The gender pay gap: Separating fact from fiction

05 Sep 2013

Whenever I speak to audiences about the gender pay gap I can almost see the discomfort level in the room rise. There's lots of disagreement on many elements of the gender debate but there's something about the cold hard reality of a 17.5% difference between men and women's average weekly full-time earnings that is hard to ignore. Perhaps that's why I have now heard every objection and justification for the gap that you could imagine.

Here's a list of the main offenders and the evidence we now have at hand rather than relying on more conjecture and stereotypes.

There's a pay gap because women work less hours than men.

The gender pay gap is calculated from comparing full-time earnings of men and women and does not compare full-time to part-time wages. Of course the 17.5% pay gap statistic is a very broad calculation and some of the discrepancy does reflect structural economic factors such as occupational gender segregation, which results in women being more likely to be employed in certain lower paid sectors (teaching, community services, retail).

While it is an average figure, the 17.5% is based on data which has been collected for years using payroll information from employers and is therefore statisically robust. And even when more detailed studies are made comparing men and women's pay in similar jobs within sectors, or States, a gender pay gap still emerges.

Part-time jobs don't explain the gap but they do further depress women's earnings. It is now well established that women who move to part-time work, after childbearing for example, on average attract a wage penalty estimated at 5% for the first year taken off and 10% for a two year break, according to the Workplace Gender Equality Agency. (Don't ask about what happens after three years). So even if these women are returning to the same job but on reduced hours their equivalent full-time salary would be less than before they took a break for child bearing. It's called the motherhood penalty for obvious reasons.

The gap is widening because of the resources boom and few women work in mining because it's too dirty and physically demanding.

Actually the number of people employed in the resources sector is much lower than many people think - resource jobs made up less than 10 per cent of total employment in Australia in 2011/2012 (RBA Bulletin March quarter 2013). It's true wages in the sector did increase rapidly over recent years, and there aren't many women working in higher paid resource jobs but that's a pattern that is repeated in many sectors, and nor could it account for the entire national gender pay gap.

As Dr Carla Harris, research executive manager with WGEA points out, the worst gender pay gap in Australia is in Western Australia (26.4% in November 2012) but the gap was actually just as pronounced before the resources boom.

Mining jobs are demanding but try telling a nurse or aged care worker they have a clean and easy job. Many of the most unappealing, dirty and stressful but crucial caring jobs in society are done mainly by women. Unlike mining however these roles are usually poorly paid.

Women choose to work part-time and in lower paid roles.

This is a furphy, according to Harris, because it's obvious women gravitate towards them because they can manage their own caring responsibilities. As Julie McKay, the executive director of the Australian National Committee for UN Women, commented in Women's Agenda on Equal Pay Day, women also gravitate towards 'caring' jobs because that's what they are encouraged to do. Choice means having viable options to select from and that's still not the case for many women looking for employment in Australia.

Women don't know how to negotiate a pay rise.

This has become a truism in business yet the reality is much more complex. Research does consistently show that women are more reluctant than men to initiate negotiations, according to Melbourne University negotiation expert Professor Mara Olekalns. They also ask for less and undervalue their work. But when they do proactively seek a raise, her research points out, they are often penalised for being too pushy and are seen as less likeable which can obviously affect their promotion prospects. This is known as a 'no win' situation.

However, when organisations provide clear guidelines on what is negotiable and when it is appropriate to negotiate, the gender gap is removed according to a range of studies Olekalns cites. Pay scales and bonus calculations remain notoriously opaque in many organisations. In the public sector, which has clearer pay bands, there is a much lower gender pay gap of 13% compared to 20.8% in the private sector, Dr Harris says

Over the years I've had many irate women tell me they know there is no pay difference among their peers only to admit they have no idea how much their colleagues take home as a yearly bonus. And in some sectors of course the bonus far exceeds the fixed salary.

The good news

Separating the fact from the fiction can help to address the real culprits when it comes to the gender pay gap: systemic and attitudinal problems which result in undervaluing of women's work and highly subjective promotion and recruitment processes. Thankfully, more businesses are running pay audits to identify the gap instead of assuming there is none and the new reporting regime to be introduced by WGEA next year will collect detailed information about the components of remuneration which is another step forward.

Long gone are the days when businesses could simply claim 'we just pay everyone the same'.

The gender pay gap is stuck at 17.5%. Want to find out what you could earn as a man doing the same job? Calculate what you could earn below.

{module Gender pay calculator}

Catherine Fox

Catherine Fox is a journalist, author and public speaker with a particular interest in women and the workforce, workforce trends, management and career. Catherine worked for the Australian Financial Review until November 2012, and has written three books. Her latest is Seven Myths about Women and Work. She is on several advisory boards, including the Defence Force Gender Equality Advisory Board.

Twitter: @corporatefox

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