Factors that contribute to the pay gap in Australia and why the difference is more significant in some industry sectors than others.
The labor market is composed participants who are basically men and women. The rewards of the labor market are wages. The concept of wages is complex and has to be considered critically by employers. One of the greatest concerns in the labor market has been the disparities in the mean income between men and women. Differences between wages received by participants in the labor market is measured by the gender pay gap. The differences arises due to various aspects that differ from one organization to the next (Cohen 2007). In Australia for example, the wages pay gap is computed on the basis of full-time weekly earnings excluding overtime and salary sacrificed pay. Currently, the wage pay gap in Australia stands at 17.5%. The gap has been fluctuating with small margins but the figure has remained unchanged overtime. Differences in income levels of men and women are, for this reason, an important economic and industrial aspect worth consideration.
In order to address the disparities in the pay gaps, it is important to examine the possible reasons as to the existence of remuneration differences between men and women. Why does the difference exist? Well, the answer to such a query is often critical and complex. However, the real explanation is the fact that there exist a range of factors responsible for the occurrence of the pay gaps. These factors range from historical, social, behavioral and labor market factors (Clark & Drinkwater 2007). These factors have collectively have led to pay gap differences. More often than not, the causes of gender pay gap are usually intertwined and related. In this view, it can be noted that women have been the primary victims of scanty pay. Most of the women earn less than the men. This has been the same case with Australia. Several factors that have been contributive to the existence of pay gaps include:
Gender discrimination is evidenced when one sex is treated unfairly. There are two categories of gender biases: direct and indirect sex discrimination. Direct discrimination is conspicuous and openly practiced with unfairness leveled against a particular person on the basis of sex. The existence of different plans and choices in education, jobs and family are instituted in favor of men and against women constitutes indirect discrimination (Rodgers & Rubery 2003). Indirect biases can also be seen in the case where preference is considered in the selection of careers designed for men while the low paying and undervalued jobs are designed for women.
In some organizations, gender is usually a great determining factor in order to fit in a given career and do certain errands. Many are the speculations levelled against the job profiles and professions that best suit the women and men in the labor sector. Others have it that women should only carry out specific chores while the heavy and professional jobs should be left out for men. These assumptions bring about the decisions made when applying for jobs. Nevertheless, these suppositions are the main cause of extended gender pay gaps.
In a study conducted by NATSEM, it was estimated that 60% of the pay differences arose as a result of gender biases as well as other related factors brought about by female-oriented factors. In actual sense, it is estimated that seventy to ninety percent of the Australian managers working on a full time basis have huge pay gaps and the variation in the income levels is not as a result of personal, work experience, family or industrial factors as well (Clain & Leppel 2001). It is however postulated that 70% of the gap is due to factors associated with being a ‘female.’
However, in recent surveys, women who represent 50.2% of the Australian population and 45.3% of the national workforce saw the number of the female workforce surge steadily especially in the year 2012. In 2008, for example, the female population that enrolled in tertiary education in Australian Universities accounted for approximately 55% of the total student population. In addition, in the labor market, the finance industry has the widest wage gap that accounted for about 32.2% of the mining sector following closely with about 27.2%.
The balance between the paid and unpaid work undertaken by men and women in their lifetime. Notably enough, women still take social tasks without compensation in the society. Low payments obtained from undertaking such tasks affects the development and occupations of women. This is because, it leads to other errands being seen as ‘family-friendly’ as compared others (Mitra 2003). Whenever women who are mostly associated with the ‘family-friendly’ chores take a break or even attempt to work part-time, this only reduces their already meager pay.
However, this leads to a negative effect on their long term working since they may never realize their long term earning prospects. Studies have shown that the wage penalty for women increase the more they are on maternal leave. Upon resuming work, women receive a pay cut of upto 5% in the initial years of their work (Rubery 2003). In case they decide to go back to work after three years, their wages are expected to drop by ten percent.
The industries in which the women work is different from that of men. According to Anderson, Forth, Metcalf & Kirby (2001), the industries in which women work is usually under-valued. Women are located mostly in service industries that offer substandard pays. Even with an increase in women participation in the labor market, there has been a big difference between the industries where men work and where women work. In determining the wage level, the type of industry is of great importance as it is a critical factor in setting the wage levels. The clustering of women in a particular industry only widens the gap.
As an example, a good comparison to undertake would be that one of mining and retailing. One of the best paying industries include the mining firms. The percentage of women working in the mining industry account to about fifteen percent. In the retail industry, women account for about 57%. Notably enough, the retail industry is among the poorest paying industry in the market. Men in the retail industry account for only 40%. From this analysis, it is evident enough that the pay gap is significant enough and reduce the pay gap; it would require to redistribution of women and men across both industries (Swaffield, 2000).
The setting of pay-rates. The pay rates for women are usually undercast and hence they are left without much to budget on. According to Miller (2005), occupational segregation can best be seen to occur in the scenario where women are over-represented in other industries while they are poorly represented in other sectors. Examples of industries where women are over-populated include occupations with clerical and administrative work by what women occupy 75% of the total workers in the industry. Additionally, women hold 68% in the community and personal service work industries. In the sales industry, women hold approximately 68% whiles in the professional business industries women take up the portion of about 52%.
The fact of whether occupational segregation primarily causes pay gap differs from one study to another. Other studies do not appreciate the fact that occupational segregation is a causal factor. According to Smeaton, & Vegeris (2009), occupational discrimination is a great cause of increased gender pay gap.
Undervaluation of expertise of women.
Inadequate permanent part-time jobs as well as resilient working arrangements. Women are adversely affected by this fact bearing in mind that they are required to combine quality employment with family care responsibilities. Women having dependent children face this challenge and cannot maximize their current and future earning potentials.
From time immemorial, women related work that primarily entails social welfare work, as well as other community work, has been undervalued and seen not to be of great importance and value. These roles have been perceived as inferior not requiring any skill of expertise and due to this; they have been regarded as low class (Anderson, Binder & Krause 2003). This has directly translated to their pay-wage. Women who do such tasks are paid poorly. In the real sense, social work which is termed by others as inferior greatly requires expertise and professionalism. The ability to apply hospitality skills is not simple.
Down the history of Australia, it is evident that the jobs regarded associated with women were demeaned. It reflects the perceptions and beliefs held in the past. The mismatch of jobs appropriation in the former award and pay systems led to under-valuation of jobs and poor payments too. However, with time, ‘women errands’ have transformed immensely. The social as well as the economic structures of men and women in the Australian industrial system has also changed significantly (Thewlis, Miller & Neathey 2004).
Religious beliefs pay gaps.
In certain religions, the gender roles of men and women are usually considered significant (Walby & Olsen 2002). In the Muslim faith, for example, there exist a wide religious pay gap between the Muslim men and women.
The determination of wages differs from one organization to another. There exist several wage setting methods. Payments are set according to awards, collective, individual agreements as well as number of employees as well. The means of setting the pay rates has a direct effect on the difference in the wage rates. For example, full-time workers earn more than those working on part time basis. Average weekly payments set on an individual basis after negotiations between the employer and employees are greater than the already ‘set pay’ (Karamessini, & Ioakimoglou 2007). Additionally, individual and collective wage agreements for men are usually higher than that of women. The difference in earnings, however, is less in the scenarios by what awards pay employees.
When federal or legal institutions set the fee, the pay rates can be seen to be relatively equal. In an individual survey, it was found out that when agreement set pay rates, the pay gap was about 15.8%. In case the pay rates are set through individual agreements with the employer, the gap increased to 20.2% while if the pay rates were determined through awards; the pay gap reduced to 1.7%.
Overpopulation of the women population in the casual and non-career part time jobs. These jobs are best described as non-formal jobs. They offer low wages and have little employment opportunities in terms of job security, training, development and career progression. In industries with both workforce of men and women, the women’s work is usually undervalued with the men’s work being highly valued due to technicality issues and complexity of the jobs.
Does the gap matter? How can the gap be closed?
To bridge the men and women wage gap equity should be embraced. Gender equality has to embrace since fairness and equity cannot be achieved while discriminating one group from another. Work opportunities as well payment rates should not be based upon gender. Closing the gap will undoubtedly improve the economy of Australia (Grimshaw, & Rubery 2001).
In actual sense, reducing the deficit by 1% point increases the GDP by 0.5%. Additionally, the introduction of flexible working agreements reduces the gap between men and women earnings and potentially increases the country’s GDP by 9%. On a business level, organizations that employ workers fairly without discriminating on the basis of gender stand to gain talented staff, as well as an increase in the staff morale and motivation (Agesa & Monaco 2006). The increase in motivation and morale in turn leads to the rise in productivity.
Removing the barriers that prevent women from exploring job opportunities expands the pool of talented staff through tapping the talents and skills from both genders. Essentially, reducing the shortage of competencies is essential especially at a time when the economy requires technical and economic boost. Increase in skill diversity leads to improved performance as the relationship between the financial performance of the company, and the gender are positively related. Nevertheless, the formation of policies of gender equality especially in the recent times has helped change the composition of the labor force in many organizations.
Companies are failing to adhere to these legislation risks being prosecuted in legal claims. These could be time-consuming as well as expensive on the part of the enterprise. Additionally, setting wages on a discriminatory basis may lead to prosecutions on the part of the business. In order to bridge the pay gap, organizations should consider doing the following:
Carrying out a gender pay gap research
An organization in operation and carrying out the normal business operations should perform an analysis as to whether they are discriminating on the basis of sex. It should do this on a regular basis. It may conduct an analysis of the payrolls. Jobs that are similar in profiles can effectively be organized into one category and the payment scales determined. In case of wage disparities, the organization will identify on the best means of sealing the gaps and any unjustifiable gender pay gaps will hence be solved.
Organizations should be in position of comprehending about the existence of pay gaps. This is essential as it will help in the making of policies as well as decisions that do not infringe on the principles of fairness and equity.
It is the onus of an enterprise to examine the payment policies. The corporation through the board of directors should put into place policies that completely abolish gender biased policies. This can be done through setting policies and ensuring that the board of directors in the organization puts it into practice.
Reviewing the human resource policies and procedures regarding recruitment.
It is not only essential to ensure that the human resource policies do not conflict with the equity principles but also to ensure that fairness and justice is practiced across all departments within the organization. Uniform recruitment procedures should be adopted by the company. Promotions should also be done fairly.
In conclusion, women should be in the forefront to forward their grievances in case they cite instances of gender discrimination in the company. Men should also rise and support the women too. It should be a collective effort conducted by both women and men in a bid to end gender discrimination. It goes without saying that, by abolishing gender discriminative laws and legislation, the economy as well as enterprises stand to increase in profits and productivity as well. What’s more? In the current world today, the practice of gender discrimination has become otiose, and it is no longer considered as a determining factor especially when applying for jobs. Women have advanced in intellectual knowledge as this can be witnessed by the fact that they are the majority in the universities and colleges. When enterprises organizes for appraisal schemes, women should also be included as this will give them the motivation to work even better (Daly, Meng, Kawaguchi, & Mumford 2006). For this reason, organizations should be hell-bent at focusing on the productivity and performance expertise of personnel’s across both genders. The government, in this case, has an enormous role to play. It is the onus of the government to conduct an independent audit of payrolls and also investigate whether the rules and regulations set are being followed strictly.