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This document was added 01/23/2019.
UNDERSTANDING MEASURES OF THE GENDER PAY GAP
Rate ratio = Female earnings / Male earnings
Percentage gap = 100 x (1 – Rate ratio)%
FIRST… WHAT CAN’T A GPG MEASURE TELL US?
While GPG measures can describe an overall position of women in the workforce, they cannot determine or explain causes of the differences in earnings between women and men.
Where a gap exists, it does not necessarily indicate that a woman is paid less than a man with similar qualifications or experience in a comparable role. The composition of women and men in different industries, different employment arrangements, such as full-time/part-time status and those in casual employment, and rate and type of pay, are all factors that influence the GPG. Some GPG measures therefore attempt to adjust for these factors by specifically referring to certain populations, pay types or pay periods, to put female and male earnings measures onto a more comparable basis.
Consequently, Gender Indicators presents three GPG measures:
These three measures were selected for their suitability in measuring the more common dimensions of the GPG. However, it is possible to use ABS data to produce a number of population, industry, or occupation specific GPG measures, depending on the comparison(s) of interest.
SO WHAT EXACTLY ARE THESE GPG MEASURES?
Non-managerial adult hourly ordinary time cash earnings
In 2018, the rate ratio of female to male average adult hourly ordinary time cash earnings was 0.872, for non-managerial employees; women earned $36.80 per hour compared to $42.20 per hour for men.
This measure is calculated from the Survey of Employee Earnings and Hours (EEH). It is produced every two years and forms the key series of earnings data presented in Gender Indicators.
This measure examines ordinary time cash earnings, which are gross earnings based on the employee’s workplace agreement (footnote 2).
The population for this measure is non-managerial employees paid at the adult rate (footnote 2).
The key strength of this measure is that it accounts for the broad range of employment arrangements in the labour market, and the different hours that are worked. This is important because in 2017–18, 44% of employed women and 16% of employed men worked part-time (See Table 1.9, available from the Downloads tab of this publication), and full-time women worked fewer hours on average than full-time men (36 hours per week compared to 40 hours per week, see Table 1.10).
Another benefit is the exclusion of managerial employees and those not paid at an adult rate, who generally represent the higher and lower earners, and whose inclusion could lead to unusually high or low earning amounts. Consequently, the measure better reflects the bulk of the adult workforce.
Using EEH data also allows median rate ratios and rate ratios by occupation to be produced.
The main limitation of this measure is that it is only available every two years. This makes it less useful for monitoring the GPG on a regular basis.
Adult weekly total cash earnings
In 2018, the rate ratio of female to male average adult weekly total cash earnings was 0.689; women earned $1,099.40 per week compared to $1,594.70 per week for men.
This measure is also calculated from EEH. It is produced every two years and presented as a related series of earnings data in Gender Indicators.
This measure examines total cash earnings, which are gross earnings based on the employee’s workplace agreement, plus any overtime earnings (footnote 2).
The population for this measure is all employees paid at the adult rate.
This measure is an important reflection of economic security as gross weekly pay is directly related to disposable income and superannuation.
Using EEH data also allows median rate ratios and rate ratios by occupation to be produced.
Given the much larger proportion of the female workforce working part-time (44% of females compared to 16% of males; see Table 1.9, available from the Downloads tab of this publication), the pay gap is increased by the inclusion of both full and part-time employees, when calculated as a weekly rate (rather than hourly).
Full-time adult weekly ordinary time earnings
In 2018, the rate ratio of female to male average adult weekly ordinary time earnings was 0.854, for full-time employees; women earned $1,433.60 per week compared to $1,678.40 per week for men.
This measure is calculated from the Survey of Average Weekly Earnings (AWE). It is produced every year and presented as a related series of earnings data in Gender Indicators. The same measure is also used by the Workplace Gender Equality Agency (WGEA) to calculate the ‘national gender pay gap’ featured in their fact sheets and reports.
This measure examines trend estimates (footnote 3) of ordinary time earnings, which are gross earnings based on the employee’s workplace agreement (footnote 4).
The population for this measure is full-time employees paid at the adult rate (footnote 4).
The strengths of this measure are;
This measure omits a large proportion of female employees who, as noted above, are more likely to be employed on a part-time basis.
As a weekly measure reliant on full-time status, this measure does not take into account the variation in the average number of hours worked between women and men employed full-time (36 hours for women compared to 40 hours for men; see Table 1.10, available from the Downloads tab of this publication).
An important consideration when interpreting this measure is in the differences in age for full-time employees, and in particular that earnings generally increase with age. The percentage of employed women who work full-time hours peaks in the late 20’s age group (at around two-thirds of employed women in 2017-18). This percentage drops to between 54 and 61 per cent, up to the age of 60 years. Employed men, by comparison, do not experience the same changes, with the percentage employed full-time remaining at around 90 per cent for the majority of working years.
Restricting the population to full-time employees only, therefore gives greater weight to younger women earners and their influence on the size of the GPG.
Figure 1 - Percentage of female and male employees working full-time hours by age, 2017–18 (a)
Footnote(s): (a) Data averaged using 12 months in the financial year.
Source(s): Data available on request, Australian Bureau of Statistics, Labour Force Survey, Australia, cat. no. 6202.0
SO HOW DO GPG MEASURES COMPARE OVER TIME?
Figure 2 below shows how each measure has been tracking over the last decade and how they compare to one another. Whilst each measure presents a different perspective on the gender pay gap, it is clear that each measure is showing a similar trend.
Figure 2 - Mean female to male earnings rate ratios, selected sources, 2008 to 2018 (a)
Footnote(s): (a) Data only available for even years for the Non-managerial adult hourly ordinary time cash earnings series and the Adult weekly total cash earnings series.
Source(s): Data available on request, Australian Bureau of Statistics, Employee Earnings and Hours, cat. no. 6306.0; and Australian Bureau of Statistics, Average Weekly Earnings, cat. no. 6302.0
The ABS presents ‘Non-managerial adult hourly ordinary time cash earnings’ as the key series in Gender Indicators. It represents most employed people and allows direct comparisons to be made (i.e. employed women were paid 12.8% less per hour than men, on average).
The ‘Full-time adult weekly ordinary time earnings’ measure is used by WGEA. Given the consistency shown between each measure, this provides a more frequent and stable method to show ‘whether the gender pay gap is closing over time’.
It is important to note that over the past decade there has been little change in the gender pay gap. Since the measures are based on survey data, which always have an unavoidable and inherent level of sampling variability (footnote 3), the ABS recommends caution in focusing on very small period-to-period movements in the EEH and AWE data, and in the corresponding GPG measures.
DATA SOURCES FOR GPG MEASURES
The ABS collects earnings data across a number of household and business collections. Gender Indicators features GPG data based on two collections:
Survey of Employee Earnings and Hours (EEH)
The EEH is conducted every two years and designed to provide detailed statistics on the composition and distribution of employee earnings, hours paid for and the methods used to set employees' pay.
Information is collected using a sample survey at both the employer and employee level. Characteristics of both the employers (such as industry and sector) and their employees (such as occupation, employment arrangement, and method of setting pay) are obtained. The statistical units of this collection are employees.
As information is collected at the individual employee level, it is possible to derive measures of distribution (e.g. medians, deciles, earnings ranges) and provide some information on individual characteristics of employees based on data items collected.
Survey of Average Weekly Earnings (AWE)
The AWE is conducted biannually, with reference to May and November each year, and information is collected using a sample survey of employers. The statistical unit produced by the collection is employers.
The AWE collects total earnings that employers pay to their employees, and the total number of employees in the business.
The measure of GPG is calculated by dividing aggregate estimates of weekly total earnings by estimates of the number of employees, which means that distributional measures are not able to be calculated, or factors such as the composition of the labour force. Variations in the rates of full-time and part-time employees are able to be controlled for.
DIFFERENCES IN SCOPE BETWEEN EACH GPG MEASURE
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