WEL's Pay Equity Policy Document - Women's Electoral Lobby

Pay Equity

In Australia, men still earn more than 150% of women’s earnings (ABS Cat.6302), 44 years after the historic 1972 equal pay decision. This gender pay gap has fluctuated over the past 20 years, but since a low of 14.9% in 2004 it has grown to 17.9% in May 2015. The gap is wider for total full time earnings (20.9%) and wider again for total earnings of full and part time workers (35.37%).

The gender wage gap has widened despite significant improvements in women’s levels of education, job types and job levels, and workforce participation.

Attempts have been made to explain the gender pay gap by calculating the parts of it which may be attributable to women’s personal characteristics such as work experience, qualifications and areas of study as well as factors relating to jobs such as employer size, location, export/domestic market orientation, industry segregation and extent of unionisation. But it is increasingly accepted that these explanations themselves reflect rather than explain women’s disadvantages in the workplace and in most Australian studies do not account for all or most of the gap. Women simply do not benefit as much from their experience or qualifications as men.

The gender pay gap reflects differences in the jobs women and men do, how men and women share the paid and unpaid work, and how men’s and women’s work is valued.

Changes in the industrial system, including deregulation and decentralised bargaining, have contributed to greater gender inequality and made seeking redress more difficult. Gender pay equity is much higher in award-related remuneration than in remuneration under certified agreements or overaward payments. Earnings set by awards account for a decreasing proportion of all earnings, while the award system continues to play an important part in maintaining a more equitable base level for earnings, as does the minimum wage. Pay systems are often lacking in transparency and frequently involve high levels of management discretion, which often involves gendered decision making.

In the equal pay victory for social and community services workers in the Fair Work Australia Commission in 2012, significant pay increases were won for low paid women doing work vital to society’s wellbeing. The Fair Work Commission decided that the low pay in the sector was in part due to undervaluation because the work is traditionally seen as women’s work and mostly done by women. This was a very significant landmark in the campaign for equal pay. The increases were to be phased in over an unusually long eight year period. Government support for funding the increases was critical for the outcomes achieved.

The recognition that gender-related undervaluation of work is a highly significant cause of the gender pay gap, and that evaluation of work without gender bias is the remedy, developed through the Pay Equity Inquiries and development of Equal Remuneration Principles. A number of successful equal remuneration cases have been based on the concept. The concept of gender-related undervaluation provided a path to equal remuneration claims that did not depend on comparing male and female jobs. The requirement for direct comparators is very difficult to meet, because the characteristics of female dominated jobs are different from male dominated jobs and differences in remuneration tend to be attributed to differences in job characteristics, although those differences may not actually reflect differences in value that are legitimate bases for remuneration.

However, the Fair Work Commission’s decision in the early childhood education and children’s services case in 2015 (FWCFB 8200) narrowed the scope for equal remuneration applications and reintroduced the requirement for feminised work to be compared directly to male work. Equal remuneration claims could not be based on establishing gender-related undervaluation. The mechanisms for claiming equal pay for men and women workers for work which is not similar but is of equal value – a right thought to have been won in 1972 - have been significantly weakened. In any case, history has shown that the 1972 decision was not adequate for equal remuneration and that its implementation was flawed and partial.

In view of this significant setback, and the indication it provides that equal remuneration is most unlikely to be achieved under the current legislative and policy regimes, a comprehensive new set of strategies is required. WEL’s recommendations on them are included below. Failure to adopt an active and integrated approach condemns further generations of women to remuneration based on gender rather than the value of their work.

While improved equal remuneration provisions are essential, equal remuneration cases are complex, costly and protracted.  Support in taking cases, through provision of funding and expertise by Government, is needed to facilitate access to equal remuneration remedies for low paid female dominated occupations. This approach was successfully used in Queensland some years ago in the case for dental assistants, following the Queensland Pay Equity Inquiry.

Proactive approaches are also needed. The Workplace Gender Equality Act provides the only proactive measures in Australia, and those extend only to self-reporting by the organisations covered by the Act on their workplace practices and workforce profiles. The reporting is without verification or workplace investigations. The Act covers employers outside the public sector with more than 100 employees, including higher education institutions, non-government schools, other non-government organisations and unions, among others. Under current Workplace Gender Equality Act reporting requirements, no specific action on equal remuneration is required. The WGEA’s 2015 report card on pay equity showed that 26.3% of reporting organisations undertook a pay equity analysis and 51% took some action on the results. The UK Government is currently consulting on regulations that will introduce mandatory gender pay gap reporting for employers with 250 or more employees, in the private and voluntary sectors.

Equal remuneration in many areas depends fundamentally on Government action regarding Government employees and Government funded services. The pay gap in the public sector is 12.2% (the gap in the private sector is 21.3%), and Government needs to actively investigate and address the gender pay gap for its own employees. There are no current requirements to do so.

In many low paid female dominated areas, such as the expanding areas of aged care and disability services, Government commitment to fund equal remuneration pay increases is critical, just as it was in the social and community care case.

 

 Recommendations

 1. The Pay Equity Unit, which began work in Fair Work Australia on 1 July 2013, should be resourced to provide effective assistance to Government, employees, employers and unions to promote pay equity. This should include a fund to provide Government assistance in undertaking research, mounting cases, and facilitating engagement as required to narrow areas of disagreement between parties. It should also include preparation of an annual report identifying significant areas of concern regarding equal remuneration, in terms of the industries and occupations involved, and the employment arrangements and instruments in place. The report should consider options for achieving equal remuneration in those areas.

2. A comprehensive review should be carried out of progress in implementing Fair Work Australia’s 2012 equal remuneration decision for social and community services workers, and a public report provided on the review.

3. The requirement to have a policy or strategy on equal remuneration should be extended to the whole of the WGEA coverage.

4. The Workplace Gender Equality Agency should be funded to, and should, actively follow up and specifically report on the reporting organisations that have not conducted a rigorous equal remuneration analysis, and reporting organisations that have not undertaken relevant equal remuneration actions following an equal remuneration analysis.  The adequacy of reporting on equal remuneration and on actions taken on equal remuneration, and the results of investigations undertaken should be specifically considered by WGEA in issuing letters of compliance with the WGEA in relation to the Workplace Gender Equality Procurement Principles.

5. The Fair Work Act should be amended to include an equal remuneration objective consistent with Australia’s commitments under international conventions and consistent with the equal remuneration objectives included in the modern awards objective and the minimum wages objectives, and with the anti-discrimination objective of the Act and requirement that no agreement can include a discriminatory provision. Fair Work Australia should require that the equal remuneration objective should be specifically and explicitly considered in all decisions.

6. The Fair Work Act should be amended to provide for hearing equal remuneration applications based on establishing gender-related undervaluation, and to provide for remedies to the gender-related undervaluation through establishing the value of the work in ways that are not affected by gender.

7. Consistent with the equal remuneration objective recommended for the Fair Work Act, the four-yearly reviews of modern awards should include review of how award provisions (including definitions of ordinary hours, penalty rates, and classification structures, among others) affect equal remuneration. These matters should also be considered at a systemic level every four years, looking across male dominated and female dominated awards and industries. Relevant award provisions should be amended and/or guidance provided to parties, to remove identified actual or likely impediments to equal remuneration. The Fair Work Act should be amended to include these award specific and systemic considerations of equal remuneration in awards.

8. Consistent with the equal remuneration objective recommended for the Fair Work Act, the approval process for certified agreements should include specific  and explicit consideration of the implications of the agreement for equal remuneration. The Fair Work Act should be amended to include specific and explicit consideration of equal remuneration implications, as part of the approval process for certified agreements.

9. Government should adopt and implement a commitment to investigate, address and report on  equal remuneration within and across public sector agencies. Strategies should include adoption by agencies of the Australian Standard on Gender-inclusive Job Evaluation and Grading (5376-2012).

10. Non-government organisations that receive public finding should be required to investigate and report to Government on equal remuneration in their areas of activity.

11. Government should periodically review the equal remuneration reports from government funded non-government organisations and develop strategies for achieving equal remuneration, including costing and funding any required increases.