Gender wage gap statistics: a quick guide

Updated 6 December 2017

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Penny Vandenbroek
Statistics and Mapping Section

 

Introduction

This guide provides a brief overview of wage gap statistics, including an introduction to the key concepts and terminology, examples from two key data sources and links to other relevant information. A quick guide to Australian earnings data is also available from the Parliamentary Library website, along with the following related guides: labour force and employment.

Gender differences

Labour market statistics can benefit from being analysed through gender, as men’s and women’s experiences of the labour force (and outside of it) vary. The International Labour Organization (ILO) has observed that, despite progress in educational achievements over the last two decades, there has not been comparable improvement in the situation of women and work. Globally, women have fewer chances to participate in the labour force and when they do, they often have to accept lower quality jobs (i.e. those with poorer working conditions and lower levels of pay). The ILO also highlights women’s overrepresentation in non-standard forms of employment or in occupations that are more likely to consist of informal working arrangements. The ILO generally publishes an annual summary of labour market indicators by gender—for 2016 refer to Women at work: trends.

Types of labour market gaps

Gender gaps are observed differences which tend to disadvantage women compared with men. Most often discussed is the wage or pay gap. However, there are a number of other labour market indicators where gaps may occur. Women tend to have lower levels of labour force participation and, when they are employed, they are more likely to work part-time. These and other situations may contribute to the gender wage gap.

What are the key measures?

The gender wage gap is one of the most commonly cited measures of difference in men’s and women’s employment outcomes. The gender wage ratio forms part of the ‘gap’ calculation, and will also be outlined as part of the measure.

Gender wage ratio

The gender wage ratio is the ratio of female to male wages, or the earnings of women expressed as a proportion of the earnings of men. This calculation may be based on any earnings source.

Female earnings [divided by] male earnings [multiplied by] 100

Gender wage (or pay) gap

The gender wage gap is the difference between parity (100%) and the gender wage ratio. The ILO Global Wage Report simply states that the gap is ‘the percentage shortfall in the average wage of women relative to the average wage of men’. They note that while the gap has generally narrowed over time, it has not been closed in most countries (for which data are available).

100 [minus] the Gender Wage Ratio (see calculation on previous page)

In 2017, UN Women estimated the wage gap was approximately 23% globally. Using this estimate, a gap of 23% indicates that for every $1 a male employee receives, a female employee receives 77 cents. This gap however, is dependent on the source of earnings used for the calculation. In this case, the gap is based on average weekly wages. The gap narrows by more than half when the calculation uses hourly wages. In 2016, the ILO estimated the wage gap based on average hourly rates was about 10% globally (Women at work trends, p. 8). In this instance, the average earnings more accurately reflect the different working hours of men and women. Figures 1a and 1b provide men’s and women’s weekly and hourly earnings, and the estimated wage gaps for Australia. This illustrates a similar finding to the ILO, where the use of hourly rates of pay shows a large reduction in the pay gap.

Figures 1a and 1b. Average total cash earnings of non-managerial employees paid at the adult rate, May 2016(a)

Av weekly total cash earningsAv hourly total cash earnings

(a) Excludes managerial employees and anyone paid at a rate other than the adult rate (see p. 6 for more information).

Source: ABS, Employee earnings and hours, May 2016, cat. no. 6306.0

There are however, a few dynamics to consider:

  • Female employees are typically underrepresented in managerial roles (approximately 31% of senior and middle level managers in 2015), and removing this level of employees provides a more comparable group. However, the extent of the gap due to differences in the proportion of management jobs held is not truly reflected by such an adjustment.
  • Women tend to be overrepresented in part-time work, with almost half (46%) of all female employees working part-time hours compared to about 18% of male employees (Labour Force Survey, detailed–electronic delivery, March 2017). In some instances, full-time employees are used as a pseudo adjustment for the differences in men’s and women’s labour force participation. However, this exclusion is problematic, given the large proportion of women who work part-time.
  • The distribution of women across full-time and part-time work may impact on the earnings measured. For example, if a large proportion of women in higher-paid occupations or industries work part-time, these earnings will not be captured by a full-time earnings measure. Similarly, if most full-time work is undertaken in lower-paid occupations or industries, these earnings will be reflected in the measure.
  • The main sources and types of earnings are discussed elsewhere.

What can these measures tell us?

A number of detailed studies have recognised gender pay differences in Australia that are significant, persistent and ‘unexplained’ (see for example, M Smith, ‘Closing the gender pay gap’). While report findings are able to attribute a small proportion of the gap to differences in ‘productivity-related characteristics of men and women’ (for example, education levels or workplace experience) the conclusion is that the types of jobs held by men and women and the method of setting pay for those jobs are contributing factors to the gap. Where women work is also important, with higher gaps for employees in the private sector, in large organisations and at the top of the wage distribution.

Why are these measures important?

These types of measures can assist in recognising pay gaps. They can be used as a starting point for questions about work type, methods of setting pay, value of work done and more. There are a range of limitations to such measures, with pay equity varying across industries, sectors and among or across states (see for example, P Todd and A Preston, ‘Gender pay equity in Australia’). There are also differences between employees on award and non-award agreements, working full-time or part-time, and permanent and casual workers. At the aggregate level, the gender wage ratio cannot account for variations within an ‘employee’ group, therefore all of these variables, and more, need to be considered when analysing differences in men’s and women’s pay.

Figure 2 provides an example of the different hourly wages that apply to different employee types. As a total group, the gap for employees (non-managerial paid at the adult rate) is the largest, at just over 12%. Analysing sub-groups of employees, such as those working casually, shows that there is a smaller gap between men’s and women’s wages when the groups being compared are those employed on a more similar basis.

Figure 2. Average hourly total cash earnings of non-managerial employees paid at the adult rate, May 2016(a)

Average hourly total cash earnings of non-managerial employees paid at the adult rate, May 2016(a)

(a) Excludes managerial employees and anyone paid at a rate other than the adult rate (see p. 5 for more information).

Source: ABS, Employee earnings and hours, May 2016, cat. no. 6306.0

Wages/earnings and sources of data

The terms ‘wages’ and ‘earnings’ generally refer to the same thing, with ‘earnings’ often used for statistical purposes. The ILO describes ‘earnings’ as remuneration paid to employees, generally at regular intervals, for time worked or work done, as well as remuneration for time away from work (e.g. annual leave, vacation pay, holidays). Earnings exclude employer contributions on behalf of employees paid to social security and pension schemes. Also excluded are severance and termination pay. The Australian Bureau of Statistics (ABS) definition of ‘earnings’ also excludes payment in kind (non-cash goods or services provided to employees).

ABS earnings data

The ABS provides a summary of its earnings data sources, as well as strengths and limitations, in the article, ‘Understanding earnings in Australian using ABS statistics’, Australian Labour Market Statistics, July 2014 (cat. no. 6105.0). Two of the main sources will be discussed in further detail. The release, Characteristics of employment (cat. no. 6333.0), while not discussed here, is also relevant. ABS earnings data generally relates to employees, who at June 2017 represented about 83% of employed people. Employees exclude self-employed persons.

Average weekly earnings (cat. no. 6302.0)

There are limitations to the ABS data on earnings due to changes in survey collections and concepts over time. However, Average weekly earnings provides fairly consistent estimates based on weekly earnings of full-time employees. This survey provides estimates of the level of average earnings at a point in time and is conducted every six months. The data can be used to create a benchmark, from which individual earnings can be compared to the average level. Note this survey differs conceptually to Employee earnings and hours and the estimates cannot generally be compared.

Concept of average earnings

The ABS advise that average weekly earnings figures represent average gross (before tax) earnings of employees and do not relate to average award rates nor to the earnings of the 'average person'.

Average weekly earnings = estimates of weekly total earnings [divided by] estimates of number of employees

Further survey concepts and exclusions are available from Australia earnings data: a quick guide.

Key series

Figure 3 provides the key series of data from this source and highlights the differing level of earnings, depending on which series is selected: Average weekly ordinary time earnings for full-time adult employees—excludes overtime; Average weekly total earnings for full-time adult employees—includes overtime; and Average weekly total earnings for all employees—includes part-time workers, youth, overtime, etc.

Figure 3. Average weekly earnings of selected employee groups, trend(a)

Average weekly earnings of selected employee groups, trend(a) 

(a) Trend data is only available from May 2012. The original series commences from an earlier period.

Source: ABS, Average weekly earnings, May 2017, cat. no. 6302.0

Full-time and part-time employees

Whether people worked full-time or part-time is generally based on the number of hours worked; it does not relate to the type of relationship they have with their job—casual, temporary or ongoing. Generally, the award reflects a 38 hour week, but this may vary. Where the agreed or award full-time hours are unknown, full-time is considered as 35 hours or more per week.  

Employee earnings and hours (cat. no. 6306.0)

The ABS conducts this survey every two years, providing estimates on the composition and distribution of employee earnings. The data comes from employing businesses at the individual employee level. This makes it possible to look at earnings distribution (e.g. medians, deciles, ranges), as well as being able to derive hourly measures (for non-managerial employees only). The key series of average weekly cash earnings data relate to all employees, non-managerial employees and full-time non-managerial employees. Unfortunately, there have been a number of changes to the survey concepts and methodology, which means that many of the data sets cannot be compared over time. In 2014, a new concept of payment was introduced to better clarify differing wage rates (i.e. adult, junior, trainee), which has led to a clear break in the series. Further information is provided in the May2014 release.

Average hourly cash earnings

The earnings time unit most useful for analysing the gender pay gap is the hourly rate, as it best accounts for differences in men’s and women’s patterns of work.

Average hourly total cash earnings = total taxable gross weekly earnings [divided by] total hours paid for

Figure 4 provides the estimated pay gap for non-managerial employees paid at the adult rate for 2014 and 2016.

Figure 4. Gap in average hourly cash earnings of non-managerial employees paid at the adult rate, May 2014 and May 2016(a)

Gap in average hourly cash earnings of non-managerial employees paid at the adult rate, May 2014 and May 2016(a)

(a) Excludes managerial employees and anyone paid at a rate other than the adult rate (see below):

  • ‘Rate other than the adult rate’ includes anyone paid as: juniors, apprentices, trainees or conditional employees. This equates to about 7% of female employees and 8% of male employees.
  • men represent approximately 61% of all full-time employees (paid at the adult rate)
  • women represent approximately 73% of all part-time employees (paid at the adult rate), and
  • data from this survey is generally only comparable with the 2014 survey—see earlier explanation.

Source: ABS, Employee earnings and hours, May 2016, cat. no. 6306.0

Employee characteristics

Earnings data is available by various employee characteristics, including: sex, full-time/part-time status, adult/junior status, type of employee (permanent, fixed-term contract or casual), method of setting pay (award, collective agreement and individual arrangement), occupation, industry, sector, employer size and age (from 2014 only). Analysing earnings data using additional variables can enable better understanding of the differences between men’s and women’s pay; however, not all characteristics can be cross-classified by sex using publicly available data. There are a number of useful tables available from the survey release (see the ‘Downloads’ tab). Figure 5 provides an example of how industry data can be used to highlight differing levels of wage gap.

Figure 5. Gap in average total hourly cash earnings of full-time non-managerial employees, selected industry sub-divisions, May 2016(a)

Gap in average total hourly cash earnings of full-time non-managerial employees, selected industry sub-divisions, May 2016(a)

(a) Employees paid at the adult rate. Excludes employees paid at other rates. See previous page for more information.

Source: ABS, Employee earnings and hours, May 2016, cat. no. 6306.0

Workplace Gender Equality Agency data set

Another source of earnings data is the Workplace Gender Equality Agency (WGEA). The WGEA data set draws on reports submitted from approximately 4,700 organisations, covering four million employees across Australia and representing about 40% of the total labour force in 2015–16. A key strength of the data set is that information on all people employed by a business is included. A limitation of the data is that it only represents non-public sector employers with 100 or more employees. It therefore excludes the public sector, small organisations and many medium sized organisations. Data is available from the 2013–14 reporting period onwards.

The Agency’s website provides a series of data presentations on the gender pay gap (average weekly full-time earnings); managers and employees by workforce status; and types of paid parental leave. The Data Explorer is an interactive website that provides a platform for the data to be interpreted through three key themes—gender equality overview, industry and comparison. Summary information explains the concepts used and assists in interpreting the data. The WGEA also provide a gender pay gap factsheet on their website, which contains a summary of their wages data, as well as ABS data on an average weekly earnings basis.

APS Remuneration Report

The APS Remuneration Report is an annual snapshot of remuneration across the whole of the Australian Public Service (APS). It provides information on remuneration by classification level and details on key components of remuneration packages. Comparisons with previous reports are also provided. Since 2011, the data is based on information provided by all APS agencies. Prior to this (from 2001 to 2010), the information was provided through an annual sample survey.

In 2016, the report was based on 2,565 senior executives (SES) and 137,320 non-SES employees. Excluded are casual employees, locally engaged employees, employees on leave without pay and employees classified at the Trainee/Cadet level. Agency heads and public office holders are also excluded. Data on part-time employees and those who only worked part of the year (to 31 December) are annualised. When considering the data, it should be noted that large agencies have an impact on the results. The Department of Human Services, Australian Taxation Office and the Department of Defence account for almost half (48%) of the APS workforce, and the profiles of those agencies are therefore influential on the median figures. Further information is provided in the report.

 

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