Women’s Policy Action Tank: The gender pay gap persists due to an incorrect framing of the problem

Scorecard on Women and Policy provided by Fiona Macdonald, Centre for People, Organisation and Work, RMIT University

Topic:  Federal policies: Fair Work Act 2009; Workplace Gender Equality Act 2012

Sub-topic: Equal pay in workplace and industrial relations policy

In 1995 the gender pay gap in Australia stood at 16.2 per cent.  In 2015, despite targeted policies to redress this inequality, the pay gap had actually risen, to 17.3 per cent.[i] In this analysis, Fiona Macdonald dissects these policies.  She explains how the representation of the gender pay gap problem is both faulty in places and too narrow in others to correct this persistent injustice.

The Fair Work Act and gender-based undervaluation of female-dominated sectors

In Australia the industrial relations sphere has been the main site of intervention in respect to equal pay for women. At the present time a concern to address unequal pay is embedded in key wage-setting mechanisms in the Fair Work Act 2009, and this legislation also gives the industrial tribunal, the Fair Work Commission, the power to ‘make any order it considers appropriate to ensure that, for employees to whom the order will apply, there will be equal remuneration for work of equal or comparable value’ (s301[1]).

The existence of these broad provisions in the Fair Work Act suggests there is a recognition of the problem of unequal pay as a systemic problem of industry and occupational segregation and the undervaluation of women’s work. Indeed, in making their decision in the successful 2012 Social and Community Services (SACS) equal pay case, the Fair Work Commission accepted unequal pay as a problem of gender-based undervaluation of female-dominated jobs. However, since then, in a case concerning childcare workers’ pay, the Commission has rejected the approach taken in the SACS case and has reintroduced a requirement to have a male comparator against which pay can be benchmarked. This appears to be a step backwards towards earlier approaches when little progress towards equal pay was made through industrial tribunals.

Unequal pay a problem of unfair reward for work

The Fair Work Commission has demonstrated a reluctance to allow the goal of equal pay to challenge the dominance given to the market as the main determinant of wages in the industrial relations system. Even in the SACS case ‑ which resulted in some significant pay rises for Social and Community Services workers ‑ the Commission explicitly rejected a representation of the problem of unequal pay as a problem of actual reward for work, confining it to a problem of inequity between minimum weekly rates of pay specified in industrial awards. That most of the feminised SACS workforce were employed on or just above the award safety net wage rates and that these workers had been unable to gain pay increases through collective enterprise bargaining were not parts of the problem as it was represented by the Fair Work Commission.

Under the Fair Work Act the Fair Work Commission is also required to have regard to equal remuneration in undertaking annual wage reviews and reviews of Modern Awards. However, the Commission ‑ and most employers and many trade unions making submissions – has tended to give cursory or no attention at all to equal remuneration in these reviews, excluding it from proper consideration by suggesting it is better dealt with through specific equal pay applications (such as that made by the union leading to the SACS case).

Workplace gender inequality framed as ‘an impediment to competitiveness and productivity’

The other main federal policy mechanism for addressing unequal pay is the Workplace Gender Equality Act 2012 (WGE Act). The WGE Act, which requires large non-government employers to report against a framework of ‘gender equality indicators’, has been seen as an improvement on its predecessor, the Equal Opportunity for Women in the Workplace Act 1999, as there is now a stronger focus on outcomes. The WGE Act requires non-government employers with 100 or more employees to report against a set of standardised gender equality indicators (GEIs). In the WGE Act unequal pay and, more generally, workplace gender inequality, are represented as impediments to business competitiveness and productivity. This representation sets up the equal pay goal as a goal that must be in line with, or else balanced against economic efficiency goals. This has played out strongly in arguments made by industry groups who have successfully sought to reduce the compliance burden of WGE reporting. It is also reflected in the weak minimum standards set for reporting on equal remuneration and which apply only to organisations with at least 500 employees.

Pay equity remains elusive due to the narrow representation of the problem

A Pay Equity Inquiry held in 2008-2009 produced an analysis of the problem of unequal pay that linked it to a broad range of factors including, for example, women’s historical lack of bargaining power and industrial representation, their over-representation in part-time and casual employment and systemic gender segregation. These factors are clearly within the scope of employment and workplace policy and legal frameworks but have not been present in the narrow representations of the problem of unequal pay. Amendments to the Fair Work Act to establish equal remuneration as an objective of the Act and the strengthening and broader application of minimum standards in the WGE Act are important changes that could be made to address the marginalisation of equal pay in current policy.

This analysis draws heavily on Macdonald, F and Charlesworth, S (2013) 'Equal Pay under the Fair Work Act 2009 (Cth): Mainstreamed or Marginalised?' University of New South Wales Law Journal, 36: 563-86. A pdf of the article is available here:  http://www.unswlawjournal.unsw.edu.au/sites/default/files/7_macdonald_charlesworth_unswlj_362.pdf

This analysis is a contribution to the Scorecard on Women and Policy project, initiated by the Women's Policy Action Tank.  We invite policy specialists in all areas to provide analysis of public policy using a gender lens:  womenspolicy@goodshep.org.au  Follow us on Twitter: @PolicyforWomen

[i] See Gender pay gap statistics, Workplace Gender Equality Agency, published March 2016, p. 4.  A pdf of the report is available here:  https://www.wgea.gov.au/sites/default/files/Gender_Pay_Gap_Factsheet.pdf