Why the gender pay gap matters / The reality of the gender wage gap (2 articles)

Posted on 6 February 2012


Ray Filar, 6 February 2012

With so many families in Britain struggling in the face of the Coalition’s austerity measures, wage inequalities between men and women seem low down on almost everyone’s agenda. But as increasing numbers of households become depend on women’s wages, equal pay for equal work is a more pertinent demand than ever, says Ray Filar

When the austerity budget was revealed in June 2010 it was quickly apparent that women would bear the brunt of the new Coalition government cuts. The likely impact was analysed at the time by Yvette Cooper who described the emergency budget as looking like “the worst for women since the creation of the welfare state”. Since then, the emerging catalogue of austerity measures: cuts to public sector, to public services, reductions in welfare measures, cuts to benefits including tax credits, have created a barren landscape for today’s women in conservative Britain.

It is easy to forget that this new reality came hard on the heels of what now seems a “golden era” which culminated in Harriet Harman’s Equality Act 2010. We could be forgiven for thinking then that women were steadily on their way to equal pay and opportunities and to the outlawing of “unfair treatment … in the workplace and wider society”.

When public services are withdrawn or cut, it is women, as carers or mothers who commonly step in to fill the breach. Women also filled many of the low-paid public sector jobs that have been lost. Those who have hung on to their jobs experience the same career insecurity and lowering expectations as all today’s workforce. But in addition they face a stubborn gender pay gap that has hardly changed in decades. In some analyses, such as the 2010 report from the Fawcett Society with the public sector union, Unison, this remains as high as 14.9%.

The Annual Survey of Hours and Earning published by the National Office of Statistics at the end of 2011 revealed that the official gap in 2011 had shrunk to below 10% for the first time ever are therefore of scant comfort. The figure does relate to a key statistic – median full-time hourly earnings – but it does not tell the whole story.
A problem with averages

Trying to justify cuts to the public sector, the Coalition Government argued that public sector workers receive higher average wages than those in the private sector. At the time, UNISON pointed out that this was a ‘meaningless’ analysis which had overlooked a vital factor: a transfer of the lowest-paid jobs from public to private sector had artificially inflated the public sector average.

In the same vein, it is possible that economic crisis followed by austerity may have led to a similar distortion of averages and a consequent misleading appearance of a narrowing gender pay difference. Women hold 65% of public sector jobs and predominate in the administrative and service sectors. Since government cuts have had a greater impact in these lower-paid jobs, the women who held these jobs were more likely to be made redundant. The average pay of the women who remained in work would thus be higher, narrowing the gender gap but as a result of job losses and a rise in women’s unemployment rate. As TUC General Secretary Brendan Barber explained: ‘Female unemployment is already at a 23-year high, and with so many women employed in the public sector, this will only deteriorate.’

The Fawcett Society too, has reservations about the new 2011 figure of 9.1% since it does not take into account the kind of work that women and men do. According to the Fawcett Society, 64% of the lowest-paid workers are women. Some two thirds of workers who earn less than £7 an hour are women. At the other extreme, the highest-paid jobs are characterised by a concentration of men. Lord Davies’s 2011 official investigation into the barriers preventing women reaching the boardroom found that only 7.8% of FTSE 250 directorships were held by women.

This pattern of sex segregation – broadly, men concentrated at the top end of the pay scale, women concentrated at the bottom – is the main determinant of the continuing difference in women’s and men’s pay, as Jude Brown finds in her study, Sex Segregation and Inequality in the Modern Labour Market. But how has this inequality persisted, 42 years since the first Equal Pay Act? The background to this Act was nostalgically re-enacted in last year’s box-office success, Made in Dagenham. On screen, the promise by Secretary of State Barbara Castle that the women workers at the Essex car factory would see legislation addressing the inequalities of shop floor pay was presented as a battle won, a victory for equality and justice by organised working women.

Today, equality and justice appear to be low-down on the political agenda. Coalition austerity has returned children into poverty and left skilled adults without work; cuts threaten pensioners and deprive disabled people of their independence. Conservative ideology scapegoats the unemployed and single mothers and reframes benefits claimants as state freeloaders. At such a time focusing on pay inequalities between men and women may look like putting principle before the urgent needs of those struggling to survive.

But with increasing numbers of families now dependent on women’s wages, it could equally be argued that the issue of gender pay disparity is all the more pertinent. Households headed by single mothers can ill afford to lose that vital 10% in their pay packets; it could be the difference between having or not having enough to eat for the week.

Ending the gender pay gap for good has never been simply about ensuring that Ms Jones receives the same money as Mr Jones for the same job. It is about recognising the broader picture. The tough challenges are to develop progressive policies that value male and female-dominated jobs equally, and that rebalance the burden of childcare.

Jobs undertaken predominantly by women tend to be undervalued, even where they require more responsibility or skill than male-dominated jobs. ‘Comparable worth’ is hard to prove. Is teaching as valuable as plumbing? How can secretaries show that they should be paid the same as drivers? The idea that the jobs women do – whatever they are – are less worthwhile than the jobs men do – whatever they are – appears ingrained and wages reflect this.

And there remain the perennial difficulties for working parents, seldom posed as a problem for men. As mothers, women are assumed to have other priorities; the lack of institutional support for egalitarian parenting is rarely, if ever, considered. The beliefs underlying ‘family friendly’ Conservative policies appear to centre on the welfare of families but do not address underlying problems of gender roles. As long as women are earning 10% less than men, it makes more financial sense (particularly in hard times) for mothers to take the main burden of childcare.

And yet this economic downturn may prove different from those of the past. Never before have women been so financially independent and never before have the consequences of austerity been so brazenly visited upon the less well off. The Coalition’s reported lack of success with women voters gives women an important casting vote on how a fairer world of work evolves. Any kind of gender pay gap may come to be seen as, quite simply, unacceptable.

The reality of the gender wage gap
6 February 2012

Australian Service Union branch secretary Sally McManus is showered in streamers after Fair Work Australia awarded community workers a landmark pay rise. AAP

As long as people see the gender wage gap as normal, society has a problem. This view is illustrated in a comment by Jeremy Sammut on a Centre for Independent Studies email newsletter: “Forget that the decision is based on dodgy comparisons – why should someone with a three-year social work degree have income parity with a trained economist or scientist?” This viewpoint is shared by those that assume market forces determine wage rates on the basis of supply and demand. If many appropriate people want the job, the necessary pay rate drops. If this model worked, the lowest paid workers would be parliamentarians – obviously, this simplistic model does not work.

Pay rates respond to a range of rational and irrational assumptions. The latter beliefs are responsible for the differences between pay rates for the jobs mostly done by men or women. These often derive from biases that undervalue skills that are seen as feminine or overvalue those seen as masculine.

This bias, which enabled employers to pay women less than men for the same jobs, was legal until the 1970s when the laws changed. There was catch up until the 80s, but since then, the difference in pay rates has persisted at around 18%. The gaps persist, even with equal qualifications. It’s not about time in the job or family responsibilities, either – recent data shows an average annual gap of $2,000 in starting pay for new graduates. The statistics show gender pay differences between industries and occupations.
Complexity of equal pay

Equal pay is complex because the gender gap is pervasive and affects broad categories of employees in very varied jobs. Sometimes, it is the result of undervaluing the actual type of job – for example, one that mimics home-based unpaid care – but others are underpaid because they are in industries where the most jobs are feminised. This is the case put in the current Australian Services Union (ASU) claims, which has allowed a significant change in the ways the gap is determined by Fair Work Australia. In their initial finding in 2011, they looked at the range of jobs covered by the Social and Community Services (SACS) award and declared that community services pay rates were affected as such by gender biases.

The traditional approach of finding that an employer or particular wage rate showed the gender bias in particular jobs is not appropriate for resolving the overarching bias that affects all award-based pay rates in a sector as diverse as this one. Wider analysis has shown how the problem is industry based, rather than job based. All jobs in feminised industries tend to be lower paid than similar ones in male-dominated industries. Therefore, most of the 14% of men in this industry share the low pay rates of the women. Unfortunately, the reverse doesn’t happen in masculinised industries. Gender gaps are highest in industries such as finance and mining. So, the remedy in this case is not job by job comparators, but comparing particular industry groups.

Community work march for a pay rise. AAP

The community sector is comprised mainly of not-for-profit private employers, but many of the jobs in the community sector are also offered in the public services. These public servants are paid much more than community sector counterparts because the pay rates lack gender biases and are equated with other similar public service jobs. This means feminised jobs in the public service areas such as health, welfare and education are paid more than similar private sector jobs offering an industry comparator.

The current judgment has used the difference between the two wage rates as a way to estimate the gender proportion of the differences. This strategy was originally part of a Queensland equal pay decision and was extended to the federal system. It is particularly appropriate to use it in the community sector because this industry’s funding base makes it vulnerable to institutionalised structural discrimination.
The wage gap and “being a woman”

The FWA judgment covers the sector’s diverse multitude of occupations and qualifications by raising the levels of pay by approximately 60% – the estimated gender gap loss. The calculation was based on a 2011 Equal Opportunity for Women in the Workplace Agency (EOWA) report, which says: “The gender pay gap is caused by a variety of factors including the undervaluation of women’s work, women’s access to training and inflexible work practices which limits their employment prospects. However, a recent report by the National Centre for Social and Economic Modelling (NATSEM) found that the main contributing factor to the wage gap was simply ‘being a woman’, and this accounted for 60% of the difference between women and men’s earnings.”

It is this approach that has enraged more conservative employers, because the model could be used for claims from workers in other undervalued industries. Two other similar sectors are child care and aged care, being largely community based and feminised. The two are often in tandem as many of the services reflect what would have been home-based services. These sectors, however, are also often commercialised but dependent on public subsidies. Therefore, workers in these areas have little or no bargaining power at the enterprise level.
Lack of bargaining power “ignored”

This factor is ignored by many of the objectors, as illustrated in the dissenting report of Fair Work Commissioner Justice Graeme Watson: “To selectively extract an entire industry from the enterprise bargaining legislative framework is a change of mammoth proportions … The precedent it creates for many other industries who cannot afford to pay significantly above the award and are female dominated highlights the need for great caution. It is not an overstatement to suggest that the future status of enterprise bargaining in this and other industries with similar attributes is at stake.”

He goes on to say: “Of course women carers should get equal pay to men doing the same job, and the same as other women doing the same job as well – as long as their employers have the money. That’s the way enterprise bargaining works: the capacity of the employer to pay is taken into account.”

However, the judge fails to acknowledge that enterprise bargaining does not work well for women when the enterprise has very limited control over its budget. A circuit breaker is needed to ensure that governments will increase subsidies for staff pay. The present judgement was delayed by FWA to allow negotiations with the major funders. The Commonwealth has agreed to carry its share and there are indications that most states will contribute.

Women’s groups have welcomed the decision as it will offer a model for a substantial – if slow – decrease to wage inequity as a result of gender bias.