| Issue 62 (WAIS 2) Contents
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Recent Developments in Gender
Pay Equality
Meg Smith
School of Management
University of Western Sydney
Introduction
The debate concerning gender pay
equity has recently received prominence through
state based pay equity inquiries in NSW, Queensland
and Tasmania and a pay equity case that
focused on two professions, librarians and geologists.
This recent attention has highlighted three
contentious issues: Do differences in earnings
between men and women indicate gender pay inequity?
If there is inequity, how does this arise? What
institutional mechanisms are capable of remedying
inequity? This paper canvasses these questions and
pays particular attention to the issues canvassed by
the comparison of professional work raised by the
librarians
and geologists’ case.
Researchers define gender pay equity in broad terms as equality in women’s earnings more relative to men’s (O’Donnell & Hall 1988). While demonstrable progress has been made in the narrowing of the pay equity gap in Australia, particularly since 1969, a 16.2 % difference in the earnings of women and men remains (ABS, Cat. no. 6302.0).
There are two principal measures of pay equity:
• The difference in ordinary time earnings for full-time adult employees. This measure includes award and agreement rates, over award rates and other payments but does not include overtime, and presently stands at 16.2 %;
• The difference in total earnings for full-time adult employees, a definition that includes ordinary time earnings and overtime. On this measure, the earnings gap is 19.3%;
The difference in ordinary time earnings for full-time adult employees engaged in professional work is narrower than that for the labour market as a whole (averaging 12%) while the earnings gap is wider in the private sector than it is in the public sector.
Is there gender pay inequity?
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Table 1 (right) demonstrates changes in pay equity ratios over time.
The claim of inequity is frequently questioned on the basis that earning differences between women and men are a result of the objective differences in human capital that women and men ‘bring’ to the labour market. Any resulting earnings differences are attributed to the operation of the market, reflecting the impact of the forces of demand and supply. Thus pay differentials and the labour market position of women do not derive from institutionalised or discriminatory measures but are a reflection of the human capital decisions made by women and the impact of market forces.
On this account women’s lower earnings reflect and are an objective measure of their lower level of investment in their own education, training and workforce participation (Mumford, 1989). The labour market position of women is therefore ‘rational’ to the extent that they receive fewer ‘returns’ (wages and benefits) because of the fewer resources they have chosen to invest in training and work experience. Quantitative research into women’s pay tests the efficacy of human capital theory – that is it attempts to explain how much of the gap between women’s and men’s pay can be explained by differences in human capital.
Research indicates that some part of this gap can be explained as across the workforce men have greater amounts of human capital and career experience – due to their greater engagement in higher education (historically not currently) and the lower incidence of career interruption.
Yet increasingly studies indicate that the full extent of earnings disparities cannot be explained by factors of human capital (Pocock and Alexander, 1999; Preston and Crockett, 1999; Wooden, 1999). These studies show that women receive lower returns than men for the same level of human capital endowments (experience and qualifications).
In responding to these studies some analysts (Wooden, 1999) have argued that the absence of comparable returns is not a result of discriminatory practice but the result of women ‘self-selecting’ their occupations in ways that balance their participation in paid work with other aspects of their lives, particularly family responsibilities.
Wooden’s conclusions are akin to other proponents of human capital theory who suggest unexplained differences in earnings arise because women choose different occupations in response to different family roles and that interrupted work histories exert a critical influence on occupational structure.
Alternatively, Australian feminist accounts have assessed the ‘unexplained’ gap against particular social and labour market institutions that shape and reproduce earnings inequality. These accounts argue that the prominence of women among the ranks of the low-paid is the result of a labour market that operates in a specifically gendered way.
Intriguingly this unexplained gap remains despite an increase in the complexity of Australia’s regulatory equal pay measures that sought to overcome the ‘male breadwinner’ premise of Australian wage fixing and satisfy Australia’s international obligations.
Key tribunal decisions and legislation in equal remuneration
The historic differences in the pay received by men and women in the paid workforce derive from decisions made by federal and state industrial tribunals, which in turn were influenced by wider social conceptions of men working full time as family ‘bread winners’.
Thus, the initial construction of the minimum or basic wage in 1907 was based on the average weekly expenditure of an unskilled male worker with a wife and three children (2 CAR 1). The establishment of separate female rates of pay was promoted through two principles adopted by the Commonwealth Arbitration Court in 1912 (6 CAR 61).
Under these principles, equal pay was granted to women in those occupations where men’s employment was at risk due to the use of ‘cheaper’ female labour (employers hiring women to avoid the higher rate attached to male labour). Where this risk did not exist, because of the inherent ‘suitability’ of women for the work at hand, women were granted a proportion of the male rate, as they were presumed not to have a family to support. A rate of 54% was the predominant benchmark for women although female process workers were granted 66% of the male rate (Short, 1986).
While industry tribunals played a part in the setting of separate rates of pay for women and men, they were also instrumental in helping to close the gender pay gap. Following the adoption by the International Labor Organisation (ILO) of the Equal Remuneration for Men and Women Workers for Work of Equal Value Convention in 1951 a number of states amended their industrial legislation to provide for equal pay.
NSW was the first state to proceed, passing legislation in 1958, a step that was followed by the majority of states. This legislative change provided the impetus for federal proceedings in the then Conciliation and Arbitration Commission in 1969, 1972 and 1974. These decisions provided for the movement from a principle of equal pay for equal work to that of equal pay for work of equal value and were the basis of the improvement in pay equity ratios from 58.4 per cent in 1969 to 74.6 per cent in 1975 (full-time adult non managerial employees in the private sector).
1969
In 1969 the Conciliation and Arbitration Commission (the Commission) adopted the principle of equal pay for equal work (127 CAR 1142). The crucial aspect of the 1969 decision was its narrow interpretation of equal pay as it only applied to situations where ‘work performed by men and women was of the same or a like nature’ (127 CAR 1142 at 1158). A specific exclusion applied to work predominantly undertaken by women. This limited the remedies that flowed from the decision to women who worked in identical jobs to men where there were separate and disparate male and female rates (for example male process worker, female process worker).
1972
The effective exclusion of female dominated industries from the ambit of the 1969 decision was lifted by the 1972 decision (147 CAR 172), which introduced the principle of equal pay for work of equal value. The Commission noted that ‘In our view the concept of “equal pay for equal work” is too narrow in today’s world and we think the time has come to enlarge the concept to “equal pay for work of equal value”. This means that award rates for all work should be considered without regard to the sex of the employee’ (147 CAR 172 at 178).
The 1974
decision was part of the 1974 National Wage Case and provided for an adult
minimum wage for all workers. Previously the minimum wage only applied to male
workers in recognition of the long-standing family wage concept introduced in
1907. The rationale for the change was that the maintenance of the male only
minimum wage until 1974 limited the application of the 1972 principle
(Thornton, 1981).
These federal tribunal developments were
followed, in time, by the majority of state juris-dictions.
The Federal Legislative Framework
Current federal legislation in the area of workplace relations and anti-discrimination provides, at an initial glance, measures to further close the pay equity gap. The Workplace Relations Act 1996 retained many of the provisions on discrimination and equal remuneration introduced by 1993 amendments to the former Industrial Relations Act 1988.
These provisions extended the 1972 industrial tribunal principle of equal pay for work of equal value to equal remuneration for work of equal value [Division 2, Part VIA]. The Commission is empowered to make orders to give effect to the principle. In practical terms this could embrace orders concerning the remuneration levels of the work in question and/or reclassification of workers for whom the application has been made to that level in the classification structure appropriate to the skill levels for the work.
The ILO Equal Remuneration Convention (on which these provisions is based) does not stipulate how the value of the work is to be determined but indicates a requirement for an objective appraisal. The method may be decided upon by bodies or parties responsible for deter-mining remuneration (Article 3 of the Convention). Yet only two cases have been substantially brought to the AIRC under these provisions and the matter remains significantly untested (the HPM Case, the Age case).
Considerable interest exists in the method of job comparison that will be utilised in equal remuneration cases. Seven years after the passage of the 1993 legislative amendments, the Commission (in the HPM case) rejected the principle of comparable worth and its reliance on job evaluation. The Commission indicated that it saw no reason to depart from its practice of assessing the value of work via the criteria of work value. Such method had underpinned the 1972 principle. The two cases also illustrated that the legislative provisions are effectively restricted to claims for equal remuneration being brought to the tribunal on a workplace-by-workplace basis. Claims would also be required to meet s test of discrimination. The 1993 federal legislative amendments had been duplicated by a number of state jurisdictions.
Pay Equity Inquiries
The limited utilisation of the federal legislative provisions and the static nature of pay equity ratios led to inquiries into pay equity by industrial tribunals in NSW, Queensland and Tasmania. These assessments have concluded that equal remuneration would be advanced through a broader approach to inequity and new equal remuneration principles.
These inquiries found that new principles were necessary to address the inadequacies of previous approaches and provide guidance to tribunals and the industrial parties. The initial findings of the NSW Pay Equity Inquiry (IRC 6320 of 1997) were instructive as to the under-lying contributors of inequity.
• New legislative provisions and a new equal remuneration principle were necessary to address the inadequacies of previous approaches and provide guidance to tribunals and the industrial parties.
The features of the approach advocated by the Inquiry included:
• An emphasis on undervaluation as the key to establishing whether there is the basis for an equal remuneration claim.
• Gender discrimination not required to establish undervaluation. Comparisons between female-dominated work and male-dominated work may be utilised but are not a necessary precondition to a claim being made. There is not a requirement for comparisons to be confined to areas of similar work. Comparisons with other areas of female-dominated work are not excluded
• The Inquiry’s recommendations included guidance on the matters to be considered in assessing undervaluation - award histories in addition to contextual features of women’s employment (occupational segregation/segmentation, low rates of unionisation, high rates of part-time and/or casual employment, the high incidence of consent industrial agreements).
•Indicators of undervaluation can include the lack of a career path, the characterisation of the work as women’s work, the absence of effective work value examinations and the lack of or inadequate recognition of qualifications.
• Remuneration to be defined to included all aspects of remuneration including over award payments.
• Appropriate to have regard to over award payments provided that the components of the over award payments are identified.
• Legislative amendments would assist the Industrial Relations Commission of NSW (the NSW Commission) apply the equal remuneration principle to all areas where it exercised its powers and functions: awards; enterprise agreements, industrial disputes, consent agreements.
New Equal Remuneration Principle
The new principle that was handed down by NSW Commission (IRC 1841 of 1999) was ultimately narrower than that envisaged by the Pay Equity Inquiry. On a positive note the following components of the new principle substantially reflected the recommendations of the Inquiry.
• Gender based undervaluation remained the key test and the employer organisations’ claim (not unanimous) for a test of discrimination was rejected.
• The principle of gender-free work assessment was captured.
• The method of assessment is to have regard to the history of the award while the NSW Commission is not confined to looking only at changes in work value.
• The principle permits comparisons to be made but does not require them. However appropriate attention is to be given to the award relativities – both internal and external.
Yet the following components of the principle limited its scope.
• Remuneration to be limited to those benefits fixed by the award.
• Requirement for comparison of different areas of work accepted. Yet a comparison that relies on disparities between award and actual rates of pay deemed not consistent with this practice.
• Investigative powers not open to the NSW Commission.
• No direction as to the appropriate areas for consideration in establishing undervaluation.
Public Sector Librarians and Geosciences
The principle has recently been utilized by the Public Service Association of NSW in an application concerning library workers and archivists (IRC 6304 of 2000 & 2242, 2243, 3329 of 2001). The case was the first taken under the new equal remuneration principle. Initial research had been undertaken involving a comparison of the work and pay of public sector librarians and geologists for the Pay Equity Inquiry. The case was somewhat unusual in that there was prior agreement between the industrial parties that there was evidence of long standing gender based undervaluation evident in the lack of career structure and the manner in which salaries had been aligned.
Substantial increases (on average 16% across the applicable workforce) were awarded by the NSW Commission. The value of the work of library and information professions was recognised as comparable to other professions including scientific officers, psychologists, and lawyers. The professional associations were recognised as the key authorities regarding qualification levels and work standards for the profession. Relationships between the profession and technician occupations also were considered.
The key issue was how best to describe and assess the value of work. Concerns were raised by the NSW Commission about the effectiveness of job evaluation to adequately perform this task. Job descriptions in the award were found to be a better way of defining and grading work.
The case involved some comparisons of rates paid for comparable work but the work value was not determined by any single comparator. Rather, the NSW Commission’s task was to assess the appropriate value for the occupations before it. This was a positive development. It is important that work value is not determined purely by matching comparators, since that is increasingly difficult for the most-female dominated occupations where they are increasingly dissimilar to work done by men.
The Dynamics of the Earnings Gap
The investigation of pay equity by the a number of state industrial jurisdictions examined the following features of labour market structure and practice in seeking to account for the unexplained gap between women’s pay and men’s pay. These areas of focus also inform institutional and feminist accounts of pay equity.
Valuing Work
One of the most challenging issues in the pay equity debate is how the value of work is measured. Labour is not ‘homogenous’ - i.e., different skills are required for different kinds of work, and according to the supply and demand for these skills, they will be differently remunerated. As observed conservative economists tackle these complexities through ‘human capital theory’.
The increasing body of evidence that disputes the efficacy of human capital theory however challenges the view that the lower pay rates women receive are wholly explained by differences in ‘human capital’. Attention has therefore been directed to the concept of skill and the value and measurement of work in areas of female-dominated employment. Feminist accounts assert that far from being an ‘objective’ measure, ‘skill’ is defined by different meanings and values according to the interests of the various social actors. These differences include the way in which skill is acquired (formal training versus on-the-job training), who possesses the skills (male/female, adult/youth) and in what context these skills are used (the public or private domain) (Blackmore 1993).
These accounts suggest that the value afforded to skill is itself gendered. Such practices have impacted the value and status afforded by industrial tribunals and the industrial parties to women’s work in classification structures within awards and enterprise agreements. This practice also impacts the level of pay established in awards and agreements in areas of ‘women’s work’ (for example, clerical, retail, childcare, nursing) when compared to the rates of pay established in awards and agreements in areas of ‘men’s work’ (Burton, 1991; Hunter 2000; Smith, 2000).
Occupational and Industry Segregation
Occupational and industry segregation of employment also impacts our assessment of how women’s work is valued. Women’s employment in Australia is highly segregated. Over half of all women are employed in clerical, sales and service occupations (53 per cent) (ABS, Cat. no. 6203.0). Fifty five per cent of women are employed in just four industries - retail trade, health and community services, education, property and business services (ABS, Cat. no. 6203.0).
Aside from the difference in pay within industries and occupations a number of feminist commentators have argued that this entrenched segregation demands a comparison between work predominantly performed by women and those jobs mostly performed by men (Hall, 2000). There is a debate in the literature as to whether a change in occupational segregation would alter pay ratios. Some theorists argue that desegregation would not improve the relative position of women’s earnings because new areas of women’s work (previously dominated by male workers) would change their valuation practices (with increased feminisation).
A clearer area of agreement is the type of comprehensive, inter-industry and inter-occupational assessments of women’s work did not follow the 1972 equal pay decision or the award restructuring initiatives that were undertaken in the period 1989-1991. Assessments were often focused within industries and occupations and did not recognise that women’s work and men’s work in Australia remains highly segregated.
Enterprise bargaining and access to over award payments
What of the impact of the policy shift to enterprise bargaining on women’s pay?
Not surprisingly this has issue has been a contested one with some sections of the literature suggesting that enterprise bargaining has not directly disadvantaged women (Wooden, 2000) while other sections of the literature (ACIRRT, 1999; Heiler, Arsovska, Hall, 1999) take a more sanguine view.
Of some consequence to this debate is the following:
• The increased wages dispersion within the various bargaining streams (award, union agreement, non-union agreement, AWA), an outcome that should condition any analysis of aggregate earnings figures;
• Higher wage outcomes are associated with union involvement in agreement making;
• The emergent relationship between the trading away of particular working time conditions and low wage outcomes in non-union agreements;
• Lower engagement in enterprise bargaining by part-time workers;
• Women remain disproportionately represented in industries with lower than average AAWIs (annual average wage increases), a higher proportion of low wage increases, and a larger number of agreements where working time compensation is being eroded.
DEWRSB (2000: 21) data based on 1998 and 1999 federal agreement making indicates that agreements are far more pronounced in the manufacturing and construction industries than in the service industries. DEWRSB’s data also acknowledges that women have a low representation in those sectors where there is a higher incidence of agreement making (DEWRSB, 2000: 104). This is a pattern that has previously been observed in earlier periods of agreement making (ACIRRT, 1999).
There is a similar pattern in federal agreement making in 2000 and 2001. Workplaces in accommodation, cafes and restaurants, and property and business services have been slower to embrace enterprise bargaining (DEWR, 2002: 4). The rate of bargaining in feminised sectors has improved since the early years of enterprise bargaining. However workplaces in these sectors have not experienced multiple rounds of enterprise bargaining, as have sectors in construction and manufacturing.
The low access of part-time workers to enterprise bargaining is germane to the consideration of pay equity. Pay equity ratios are most frequently based on changes in relative full-time earnings for men and women. The nominally benign trend in pay equity ratios for full-time workers masks a growing disparity between the hourly earnings for full-time and part-time employees and falling returns to part-time work. The earnings ratio of part-time casual workers to full-time permanent workers has fallen from 0.92 to 0.83, that for part-time permanent workers to full-time permanent workers from 0.96 to 0.88 (Whitehouse, 2001: 70). Whitehouse observes that the regulation that formerly attended part-time work (through pro rata entitlements in awards) has altered in favour of arrangements that promote the use of non-standard employment (2001: 69 –70).
This data is not
disaggregated by gender but this limitation is softened by the sharply
gendered nature of part-time and casual employment. Despite the sharply
increased entry of men into part-time and casual employment (Campbell, 2000;
Smith and Ewer, 1999) women remain disproportionately represented
in these forms of employment.
Casual employment, part-time employment, low levels of unionisation and work and family policies
The growth of casual employment is one of the key trends in the evolution of the Australian labour market (26.9 per cent of all employment). While casualisation is growing at a faster rate for men, the detailed pattern of casual employment suggests a sharply gendered phenomenon. In the year 2000:
• Thirty two per cent of employed women are employed on a casual basis - the comparable figure for men is 22.5 per cent;
• Seventy per cent of casuals are employed on part-time basis. Men comprise 71.5 per cent of all full-time casuals while women comprise 66.7 cent of all part-time casuals;
• Eighty four per cent of women and 52 per cent of men employed casually are engaged on a part-time basis;
• Among part-time casual employees 61.4 per cent of women and 46.9 per cent of men have been with their current employer for more than 12 months. These long periods of casual engagement are even more prevalent among full-time casual employees where 58 per cent of women and 64 per cent of women are so employed.
Casual employees, most particularly women, are more likely to be employed in the private sector in small non-unionised workplaces. Forty two per cent of casual employees (compared to 24 per cent of all employees) work in workplaces with less than 10 employees. Only 11.6 per cent of casual employees are unionised.
Concentrating on part-time employment (embracing both permanent and casual part-time employment) reveals the following:
• Seventy one per cent of all part-time work is undertaken by women;
•Forty five per cent of all employment women are employed on a part-time basis;
•Almost thirty per cent of all workers are now employed on a part-time basis. This rate has doubled in the last fifteen years (ABS, 6203.0). The high representation of women in casual and also part-time employment may reflect a degree of ‘self-selection’ but is partly related to the absence of supportive work and family policies at the workplace. The need for supportive arrangements arises because women still have the primary role in child-rearing and household duties.
This issue is also a contested one in the literature. Commentators such as Wooden (1999) assert that the high representation of women in part-time and casual employment, while a function of women’s greater share of family responsibilities also represents self-selection into low paying occupations.
Feminists position the debate somewhat differently and question the degree of choice open to women given the limited spread of work/family responsibilities and the gendered basis of social policy.
More recently the Pay Equity Inquiries in NSW, Queensland and Tasmania have assessed that the skewed distribution of women across part-time and casual work is one of the dimensions of gender-based undervaluation. This arises because areas that are characterised by high levels of part-time and casual employment are also areas of low pay.
Part-time work in the majority of awards and agreements now receives pro-rata entitlements relative to those of full-time employees. However, part-time and casual employment is concentrated at the lower level of organisational and classification hierarchies and part-time employees have lower access to training and limited opportunities for advancement and career development.
Conclusion
The impact of the new equal remuneration principle in NSW will be confined to areas of state award coverage in NSW and will be arguably of grater benefit to women in the public sector given that it is conservative in its ability to take account of market or paid rates. It remains to be seen how the NSW Commission will assess future claims of gender based undervaluation in the absence of agreement by the parties Tasmania (T8413 of 1999) has adopted a principle identical to that in NSW and a new principle has recently been determined in Queensland (B450 of 2002) following the report of the Pay Equity Inquiry in that State (B1568 of 2000). This principle is more expansive than that available in NSW and Tasmania and allows a more proactive role for the Queensland Industrial Relations Commission (QIRC) in satisfying itself that the principle of equal remuneration has been met. The decision followed legislative amendments to the Industrial Relations Act (Qld) 1999 in November 2001. Under these amendments, which flowed from a recommendation by the Queensland Pay Equity Inquiry, the QIRC must ensure that all awards and agreements provide equal remuneration for men and women workers. The principle specifically identifies the features of an industry or occupation that may have contributed to undervaluation.
Thus there is positive news on the scope of the available institutional measures notwithstanding the restricted scope of the new principle in NSW and the lack of any new developments federally. The available measures do though indicate the requirement for unions to construct a comprehensive approach to the assessment of work value if they are to sustain claims of undervaluation. As would be expected this assessment would encompass current indicators of work value and be inclusive of the support of professional and technical associations where appropriate. The framework should also account for the undervaluation of work, an objective that is assisted by an examination of past and present systems of work recognition, credentialing, and work organisation.
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