THE GENDER PAY GAP:

ASSESSING POSSIBLE FUTURES IN THE POST-INQUIRIES ERA

Conference - University of Western Australia, Perth

Paper by Commissioner Dominica Whelan

Australian Industrial Relations Commission

Friday, 29 April 2005

Where We Are

[1] `In 1972 the Australian Conciliation and Arbitration Commission granted men and women the same minimum wage. In theory, then, women in Australia have finally achieved the right to equal pay. In practice, the principle of `equal pay for equal work' is still `abstract justice' rather then `practical politics'. Many factors, such as the segregation of women into female-only occupations, the application of the principle to the minimum wage and not to overaward payments, and discrimination in education and job training, have contributed to the fact that for many women equal pay is just not a reality.'1

[2] That is the opening paragraph of a paper which I gave to an Australian Political Economy Conference in 1978. In the last 27 years we have defined the causes of wage inequity more precisely. We have measured the gender pay gap against a whole range of variables. We have accounted for the different factors that contribute to the reality that women are still being paid less than men. We have satisfied ourselves that accounting for all those factors discrimination still lies at the root of wage inequality. But in some ways, after the initial gains (the wage gap narrowed by about 17 per cent between 1969 and 19762) we have made little progress in making equal pay a reality for many women.

Where We Have Come From

[3] The implementation of the 1972 Equal Pay Case occurred over a period of time. For the most part it involved very little examination of the value of the work being performed by women. Most award variations were by consent,3 in some cases involving little more than the transfer of all female workers to the lowest-paid classifications in the male scale.4 Later, despite the failed attempt to introduce the concept of `comparable worth' into Australian industrial jurisprudence5 gains were made for women, particularly those in professional occupations through the use of the Federal Commission's `anomalies and inequities' principle and `structural efficiency' principle which enabled different occupations to be compared on the basis of comparability of qualifications as well as standard work value factors.6 The `minimum rates adjustment' principle introduced in August 1989 took this one step further when an attempt was made to establish comparable minimum rates of pay across all federal awards based on classification structures which set rates by reference to relativities to a metal industry tradesperson.7

[4] The limitations of approaches such as these to closing the gender pay gap were twofold. They could not address rates of pay above the award minimums and they essentially did not challenge the undervaluations of female dominated occupations except by reference to tertiary-based qualifications. In 1992 the Human Rights and Equal Opportunities Commission issued a report of an Inquiry Into Sex Discrimination in Overaward Payments.8 The Inquiry found that it was likely that broadly based overaward differentials reflected practices which constituted direct and indirect discrimination on the basis of sex. There was little under the Sex Discrimination Act, however, that the Commission could do to redress this.

[5] In 1993 the Federal Government attempted to address the problem of the gap between equal pay - being the minimum award rate for the job - and equal remuneration through amendments to the then Industrial Relations Act 1988. These changes were substantially replicated in the 1996 Workplace Relations Act.9 They have been notoriously unsuccessful in achieving their objective. The provisions are complex and uncertain in their application. The actual powers of the Commission, the capacity to use the provisions in conjunction with other provisions in the Act, application of orders to whole industries and the ability to look behind previous work value assessments are all open to challenge. The procedures, the definitions and the approach to being taken are contestable and the process could hardly be described as user friendly. It is little wonder that in 12 years not one order has been issued.

[6] Until the late 1990s action in pursuing pay equity was lead through the federal industrial commission. Commencing in 1998, various states, initially through their state industrial tribunals, have now undertaken inquiries into pay equity for women. Some progress has been made through the adoption in New South Wales, Queensland and Tasmania of `pay equity' or `equal remuneration' principles that appear to offer greater scope for the tribunal to examine historical undervaluation of women's skills in assessing the work value of occupations traditionally the domain of women workers.

[7] In Victoria, also, the Government in 2004 commissioned an inquiry into pay equity that reported in February this year. A copy of our report is available to conference participants. Unlike the other states we were not in a position to consider changes to state industrial legislation or to the principles that a state tribunal might apply to claims for pay equity. Since Victoria has transferred its industrial relations powers to the Federal Government the state government can only effect legislative changes in that area if it takes those powers back or negotiates changes with the Federal Government either bilaterally or through the Workplace Relations Ministerial Council.

[8] The Victorian Pay Equity Working Party made certain recommendations aimed at the later process10. Unless, however, that approach is supported by other states it is unlikely that it will get very far in Canberra.

Where We Are Heading

[9] Currently the federal government is considering using the corporations' power in the Commonwealth Constitution to bring all corporations under the Workplace Relations Act 1996. This has received a mixed response from Liberal Party leaders at the state level and some commentators have suggested that it may not receive the support of the High Court. Should it occur, however, the strategy of using state industrial tribunals to bring about pay equity would be severely curtailed. If, as it appears, the current federal provisions are more restrictive in their application it may benefit women in all states if their Industrial Relations Ministers were to support a review of the Equal Remuneration provisions in the Workplace Relations Act.

[10] Partly because of the limits available in the area of industrial regulation, but also because such measures cannot address all of the factors that contribute to pay inequity, the Victorian Working Party has made a broad range of recommendations aimed at achieving progress in reducing the gender pay gap. It is particularly important that employers, unions, and employees at the workplace level are encouraged and supported in taking action aimed at identifying where and why pay inequity exists and putting in place measures to address it. Increasingly the decisions that affect women's pay packets are being made not by tribunals but either unilaterally by their employer or through the collective bargaining, performance appraisal or wage review mechanisms that exist at the enterprise level.

[11] The Working Party benefited by the contribution of representatives from employer organisations and unions in formulating the recommendations which we made about how we could go about effecting this change. I refer in particular to Recommendations 2, 3, 4, 9, 10 and 20. I must admit that having had a strong interest in this area for almost 30 years I tend to forget that for many people the idea that the wage market is not a level playing field when it comes to gender is a surprising concept. As research in the UK has shown most employers don't think that they discriminate against women when it comes to wages and attribute any difference in pay to personal choices made by women which confine either the areas in which they work or their prospects for promotion. Others suggest that the problem arises because women are not good advocates on their own behalf and when they do engage in bargaining fare less well then men.

[12] There is still a big task to be done in the area of education and encouragement. What ever shape the future industrial relations regulatory framework takes what happens at the workplace level will be crucial. We are slowly starting to see some breaking down of the male/female occupational barriers at the professional level. When I was a law student, a generation ago, women were 25% of law undergraduates. Now they are 55%. Women lawyers are still getting less benefit from their degrees than the men are, it is true, but pro-active steps are being taken such as the Victorian Government's equal opportunity briefing policies which will hopefully have some impact on this.

[13] Governments and employers are increasingly voicing concern at the skill shortages in the traditional trades. Policies and practices which address workplace factors such as harassment and bullying of women and which provide mentoring and support for women in non-traditional jobs can have benefits for both pay equity and the economy in general. I note in that regard that Linfox, a major transport and logistics company, has started a campaign aimed at recruiting and supporting women truck drivers because they are having trouble in recruiting and maintaining a traditionally male workforce.

[14] In Victoria we have not abandoned the area of legislative change. Wage inequity has always been a human rights as well as an industrial issue. Both state and federal anti-discrimination legislation, in theory, can provide an avenue for women to seek to obtain redress for unequal pay. We are conscious, however, of the limitations that this avenue has traditionally provided. The legislation is complaints based and requires the complainant to establish either direct or indirect discrimination. The remedy is individual and is, generally, compensatory. In Victoria the Attorney General, who is also the Minister for Industrial Relations, issued a Justice Statement in May 2004 in which the government made a commitment to look at new approaches to reducing systemic discrimination.

[15] The Pay Equity Working Party built upon that commitment to recommend that the Equal Opportunity Act 1995 be amended to allow for broader measures such as representative complaints and non-complaint based investigations. The Equal Opportunity Commission has already started to work on ways this might be achieved.

[16] The Commission is working on a model involving a new separate part to the Act dealing with pay equity. This would involve modification of the definitions of direct and indirect discrimination, imposition of a positive duty on employers to afford equal remuneration to women, representative complaints, and the capacity for the Commission to initiate a pay equity inquiry into a particular industry or sector.

[17] There are, of course, a number legal issues which might accompany such a shift in focus of what has until now been traditional anti-discrimination legislation not least of which may be where such powers collide with the industrial relations powers which now reside with the federal government.

[18] Finally, the Working Party has recommended that the government support pay equity audits in both the public and the private sectors. Pay equity audits have become a focus for achieving pay equity in other jurisdictions without a strong industrial relations framework. In Britain they are mandatory in the public sector and voluntary in the private. A Canadian Taskforce recently recommended that legislation should require the submission of mandatory workplace pay equity plans. The Equal Opportunity in the Workplace Agency recently launched a pay equity audit tool and similar tools have been developed in the United Kingdom and New Zealand.

[19] The response of the Victorian Minister for Industrial Relations has been a positive one. The fact that in the Equal Opportunity Commission, Industrial Relations Victoria and the State Services Authority people are working on how to implement the Working Party's recommendations is good news. The test will obviously come when we see what money is allocated to the Pay Equity Plan and in particular to the Pay Equity Fund11.

The Future

[20] We are entering a period in Victoria where changes in the industrial relations laws may have a significant impact on pay equity. Women are significantly more dependant on award wages than men. Nearly one third of women are entirely dependant on award payments compared to 17% of men12. Currently the minimum wage is about 55% of full-time median earnings. This is an important reason why we have a smaller gender wage gap than other comparable countries. There is some pressure to reduce the relative value of the minimum wage. This derives from an assumption that a lower minimum wage would encourage the employment of lower skilled people.

[21] This assumption does not appear to be consistent with the fact that the demand for labour, outside of seasonal agricultural labour, is for skilled workers. Lower wages would also not appear to be a way of increasing workforce participation by women. Many women are currently in low paid jobs, not because they are low skilled but because the work they do has traditionally been 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. In addition, for mothers, the wage rates need to be high enough to cover the costs of childcare before the marginal benefits of workforce participation outweigh the costs.

[22] Policies aimed at encouraging workforce participation by women, the decline in large families, greater participation by women in post-secondary education, the cost of housing, healthcare and education and the discouragement of early retirement are likely to lead to an increased proportion of women in the paid workforce. For higher educated women in full-time employment the gender wage gap is likely to narrow but while `female' skills continue to be undervalued and part-time work continues to be available only at the lower end of the wage market the gender wage gap will not be breached.

[23] As can be seen from the history of equal pay implementation the capacity to compare like with like through benchmarks such as award classifications has been important in establishing equal value. The federal government is now proposing to remove skill based classification structures from awards. Such structures enable employees to achieve rates above the minimum rate through skill acquisition. Given their greater dependence on award wage rates the removal of these structures is likely to make it harder for women to achieve rates of pay above the award minimum.

[24] Further, the first case brought under the New South Wales equal remuneration principles 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 occupations. The New South Wales Commission was able to compare these with the work, skills and classification structures covering employees in a male dominated occupation, in this case geologists.13 In the absence of such structures such a comparison could not easily be made.

[25] We have comprehensively established that pay inequity has a number of causes. Since 1998 we have again put the issue clearly on the agenda. There are a number of things that currently run counter to a real surge in closing the gender wage gap. On the other hand the economy needs women in the labour force. It also needs skilled labour. We should try to make the most of what opportunities we have to advance pay equity in that context.

[26] The traditional means we have used to advance pay equity may no longer be the best ones. The measures we use, however, are not limited. We may need to be more inventive, imaginative and collaborative in the way we work towards that goal. The more avenues we pursue the greater chance we have that in another 27 years I will not find that I am repeating the first paragraph of this paper because it is still true.

1 D.Whelan `Women and the Arbitration System', 4 Journal of Political Economy, March 1979.

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 C. Short, `Equal Pay - What Happened?' (1986) 28(3) Journal of Industrial Relations, 315-335.

4 For example see Re Confectioners Award 1959 (1975) 166 CAR 912.

5 Re Private Hospitals' and Doctors' Nurses (ACT) Award 1972 (1986) 18 IR 455.

6 F. Rafferty `Equal Pay - Past Experience, Future Directions: A Practitioner's Perspective' (1989) 31(4) Journal of Industrial Relations, 526-537.

7 National Wage Case 1989 [Print H9100]

8 Human Rights and Equal Opportunities Commission `Just Rewards, A Report of the Inquiry into Sex Discrimination in Overaward Payments', November 1992.

9 Part VIA, Division 2, Sections 170BA to 170BI

10 Report by the Victorian Pay Equity Working Party to the Minister for Industrial Relations, `Advancing Pay Equity - their future depends on it', February 2005, Recommendation 12, page 13..

11 Report of the Victorian Pay Equity Working Party, n.9 above, Recommendation 20, page 17.

12 ibid, page 3.

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