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Income Distribution: Female/male earnings
The fight for equal pay for equal work was a major issue for women in the 1960s. Under Australia's highly centralised wage negotiation system pay rates for women had been set as a proportion of the adult male basic wage. In 1969 the principle of equal pay for equal work was recognised and followed by the key 1972 decision granting equal pay for work of equal value. Differences between men's and women's wages were greatly reduced as a consequence of a series of decisions on specific awards which followed.1
By the 1980s women were seeking ‘comparable worth’, a concept based on the idea that skill relativities between occupations were based on a systematic undervaluing of women's skills.1 While the comparable worth cases pursued in the 1980s did not succeed, women gained two substantial legislative advances. The Sex Discrimination Act 1984 made (inter alia) both direct and indirect sex discrimination in employment unlawful. The Affirmative Action (Equal Opportunity for Women) Act 1986 required most larger employers to institute active programs to identify and remove all forms of indirect discrimination against women employees.
Through legislative processes initiated in 1991 the general environment for wage negotiations has changed from a centralised wage fixing system to an enterprise bargaining system. Several organisations representing women's interests expressed concerns that this would widen the gender pay differential.2 Initial research has indicated some support for this view from available data.3
FEMALE/MALE EARNINGS RATIOS, MAY 1988 TO MAY 1998
Source: Employee Earnings and Hours, Australia, May 1998 (cat. no. 6306.0).
Levels and trends
The earnings ratio measure which simply compares the weekly earnings of all male and female employees indicates a substantial and persistent earnings gap. The ratio was 0.66 in May 1998, (that is, women on average earned 33% less than men) and showed little change over the preceding decade. However the reasons for this gap do not, in the main, relate to issues of pay equity for equal work but rather to differences in other factors such as: hours worked per week, the types of jobs performed, and to differences in levels of educational attainment. Part of the difference is also related to the fact that women’s working lives are often interrupted as they bear primary responsibility for caring for babies and young children.4,5
When looking at men and women in more closely comparable circumstances, the differences are less marked. For instance, when comparing the ordinary time earnings of adult men and women in full-time non-managerial occupations the earnings ratio was 0.89 in May 1998. When looking at their hourly rates of pay (which allows for the fact that men in ordinary time jobs, on average, work slightly longer hours than women) the ratio was 0.90.
A study of trends in male/female earnings between 1983 and 1994 (see Australian Social Trends 1995, Differences in men's and women's earnings) using the full-time workers ordinary time weekly earnings measure, revealed that the earnings of women relative to men had generally improved - up from 87% to 92% over that period. Since 1994, however, female earnings have drifted back, falling to 89% of men's earnings in May 1998. The same trend is evident when measured in terms of hourly rates of pay - falling from 94% to 90% between 1994 and 1998 respectively.
Components of earnings
The largest component of total earnings is base pay for standard hours worked. However, overaward payments, payments for measured result and overtime can, in various occupations, contribute substantially to earnings. Non-wage benefits, such as leave, and working time flexibility can also be valuable, but their value is hard to measure. It is possible that the value of such benefits may be greater for women than for men.4
In May 1998 the average additional earnings of adult men in full-time non-managerial jobs (to average base pay earnings of $705.50 per week) was $86.70 per week, whereas the additional amount for the equivalent group of women (from base pay earnings of $639.30 per week) was $19.70 per week. Most of the additional earnings for both men and women were due to overtime of which men typically do more than women.6
Notwithstanding the differences in levels of earnings from each component, it is apparent that from the mid to late 1990s (1994 to 1998) women's earnings have slipped relative to men's for each component of earnings. For instance the female/male ratio in average overaward payments, while involving only a small amount, fell from 0.55 in 1994 to 0.44 in 1998.
Differences by age
Earnings are related to skills obtained through education and from direct work experience. Work experience is related to age, and is reflected in the way (as shown for August 1999) average hourly earnings for both men and women went up with age, at least for those aged in their 20s and 30s.
However, the relationship between age and earnings differed for men and women in older age groups. While for men, average hourly earnings increased to a peak among those aged in their 40s, the peak for women was for those aged in their 30s. Associated with this pattern, the difference between female and male earnings, which was relatively small among younger workers, increased with age. The relatively small difference in earnings of young men and women compared to those in older age groups may partly reflect fewer differences in levels of educational attainment (see Australian Social Trends 1999, Educational profile of Australians) and employment opportunities for younger generations of women.
Between 1994 and 1999 the female/male average hourly earnings ratio declined in most age groups. Larger declines than average were evident among employees aged in their 40s and 50s, while more moderate declines were apparent among employees in the 25-39 year age group.
However, there were also some relative improvements for women in some age groups. For those aged 20-24 years and those aged 60 years or older, the earnings ratios increased by .04 and .08 points respectively between August 1994 and August 1999.
Rates of pay differ between occupations. Generally those in high skilled jobs receive higher rates of pay than those in less skilled jobs. Differences in the concentration of men and women within and across broad occupation (and industry) groups affect the overall difference in men's and women's earnings.
In August 1999, differences in average hourly earnings between occupations were similar for men and women, with hourly earnings generally rising with occupational skill level. For both male and female employees, those employed as managers or administrators received the highest hourly rate of pay ($26.87 for males and, and atypically an even higher rate, $28.51 for females). The occupations receiving the lowest hourly rate of pay were different for men and women.
Among male employees, those employed as labourers or related workers were paid least (averaging $13.48 per hour). Among female employees, elementary clerical, sales and service workers received the lowest average hourly wage in August 1999 ($12.48).
For major occupation groups in which most employees were women, female/male average hourly earnings ratios were close to the average ratio (0.89) for all employees. However, earnings ratios varied widely in occupation groups in which males predominated. For example, among trades or related employees (in which women only represented 9% of employees), the female/male earnings ratio was just 0.78. On the other hand, among managers and administrators (where the proportion of women was also relatively low at 21%) women earned on average 6% more per hour than their male counterparts (female/male earnings ratio of 1.06).
With the exception of labourers and related workers, the differences in earnings between young men and women (those aged less than 30 years) were less in each occupation group than they were between older men and women employees. Young female employee managers and administrators commanded 20% more in average hourly earnings than young male employee managers and administrators. Female advanced clerical and related employees aged under 30 years also earned more than male employees of the same age and occupation (female/male earnings ratio of 1.02).
While young female tradespersons or related worker employees had an earnings ratio that was low (0.86) compared to younger females in other occupation groups, the ratio for younger women was still higher than for older women in this occupation group.
From the mid 1980s to the late 1990s the distribution of earnings (among full-time male and female workers) had widened to a greater extent among men than among women (see Australian Social Trends 2000, Trends in earnings distribution). Associated with this trend there is some evidence that the differential between the earnings of younger men and the higher earnings of older men had widened over time.5 As a result, it is possible that the reduced difference between younger men and women may be partly due to a relative fall in male wages, rather than an increase in female wages.
In all cases, in comparing differences among broad groups of occupations, care needs to be taken because of differences in pay rates between occupations within each group. Some researchers argue the full extent of gender earnings differentials can only be assessed at the level of individual jobs.7
As with occupations, women tend to be more highly represented in some industries, and rates of pay vary by industry. There is, however, no clear relationship between female/ male earnings ratios and the proportion of women working in different industries. It is likely that the overall industry differentials are more affected by differences in the occupation mix between different industries.
In August 1999 in health and community services, and education, the two industry groups with the highest representation of women, the earnings ratios were at or below average. These industries have high proportions of occupations traditionally deemed to be ‘women's work’ - for example nurses and teachers. It has been argued (for example, in the comparable worth case for nurses brought before the Commonwealth Arbitration Commission in the 1980s) that the skills needed in these occupations are underpaid compared to the skills used in traditionally male occupations.1
The finance and insurance industry also employs a high proportion of women, though not as high a proportion as health, community and education services. The finance and insurance industry had a very high rate of earnings growth between 1994 and 1999: indeed it is the one industry with more than 50% female employees which enjoyed an above average increase in hourly earnings. The female/male earnings ratio improved slightly, albeit from a very low level of 0.66. This industry encompasses a variety of specific jobs, including a small number of extremely highly paid jobs (such as those involved in corporate floats). At the other extreme, there are many low-paid jobs such as bank tellers and call centre operators.
While there is no consistent pattern to the proportion of women employed in an industry and the female/male earnings differential, there is an observable relationship between changes in average hourly earnings of all employees and the representation of women in different industries. Between 1994 and 1999, the period during which women's earnings have declined relative to men's, average hourly earnings appear to have been rising at a more rapid rate in industries with relatively high proportions of male employees. Of the eight most male-dominated industries (with one third or less female employees), five had earnings increases at least six percentage points above average, and only one (agriculture forestry and fishing) had below-average earnings increases.
Changes in earnings within industries are attributed to a wide range of factors, of which one is the relative strength of trade unions. The traditionally male industries are also among those which are most heavily unionised (see Australian Social Trends 2000, Trade union members). In the new industrial environment in which pay rises are increasingly determined at the enterprise level, the old flow-through of wage increases to less well organised sectors is far more limited.
For the five industries in which the majority of employees were female in August 1999, only finance and insurance industry employees received an above average increase in hourly earnings between 1994 and 1999. No other industry employing 40% or more women had an above average earnings increase in this period.
1 Short, C. 1986, 'Equal pay - what happened?', Journal of Industrial Relations, vol. 86, no. 3, pp. 315-335.
2 See, for example, Department of Employment, Workplace Relations and Small Business 1998, Collective agreement-making under the Workplace Relations Act, January to June 1998: Update to the 1997 Report on Agreement-Making under the Workplace Relations Act, DEWRSB, Canberra.
3 Preston, A. and Crockett, G. 1999, 'State of Pay: Female Relative Earnings in Australia', Labour and Industry, vol. 10, no. 2, pp. 129-146.
4 Wooden, M. 1998, 'Gender Pay Equity and Comparable Worth in Australia: A Reassessment', The Australian Economic Review, vol. 32, no. 2, pp. 157-71.
5 Gregory, R.G. 1999, 'Competing with Dad: changes in the intergenerational distribution of male labour market income', Australian Social Policy, vol. 1, pp. 115-132.
6 Australian Bureau of Statistics 1999, Employee Earnings and Hours, Australia, May 1998, cat. no. 6306.0, ABS, Canberra.
7 Tomaskovic-Devey, D. 1993, 'The gender and race composition of jobs and the male/female, white/black pay gaps', Social Forces, vol. 72, no. 1, pp. 45-76.