70 YEARS UNTIL PAY EQUITY? WHY IR MATTERS

Conference - IR: Back to the Future?

Paper by Commissioner Dominica Whelan

Australian Industrial Relations Commission

Friday, 15 April 2005, Melbourne

A Matter of Rights

[1] Pay equity for women is a right. It is a right recognised by the United Nations Convention on the Elimination of All Forms of Discrimination Against Women as a fundamental human right. It is a right recognised by the International Labour Organisation Convention Concerning Equal Remuneration for Men and Women for Work of Equal Value as both a collective and an individual right of working women.

[2] Those conventions require the countries that ratify them, and Australia is one, to take action to implement those rights. In Australia that action has involved, at both the state and federal level, legislation to implement pay equity through both industrial relations regulation and anti-discrimination or equal opportunity statutes.

[3] There are essential differences between industrial relations regulation and equal opportunity/anti-discrimination legislation which lie in their purpose and the remedies they provide. The purpose of industrial relations regulation is to establish new rights and obligations that determine the conditions of employment for a class of persons in a particular occupation, workplace or industry. The purpose of equal opportunity regulation is to enforce the rights established by the legislation by redressing past wrongs and compensating individuals who are able to establish that they have been discriminated against.

[4] Pay equity is an issue that impacts on individual employees. It is also, however, a matter which effects whole groups of employees because of their occupation, their employment status, the industries in which they work and their gender.

[5] Primarily, in Australia pay equity has been pursued through industrial relations mechanisms. Access to those mechanisms has historically been the most effective way to advance pay equity for women. In Australia between 1970 and 1985, principally as a result of the 1972 Equal Pay Case1 the relative rate of pay for women increased by about 30 percent2. Between 1969 and 1976 the female - male wage gap narrowed by about 17 percentage points3.

[6] The impact of the 1972 Equal Pay Case cannot be underestimated. It can still be seen in the fact that Australia's gender pay gap is not as great as that in many other OECD countries where the benefits of centralised systems of wage fixing have not traditionally existed4.

Pay Equity in Britain

[7] Britain, for example first introduced an Equal Pay Act in 1970. It did not and never had had a system for establishing a national minimum wage until 1999. Although between 1903 and 1993 there had been Wages Councils that set minimum rates for particular occupations in low paid industries, these never covered more than about 17 percent of the workforce5. The Equal Pay Act 1970 was progressively implemented over 5 years. Between 1970 and 1975 it helped lift female wages up to around two thirds of male wages6. By 1982, however, the ILO noted that this initial increase had been significantly eroded and in many predominantly female occupations wages had fallen to pre-1975 relative wage levels7.

[8] The UK Equal Pay Act 1970 was essentially an individual rights model based on a claimant establishing that by comparison with a man (or men) doing like work with the same employer she was entitled to, and was not receiving, equal pay.

[9] In 1998 the UK labour market had one of the largest gender pay gaps in Europe. In that year the British Government set up the Low Pay Commission (which is not a panel of economic analysts but a body with members drawn from British industry and Trade Unions as well as industrial relations academics). Since 1999 that body has recommended, and the government has accepted, firstly the introduction of and then annual increases to a national minimum rate.

[10] In its February 2005 Report, the Commission noted:

1. That two thirds of the beneficiaries of the 2004 rise in the minimum wage were women.

2. That there was clear evidence that the minimum wage had had a major impact in narrowing the gap between the pay of women workers and that of men at the lower end of the earnings distribution.

3. That, while female full-time workers had made significant progress in closing the earnings gap with full-time male workers, the same was not true of female part-time workers8.

[11] The Commission also noted that the minimum wage had not harmed job prospects for women, with the unemployment rate for women falling and the female workforce participation rate rising since 1999. They attributed the position of part-time women primarily to the fact that part-time work is more readily available in low-paying occupations.

Where is Australia Heading?

[12] Industrial Relations regulation has the capacity to advance the cause of gender pay equity for significant sectors of the workforce. As a result of Pay Equity Inquiries in New South Wales and Queensland the industrial tribunals in those states have developed pay equity principles which go beyond the approach to equal pay adopted by the 1972 Equal Pay Case and provide for claims to be made for whole occupational groups based on the undervaluation of work in traditionally female occupations. The Tasmanian tribunal has adopted a similar principle and a recent Inquiry in Western Australia has made similar recommendations.

[13] In Victoria, industrial relations are regulated by the federal Workplace Relations Act 1996. Since 1993 the Australian Industrial Relations Commission has had the power to make orders requiring the payment to women workers of equal remuneration for work of equal value. No successful application has been made for such an order. The provisions in the Act are complex and uncertain in their application. The procedures are contestable and the process is hardly user friendly. The Report of the Victorian Pay Equity Working Party has recommended that the federal legislation should be reviewed and the provisions brought into line with those accessible to employees covered by the Queensland legislation.

[14] Industrial relations regulation is, of course, not the only avenue that can and should be used to address pay inequity. The reasons why part-time female employees in Australia for example, as in Britain, are worse off than full-time female employees are not entirely due to problems associated with industrial regulation but relate to the nature of the jobs which are available on a part-time basis and the lack of access by part-time employees to training and promotional opportunities.

[15] The future of industrial relations regulation in Australia is uncertain. Over the last 20 years and particularly the last 10 there has been a substantial movement away from centralised wage fixation. A number of the changes now being mooted could have a significant effect on pay equity for women and may put that objective back once again.

Future IR Regulation and Pay Equity

[16] Currently the federal government is considering using the corporations power in the Commonwealth Constitution to bring all corporations under the Workplace Relations Act. Should this occur women employed in corporations currently covered by state awards in New South Wales, Queensland and Tasmania would lose the capacity to bring cases under those states' pay equity principles. If, as it appears, the current federal provisions are more restrictive in their application this would reduce the capacity to address pay inequity through the industrial tribunals.

[17] Women are significantly more dependant on award wages than men. Nearly one third of women workers are entirely dependant upon award payments compared to 17% of men9. Any changes to the minimum wage that reduce its relativity to full-time median earnings would therefore be likely to increase the gender pay gap.

[18] There is an assumption, held by some, that people in low paid jobs are low skilled. That assumption is clearly not always correct. Many women are in low paid jobs, not because they are low skilled but because their skills are undervalued e.g. childcare workers. Further many women, because of other commitments need to work part-time. There are very few high skilled jobs available on a part-time basis. A lower minimum wage will not, therefore, necessarily improve workforce participation by women.

[19] It has also been proposed that skills based classification structures be removed from awards. Such structures provide for rates of pay, above the minimum adult rate, based on skill and enable employees to progress through the pay structure by acquiring additional skills. They have also enabled comparisons to be made across industries and occupations between employees having the same or equivalent skills. The first case brought under the New South Wales equal remuneration principles, for example, looked at the design of classification and grading structures under the award as well as the gender related undervaluation of the work of librarians and related occupations10. In doing so the Commission was able to compare the work, skills and classification structures covering employees in a male dominated occupation, geologists.

[20] In the absence of wages rates based on skill and given their greater dependence on award wage rates it is likely that women would find it harder than men to obtain any wage level higher than the minimum rate. The absence of classification structures would also mean that the ability to address pay equity through reclassification of jobs would be unavailable and would potentially make it harder to establish that jobs were of an equivalent value.

[21] Industrial relations regulation has the greatest capacity to affect the best outcomes for the greatest number in achieving the goal of pay equity. If the goal of equity is no longer capable of being achieved under industrial relations laws, however, then we must look for alternatives.

[22] The Victorian Pay Equity Working Party has supported changes to the Equal Opportunity Act, such as the capacity to bring representative complaints, non-complaint based investigations and other pro-active measures to enable a greater capacity to achieve pay equity through these mechanisms.

[23] One thing that became quite obvious to the Working Party in its deliberations was that there is not only one way to go in seeking to achieve pay equity. It is not a problem with a single cause and therefore it is not a problem with a single solution. Further not all of the solutions are regulatory.

[24] We must be inventive, imaginative and collaborative in the way we approach achieving pay equity for women. IR still matters but we would be wise not to place all our pay equity eggs in the IR basket.

1 National Wage and Equal Pay Case (1972) 147 CAR 173

2 R.G. Gregory and V. Ho ` Equal Pay and Comparable Worth: What Can the U.S. Learn from the Australian Experience?', Australian National University Centre for Economic Policy Research, Discussion Paper No 123, July 1985.

3 Ibid. In 1969 the Australian Industrial Relations Commission had first adopted a principle of `Equal Pay for Equal Work' in cases where men and women were doing the same work, Equal Pay Case (No 1) (1969) 127 CAR 1142.

4 R. Dale, M. Smith, F. Macdonald and S. Bingham ` Pay Equity: How to Address the Gender Pay Gap', URCOT, February 2005, p.29.

5 A McColgan, Just Wages for Women, 1997.

6 A. Zabala and Z. Tzamatos `The Effect of Britain's Anti-Discrimination Legislation on Relative Pay and Employment', Centre for Labour Economics, London School of Economics, Discussion Paper No 155, May 1983.

7 McColgan, above n 5, 94.

8 National Minimum Wage, Low Pay Commission Report 2005, p.79-80.

9 Advancing Pay Equity - their future depends on it, Report by the Victorian Pay Equity working Party, February 2005, p.3.

10 Re Crown Librarians, Library Officers and Archivists Award (2002) 111 IR 48.