For everyone The Law & You: Solving the gender pay gap

Women should not be paid less than men, it is that simple – and yet, the gender pay gap remains a complex area for legislators.

Despite the equal pay principle being introduced federally more than 50 years ago, the gender pay gap persists – with a new report finding that gender discrimination remains its single biggest driver. The 2022 report, She’s Price(d)less, prepared for the Diversity Council Australia (DCA) and the Workplace Gender Equality Agency (WGEA) reveals that this gap costs Australian women more than $50 billion a year.

The factors that affect the gender pay gap are complex. These include gendered assumptions about the role of women, resulting in the majority of primary unpaid caring responsibilities still being undertaken by women; the concentration of women in award-reliant employment with weakened bargaining power; the disproportionate participation in part-time and casual employment leading to fewer opportunities for skill development and advancement; and women receiving lower levels of discretionary payments such as bonuses and commissions.

Women in Australia earn less than men in every age group. WGEA calculates that, on average, women earn $255.30 or 13.8% less each week than men. The biggest gap occurs at age 55, where men out-earn women by 32%, or more than $40,000 on average per year. The She’s Price(d)less report found women in education earn an average $6.33 less per hour than their male counterparts.

While women aged 35 and under are reaching management roles at equal rates, they will earn just 70% of the wages earned by their male contemporaries by the time they reach age 45 if the current pay gap continues. The disparity occurs as men predominantly remain working full time, whilst by age 35 the majority of women are in part-time or casual roles.

The biggest gap occurs at age 55, where men out-earn women by 32%, or more than $40,000 on average per year.

Women working part time are further affected by a loss of professional opportunities, as higher-paid management roles are effectively reserved for full-time workers. There are, for example, few principals employed on a part-time basis. The She’s Price(d)less report found the share of management positions held by women in the education sector was disproportionately lower than their participation in the industry – 70% of the workforce is comprised of women, but their share in management positions is only 53%. The gap widens with seniority.

Women also remain disadvantaged when it comes to superannuation. The super gap starts early, but the biggest shift occurs at 28 – when many are starting a family. The combined impact of time out of the workforce and then returning part time (which slows career progression and future earning potential) is known as the superannuation ‘double penalty effect’.

Female-dominated care sectors such as early childhood and disability services are even more affected, due to being grossly undervalued and underpaid. Workers in these sectors also face greater job insecurity and insufficient workload protections, leading to high staff turnover, over-work and other workplace pressures.

Equal remuneration orders (EROs) were introduced to redress this inequality. An ERO can be made by the Fair Work Commission (FWC) where an employee is being paid less because of their gender. However, these are costly, highly adversarial, can take years to pursue, and have been generally ineffective. Since 1994, there has only been one successful equal pay order out of 21 applications.

What is being done to solve this?

The newly elected Labor government has established the Department of Employment and Workplace Relations, and Industrial Relations Minister Tony Burke has announced that closing the gender pay gap is a “top priority”. Burke has hired Sophie Ismail – a fierce advocate and leading lawyer in this area – to advise him.

Labor has committed to making gender pay equity an object of the Fair Work Act, and to making it easier for the Fair Work Commission to order pay increases in low-paid, female-dominated industries through a statutory equal remuneration principle. This would require the FWC to be satisfied that any proposed agreement features equal remuneration for work of equal or comparable value.

The new government will consult relevant parties, including unions, on achieving faster and more cost-effective ERO resolutions. It will also establish two new Expert Panels in the FWC – one for Pay Equity and one for the Care and Community Sector. It will also introduce legislation that requires large companies to report their gender pay gap publicly, and prohibits pay secrecy, so employees will have the right to disclose their salaries. This will benefit women, who are more likely to undervalue their skills and contributions in wage negotiations.

The AEU and its members will continue our efforts to keep the federal government accountable and help ensure these polices to address gender inequality are enacted.

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