In only weeks since the Human Rights Commission’s Pregnancy and Return to Work National Review revealed that levels of discrimination against women on the grounds of pregnancy and potential pregnancy has not changed in the past 15 years, the Australian Bureau of Statistics has also revealed that the gender pay gap has regressed and, for the first time since data was collected in 1994, has soared to a record high of 18.2%, up from 17.5% only a year ago.
The data released from the ABS on 12 August paints a depressing picture. This means women are currently earning just less than 82 cents for every dollar their male colleagues earn, down from an average of 85 cents ten years ago. This is despite Australian tribunals handing down the ever first equal pay case in 1975.
How can we still be in this position in 2014?
This gap would be bad enough if trending in the right direction but to increase since it was last measured is totally unacceptable. At the current rate of change, are we willing to accept not only our daughters being paid less than our sons, but our granddaughters and great granddaughters too?
In a gloomy prediction by Oxfam, pay equity for women will not be achieved for another 75 years. The report[i] released only a few weeks ago, will be used to escalate calls for gender equity to be on the agenda of the G20 Conference being held in Brisbane later this year. The report lists Australia as one of five G20 countries where between a third and half of women’s employment is part-time, alongside Germany, Italy, Argentina and the United Kingdom.
This is not a new problem. And we’ve heard the outrage before. In 2009 when the gap was somewhat smaller, DCA conducted a research report with KPMG[ii]. The report revealed the gender pay gap was a result of:
- Occupational segregation (18%)
- Industry segregation (10%)
- Working part time (14%)
- Length of time women spend out of the workforce, work interruptions (9%)
- Differences in age (a proxy for work experience) (8%)
- Tenure with current employers (3%)
- Differences between the type of employers, with more women working at Non-Government Organisations (NGOs) and for government (3%).
Most alarming about these statistics is that the report found the remaining 35% of the gap is explained by discrimination. And after reading the AHRC report into pregnancy discrimination, if we only address the discrimination part of the gap, then we can reduce it by 35% that is, bring it down to a much more acceptable (although not yet all right) gap of 12%.
The Motherhood Penalty
But it is more complex than simply discrimination. The ‘Motherhood Penalty’ describes the impact bearing and raising children has on women's wages and the evidence is both disturbing and compelling. According to the OECD[iii], the gender pay gap in Australia has effectively disappeared for prime working aged women where they do not have children.
There is also a growing body of international research that has investigated the extent to which the presence of children influences the wages of mothers. In the UK, research[iv] shows that for every year a woman spends away from employment on “family caring work”, there is an average wage penalty of 1% and an extended effect on longer term earnings. Similarly, in the US, wage penalties of between 5% and 7% per child have been identified.[v]
In Australia, the wage gap among mothers has been analysed by a number of studies[vi] using Household, Income and Labour Dynamics in Australia (HILDA) survey data to reveal that each child lowers women’s wages – with estimates varying from 4% for the first child, to 9% for two of more children.
Perceptions versus reality
If we are going to have any hope of addressing the gender pay gap, we first need to accept not only that such a gap exists but what it really means. Auspoll polling conducted jointly by DCA and the Workplace Gender Equality Agency in 2010 revealed that most Australians are unaware of the correct definition of pay equity.
In the general community, only 14% of people agree with the correct definition that pay equity means “equal pay for men and women doing different but equivalent jobs”. Nearly two thirds of people (64%) wrongly think it means “equal pay for men and women doing the same job” (a significantly more restrictive definition), whilst 22% of people did not know, or gave alternative incorrect answers.
One thing most (76%) Australians did agree on in the poll was that “steps should be taken to close the gap between men and women’s earnings”.
Fixing the problem has clear benefits
KPMG’s report noted that closing the gender gap would result in greater competitiveness and economic output as workers would be better matched to their capabilities; companies would reduce costs through lower turnover rates; and individuals with the best skills and firm-specific knowledge would remain with the company. Other research estimated that closing the gap between male and female employment and productivity would have the potential to boost Australia’s GDP by between 11% and more than 20%.
So what can we do about it?
There are lots of practical and relatively simple steps organisations can take to address pay equity, starting with the many tools for businesses – large and small – developed by the Workplace Gender Equality Agency available free of charge on their website.
You don’t know the extent of a problem if you haven’t measured it so DCA would recommend organisations put some effort into conducting a pay equity audit with a view to taking action on the results. Other suggestions include:
- Increasing female representation in non-traditional industries
- Addressing over representation in roles/industries that are undervalued or underpaid
- Improving women’s representation in senior roles
- Mainstreaming flexible working careers
- Challenging preconceptions, attitudes, culture etc.
What is clear, however, is that we need to maintain the community outrage. And we need to continue to challenge those who try to explain away the pay gap by saying it’s a women’s ‘choice’ or it is beyond anyone’s control – not now we have clear evidence of the causes.
A pay equity gap is of 18.2% in 2014 is unacceptable. And it should be unacceptable to all women and all good men who value them – as well to those who have the power to fix the problem.
Lisa Annese DCA's Chief Executive officer
For more information on how you can address the gender pay gap in your workplace, call DCA on (02) 8014 4300 or email us at email@example.com .
[i] The G20 and gender equality – How the G20 can advance women’s rights in employment, social protection and fiscal policies.
[ii] DCA/ KPMG Report, Understanding the Economic Implications of the Gender Pay Gap in Australia.
[iii] [i] OECD. (2012). Closing the Gender Gap: Act Now, OECD Publishing.
[iv] [ii] Government Equalities Office. (2010). The gender pay gap in the UK: 1995 to 2007 (Research Findings No. 2010/2). London: United Kingdom Government.
Budig, M., & England, P. (2000). ‘The wage penalty for motherhood’. American Sociological Review, 66(2). pp 204–225; Manchester, C., Leslie, L., & Park, T.-Y. (2008). Screening for commitment: The effect of maternity leave usage on wages (Technical Report). Minneapolis, MD: University of Minnesota.
[v] [iii] Anderson, D., Binder, M., & Krause, K. (2002). The motherhood wage penalty: Which mothers pay it and why? The American Economic Review, 92(2). pp 354–358.
[vi] [iv] Baker, D. (2011). ‘Maternity leave and reduced future earning capacity’, Family Matters 2011 No. 89. Australian Institute of Family Studies. pp 82-99.; Chapman, B., Dunlop, Y., Gray, M., Liu, A., & Mitchell, D. (2000). The foregone earnings from child rearing revisited (Centre for Economic Policy Research Discussion Paper No. 407). Canberra: Australian National University.; Hosking, A. (2010). ‘The influence of children on female wages: Better or worse in Australia?’ Institute for Social Science Research (ISSR) Seminar Series, The University of Queensland, Brisbane, 2 February; Livermore, T., Rodgers, J. R., & Siminski, P. (2010). ‘The Effect of Motherhood on Wages and Wage Growth: Evidence for Australia’. University of Wollongong Economics Working Paper Series 2010.