Economic consequences of gender segregation for women
Introduction
4.1
Gender segregation is not a harmless feature of the Australian workplace.
It assigns women to lower take home pay, worse job conditions and less economic
security.
4.2
Industries and occupations with higher levels of male employees have
higher levels of pay. The data shows that, as the ratio of male to female
employees in an industry increases, so too does the average wage. KPMG found
that, for every 10 per cent increase in the ratio of men to women in
an industry, the average wage increases by 1.9 per cent. For every 10 per cent
increase in this ratio in an occupation, the average wage increases by 0.8 per
cent.[1]
4.3
Taken together, industrial and occupational segregation are the second most
significant contributing factors to the gender pay gap in Australia, after sex discrimination.[2]
4.4
This chapter examines how and why pay differs across male and female
occupations and industries.
Male industries are better paid than female industries
4.5
As explored in Chapters 2 and 3, social norms and caring
responsibilities force women towards flexible and part time roles that are
found in a limited number of occupations and industries. The problem is that
these occupations and industries are, on the whole, far less well remunerated
than industries that have predominately male workers.
4.6
A woman working in a female-dominated industry would, on average, earn
almost $40,000 (at total remuneration) less than the average full-time total
remuneration of a man in a male-dominated industry.
4.7
Historically, female-dominated industries and jobs have attracted lower
wages than male-dominated industries and jobs. According to Workplace Gender
Equality Agency (WGEA) data, employees in female-dominated organisations still
have lower salaries on average, both for base salary and total remuneration,
when compared to male-dominated and mixed organisations. In addition,
female-dominated industries pay the lowest proportion of superannuation,
bonuses and other discretionary pay when compared to other industries.[3]
4.8
The economic consequence of undervaluation of feminised work is that
women continue to dominate the lower end of the earnings spectrum in most
occupations, so that they are not only segregated into a limited range of
occupations, but they remain vertically segregated within a limited range of
low grades with less training possibilities and little career path progression.[4]
4.9
Pay inequality translates into economic inequality for women in a range
of ways, including:
-
contributing to lifelong lower earnings and consequently limiting
the accumulation of super funds and other forms of wealth;
-
increasing the likelihood of women living in poverty, including living
in poverty in retirement.[5]
4.10
This section explores some of the factors contributing to the pay
disparity between male and female economic activity, including the historic
underpayment of caring professions and traditionally female industries, and the
undervaluing of feminised work.
Historic underpayment of caring
4.11
The undervaluation of work undertaken by women is a major contribution
to the gender pay gap and structural inequalities in the labour market.[6]
4.12
The Australian Council of Trade Unions (ACTU), noted:
Highly feminised industries and occupations attract
significantly lower wages, because of the low value that has historically been
attributed to women's work. This is a great and continuing injustice. Policy
and law reform initiatives over the last 20 years have clearly failed to make a
substantial difference.[7]
4.13
The problem is particularly acute in occupations involving caring, such
as child care, in-home disability, aged care and education, where the nature of
the work demands 'emotional labour'.[8]
Whilst these are essential skills for workers in the 'care economy', they are
under-valued in the labour market.
4.14
Research shows that industrial and occupational gender segregation is reinforced
by societal norms about appropriate roles for men and women.[9]
As Bankwest Curtin Economics Centre (BCEC) explained:
Unequal pay outcomes between women and men are a stark
indicator of the different ways women and men engage with the workforce—and how they are valued
for it. Gender segregation and lower pay in female-dominated organisations
continue to drive poorer remuneration outcomes for women.[10]
4.15
Much of the growth in female workforce participation between 1998 and
2006 has been in four ‘low pay’ industries: retail, accommodation, property and
health services.[11]
United Voice noted that:
While the formal apparatus for pay discrimination has been
dismantled, the assumptions that underpin it persist today—in particular, the
idea that caring work is low skill and the idea that it is acceptable to be
paid at a low level when the work is performed outside the home because it is work
that is emotionally rewarding. This is the idea that women in these roles work
for the love of it—and we know that love does not pay the bills or the
mortgage.[12]
4.16
UnionsWA argued that government funding models contributed to
undervaluation of work in the female-dominated social, community and disability
services industry, and that changes in the value of work in female-dominated
industries have not been recognised in award rates.[13]
Industries and jobs become
undervalued when they become female
4.17
It is not just the case that women are entering professions that
historically have been feminised and undervalued. There is some evidence that professions
become less valued and less well paid when the ratio of women rises.
4.18
The higher the percentage of women in an industry, the lower its
perceived prestige. As KPMG noted, '[e]ven where men’s low-wage jobs demand far
less in terms of skill, education and certifications than women’s low-wage
jobs, the male-dominated ones usually command higher hourly pay.[14]
4.19
Research indicates that the higher the percentage of women in an
industry the lower its perceived 'prestige', resulting in lower pay:
A study [by the sociologists Asaf Levanon, Paula England, and
Paul Allison], which examined census data from 1950 to 2000, found that, when
women enter an occupation in large numbers, that job begins to pay less, even
after controlling for a range of factors like skill, race and geography. Their
analysis found evidence of 'devaluation'—that
a higher proportion of women in an occupation leads to lower pay because of the
discounting of work performed by women.[15]
4.20
Work + Family Policy Roundtable (W+FPR) explained how occupational
segregation and undervaluation of work in feminised occupations are
inter-related:
Segregation reduces the likelihood that gendered assumptions
and practices will be challenged [including] treating women's skills as
'natural' and relying on notions of a woman's essential nature as a carer.
Segregation increases the chances that women will work in
part-time jobs that are undervalued because they fail to comply with a male
norm of full-time work.
Segregation makes male comparators less available for the
evaluation of women’s work, increasing the likelihood of misrecognition (and
subsequently undervaluation) of women’s skills.[16]
4.21
BCEC found that companies classified as female-dominated recorded the
highest gender pay gap among full-time managers (23 per cent). For part-time
managers the pay gap increased to 35 per cent.
This suggests that men working in management roles in heavily
female-dominated organisations are more highly valued and more likely to be
fast tracked to senior positions and receive greater pay.[17]
Recognising the Specific Challenge
of Feminised Work
4.22
United Voice drew attention to a recent landmark decision in New Zealand
to set national minimum wage rates for carers in aged care, residential
disability care and some home based care workers.[18]
4.23
The Australian Services Union (ASU) recommended the establishment of an
industry certification and accreditation body, comprising representatives of
employers, employees, educators and clients, to set minimum professional
standards to properly recognise the skills and experiences of workers in social,
community and disability services and ensure quality service provision.[19]
4.24
The ACTU argued that the intractable gender pay gap affecting women in
feminised industries demands a new approach by policymakers:
At the heart of the pay gap is the failure to truly value
traditional women's work—paid
or unpaid. The lack of recognition for 'feminine' work and the impact of
pervasive sexist norms in the workplace is not effectively addressed by relying
on employers to voluntarily and consistently promote diversity, despite the
very strong business case for doing so.[20]
4.25
Several submissions made specific recommendations in relation to the
gender pay gap in female-dominated industries, including:
-
recognising accredited training and skills development in
feminised industries;
-
no longer implementing 'wages policies' which restrict the scope
of their predominantly female workforces to freely collectively bargain in
accordance with International Labour Organisation principles;
-
setting targets for pay equity outcomes that are reportable to
parliament; and
-
requiring government agencies, companies and NGOs with which
state governments have procurement and tender arrangements and service delivery
contracts to formulate pay equity plans (PEPs) to address areas where they fail
to comply with equity principles.[21]
Gender segregation and the pay gap in Australia
4.26
The pay disparity between male and female industries and occupations is
a major contributor to the gender pay gap in Australia.
4.27
As Figure 4.1 shows, the gender pay gap has fluctuated between 14 per
cent and 19 per cent over the past 20 years. As at November 2016, the
gender pay gap was 16.2 per cent, down from 18.6 per cent in 2014.[22]
Figure 4.1—Gender pay gap for full
time total remuneration, 1995 to 2016
Source:
ABS, Average Weekly Earnings. Australia. May 2016 (Cat. No. 6302.0), cited in
KPMG, She's Price(d)less: The Economics of the Gender Pay Gap,
October 2016, in DCA, Submission 18.1, p. 32.
4.28
Industrial and occupational segregation continue to be among the most
significant contributing factors to the gender pay gap, together accounting for
30 per cent of the gender pay gap, or $0.69 per hour. (see Table 4.1
below).[23]
4.29
The gender pay gap varies across Australia, and UnionsWA pointed out
that Western Australia has consistently recorded the largest gender pay gap of
all states and territories, with full-time male workers earning 23.9 per cent
more than female workers, compared to 16 per cent nationally.[24]
4.30
The gender pay gap begins as soon as men and women begin their careers.
As noted in Chapter 3, women are outnumbering men graduating from higher
education. However, according to the 2016 Graduate Outcomes Survey (GOS), the
median starting salary of females and males were $56,400 and $60,000
respectively.[25]
Although there are inequities for both genders, it is fair to
say that women face greater long-term disadvantage than men as a result of the
structures and processes that frame work and family life in our society.[26]
Table 4.1—Breakdown of the
pay gap by contributing factor, 2007 and 2014
| Factor |
2009 Report
(2007 data) |
2016 Report
(2014 data) |
| % of effect |
Absolute equivalent |
% of effect |
Absolute equivalent |
| Sex
discrimination |
35% |
$0.45 |
38% |
$0.88 |
| Years
not working (interruptions) |
9% |
$0.12 |
21% |
$0.48 |
| Industry
segregation index |
10% |
$0.13 |
19% |
$0.45 |
| Occupational
segregation |
18% |
$0.23 |
11% |
$0.24 |
| Age
(experience, proxied by age, years) |
8% |
$0.10 |
6% |
$0.14 |
| Share
in part time employment |
14% |
$0.18 |
4% |
$0.08 |
| Tenure
with current employer (years) |
3% |
$0.04 |
1% |
$0.03 |
| Share
working in government or NGOs |
3% |
$0.04 |
0.4% |
$0.01 |
| Total |
$1.29 ($1.70 in 2016
dollars) |
$2.32 ($2.41 in 2016
dollars) |
Source:
The Household, Income and Labour Dynamics in Australia (HILDA) Survey, Wave
14 (analysis by KPMG).[27]
4.31
The gender pay gap is more acute in non-salary remuneration. Performance
pay and other additional remuneration in male-dominated industries contribute
to higher gender pay gaps in total remuneration.[28]
4.32
There have been a number of inquiries and research reports dealing with
the economic effects of gender inequality in Australia. The 2009 House of
Representatives Making it Fair inquiry, for example, examined women's
participation in paid work, and made 63 recommendations on a wide range of
issues, including some of interest to this committee.[29]
4.33
The 2016 Senate inquiry into economic security for women in retirement
found that men's superannuation balances at retirement are on average twice as
large as women's, and that Australia's retirement income system does not
adequately accommodate the difference between how women and men experience work
over their lifetimes:
This is a problem born of many interrelated factors. At its
heart, however, is the fact that women and men experience work very
differently. Women are more likely to work in lower paid roles and lower paid
fields, are more likely to work part-time or casually, and are more likely to
take breaks from paid employment to provide unpaid care for others. Over their
lifetimes, as a consequence, they will earn significantly less than men.[30]
4.34
The committee's 2016 recommendations included a review of the Fair
Work Act 2009 to determine the effectiveness of the equal remuneration orders
in addressing gender pay equity, as well as ensuring improvements to the Commonwealth
Paid Parental Leave Scheme (PPL).[31]
4.35
These inquiries have examined particular aspects of women's workforce
participation and the gender pay gap, which are interrelated with industrial
and occupational gender segregation. They have also canvassed a range of
measures to address the economic consequences for Australian women.
4.36
However, despite such inquiries and recommendations, gender segregation
and the gender pay gap continue to be defining features of the Australian
labour market. This persistence highlights the resilience of gender-biased
assumptions that underpin patterns of occupational segregation, assessments of
work value, and career progression opportunities.[32]
4.37
Australia’s gender pay gap shows some similarities with the United
States. The International Labour Organisation (ILO) noted that in the United
States:
...there is a wage penalty for both women and men, who work in
female-dominated occupations. For instance, a highly skilled female worker
would earn $24.04 per hour in a female-dominated job, compared to $36.06 per
hour in a male-dominated job. In other words, if she worked 40 hours per week,
she would earn $25,000 more per year in a male-dominated job.
Similarly, a woman in a low-skilled job would earn $5,990
more per year in a male-dominated job than in a female-dominated job [33]
4.38
The Office for Women, Department of the Prime Minister and Cabinet (PM&C)
gave evidence that there is currently no specific national target for reducing
the gender pay gap in Australia.
Case study:The impact of gender
segregation on pay and penalty rates
4.39
The Fair Work Commission's decision in February 2017 to reduce Sunday
and public holiday penalty rates in awards covering the retail and fast food
industries was considered by the committee.[34]
4.40
According to the Shop, Distributive and Allied Employees' Association (SDA),
for the majority of women in these industries, working on Sundays is not a
preference but a necessity, given that they are not able to work Monday to
Friday because of family responsibilities and child care availability, and that
Sunday penalty rates are the only means they have to a receiving a decent wage.[35]
4.41
The SDA noted the disproportionate and negative impact that this
decision will have on women in these female-dominated industries, and pointed to
the inadequacy of the Fair Work Act in providing a positive duty on the
Commission to improve the economic outcome for women in the consideration of
the annual minimum wage review, modern awards and enterprise agreements.[36]
Gender pay gap
in the STEM sector
4.42
As an industry that promises to provide much of the growth of work in
Australia’s future economy, the STEM sector deserves a closer look. The view is
not pretty. The ABS noted in 2014 that men account for 81 per cent of
Australians with higher level STEM qualifications.[37]
The gender pay gap in STEM professions widens as responsibility level increases.[38]
4.43
Professionals Australia (PA), in their report, Gender pay gap in
Engineering and Science, noted that the low participation rates of women in
STEM fields is reflected in management and income:
Only 12% of women in STEM fall into the top income bracket
(above $104,000), while 32% of males are employed in this bracket.[39]
4.44
The gender pay gap in the Professional, Scientific and Technical
Services industry in 2015 was 22.2 per cent compared with 17.3 per cent for all
occupations.[40]
Women engineers, for example, receive 24 per cent lower than their male
counterparts in the median total salary package. The gap is minimal at entry
level but increases beyond four years' experience, suggesting that women are
experiencing barriers to career progression.[41]
Equal remuneration and the Fair Work Commission
4.45
The effects of gender segregation on pay and conditions express
themselves in systemic ways across industries. In other words, they could be
seen as industrial problems capable of being addressed through the industrial
relations system.
4.46
Numerous submitters provided analysis and suggestions regarding the role
of the Fair Work Commission in providing for equal remuneration across male and
female jobs and industries.[42]
The equal pay case
4.47
In 2012 the Fair Work Commission handed down its decision on equal pay
under the Fair Work Act. It found that undervaluation existed in the
female-dominated social, community and disability services industry throughout
Australia, that government funding models contributed to the undervaluation of
this work, and that changes in the valuing of work had not been recognised in
award rates.[43]
4.48
The decision saw many in the highly feminised and low-paid social and
community services workforce awarded significant pay increases, and the outcome
was widely welcomed as a win for the cause of equal pay for women and a sign
that Australia finally had an effective regulatory framework in place to secure
pay equity.[44]
4.49
The ASU acknowledged that the case was significant in narrowing the pay
gap in the social and community services sector, although it noted that the
sector is still subject to job insecurity and low wages and that, if not
addressed, these issues may contribute to a widening of the gender pay gap.[45]
Evaluating existing arrangements
4.50
Equal remuneration is one factor of many which can be taken into account
by the Fair Work Commission when determining an award under the Fair Work Act.
However, several submissions and witnesses raised the question of whether the Fair
Work Act provides sufficient obligation on the Fair Work Commission to properly
consider gender pay equity.[46]
4.51
W+FPR noted an inconsistency in comparative assessments of masculinised
and feminised work, and questioned whether the policy and institutional
apparatus supports the equal remuneration objective, including the capacity for
the Fair Work Commission to hear applications that address gender-based
undervaluation.[47]
4.52
The Fair Work Commission's Pay Equity Unit was established in March
2013, following the 2009 House of Representatives Making it Fair
inquiry, to provide the Commission with specialist pay equity research under
the Fair Work Act.[48]
The Unit undertook research and published reports in relation to equal
remuneration data and equal remuneration orders, United Voice gave evidence that
the Fair Work Commission received specific funding for the unit which has now
ceased.[49]
4.53
Several witnesses and submissions asserted that the adversarial nature
of the process for applicants seeking an equal remuneration order under the Fair
Work Act is time consuming, costly and slow, and that only one case has been
successfully completed before the Commission since 2013.[50]
4.54
United Voice has seen little or no progress in the four years that its
equal remuneration application for the female-dominated early childhood
education sector has been before the FWC. The Commission found in late 2015
that such applications require a male comparator, and the complexity of this
finding has added to the delay and cost of pursuing such cases. United Voice
observed:
We need something that is less technical and can capture the
reasons why there are differences in pay for women's work rather than requiring
a male comparator. We have put, and continue to put, significant financial
resources into addressing the pay inequity for educators, and we propose that a
fund is established to pursue cases such as ours and to assist the parties in
seeking a remedy.[51]
4.55
The National Foundation for Australian Women (NFAW) also noted that the
existing legislation needs to be properly enforced:
It is not a coincidence that the deterioration in our
position on the global gender gap index coincides with the deregulation of wage
fixation and the growing holes in the safety net for part-time and casual
employees. Instead of the gender gap being reduced by further deregulation, as
for example the Australian Industry Group argues as a minimum, we believe we
need a proper enforcement of the regulations that remain.[52]
Potential reforms of the system
4.56
Various submissions argued that remuneration equity is a national
problem and that the current provisions in the Act are unlikely to be effective
in addressing the gender pay gap.[53]
4.57
Some witnesses expressed support for a broad rather than narrow test for
assessing equal remuneration, and drew attention to reforms in Queensland and
NSW that might be usefully applied to the federal framework.[54]
4.58
New South Wales and Queensland, in recasting their approach to equal
remuneration, have given explicit focus to gender-based undervaluation, rather
than discrimination, as a means of assessing whether the equal remuneration
objective had been met. They have also adopted equal remuneration principles
(ERPs) to support pay equity outcomes. [55]
4.59
Applying similar ERPs to the work of the Commission would entail consideration
of gender-based undervaluation, which would circumvent the requirement,
established in the 2015 decision by the Commission, for a binary male comparator
in equal remuneration matters.[56]
4.60
Research published by the FWC in 2013 noted:
One of the strengths of the concept of gender-based
undervaluation is that it goes to the heart of addressing the institutional and
cultural determinants of why women have generally been under-remunerated for
their work.[57]
4.61
Amongst other things, the Queensland ERP provides a methodology for the
Commission's approach to gender-based undervaluation, identifying factors
relevant to the assessment that include:
-
whether the work has been characterised as 'female';
-
whether the skills of female workers have been undervalued;
-
whether there has been undervaluation due to women being
over-represented in lower-paid areas of an industry or occupation (occupational
segregation or segmentation);
-
whether features of the industry or occupation (for example,
occupational segregation, overrepresentation of women in part-time or casual
work, low rates of unionisation and a lack of ability for workers to bargain
with their employer) have influenced the value of the work; and
-
whether sufficient weight has been placed on the typical work,
skills and responsibilities exercised by women, working conditions and other
relevant work features.[58]
4.62
Research published by Fair Work Australia in 2011 noted that the
Queensland ERP:
...specifically states that it is not necessary to establish
that female workers have been discriminated against to establish undervaluation
of work... Nor does the principle require comparisons of any particular industry
or occupation with any other ... although it allows comparisons to be used for
guidance in ascertaining appropriate remuneration...[59]
4.63
A number of witnesses also submitted that pay equity claims should not
have to choose between being treated as either an equal remuneration matter or
a work value matter. It was argued that the Commission should allow for a dual
track approach. The Victorian Trades Hall Council (VTHC) stated:
Under (Queensland’s) legislation you can run an equal
remuneration matter and a work value matter at the same time, because the idea
that there is a scientific approach where we can factor in one amount of pay
differentials associated with gender related issues and another amount
associated with something else is ludicrous...
...whereas under the Fair Work Act, in contrast, you are
completely separated: you have to choose whether you take an equal remuneration
matter or a work value type matter....our system has been very bad at handling
equal remuneration matters, because it has been in a work value headspace where
it has valued men's work and articulated that particularly in comparing
everything to the metal trade standard and the skills associated with that.[60]
4.64
The VTHC also noted that, in adopting the Queensland model, there would
need to be a designated area established within the Commission with the
appropriate expertise in evaluating women's skills in order to establish the
equal remuneration principles.[61]
4.65
Several submissions and witnesses proposed other specific reforms to the
Fair Work Act in order to address the undervaluation of women's work,
including:
-
amending Section 3 to make ‘equal remuneration’ for men and women
employees for work of equal or comparable value' an explicit object of the Act
and a positive duty when making or varying an award;
-
requiring the Fair Work Commission to conduct a review of modern
awards explicitly for the purpose of remedying any demonstrated gender-based
undervaluation; and
-
amending section 302 to recognise gender-based undervaluation of
work in line with the 2015 Equal Remuneration Case, making it easier for
parties to apply for orders to amend modern awards and enterprise agreements.[62]
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