Analysis of Gender Wage Gap - Literature review Example

Gender – Pay Equity Name Class Unit Introduction The difference between the men and women average weekly fulltime earning when expressed as a percentage of men earnings gives a gender pay gap (Gender pay gap statistics, 2014). For the past two decades, gender pay gap in Australia had hovered around 15% to 18%. The analysis carried out by the Australian Bureau of Statistics (ABS) has confirmed that Australia suffers from a persistent wage gap. At the moment, gender pay gap in Australia is at over 18%. Studies have proved that the gender pay gap tends to increase as age increases (Gender pay gap statistics, 2014). Gender wage gap is contributed by various factors. The factors are; field of education, occupation, occupational segregation, and the type of industry among others (Graduate Careers Australia, 2014). These causes can be categorized as social, historical and labor market factors. The causes are complex, interrelated and dynamic. This essay will look at the gender pay gap in Australia, factors contributing to gender wage gap and why the gap is more significant in some industry than others. Discrimination in occupations has been cited as a major contributor of wage gap in Australia. The effects of occupational segregation have great effects when selecting employees, making career choices and labor market participation. It has been proved that discrimination is part of the characteristics that have led to rising gender pay gap (Miller, 2005). Women are paid less than men who are in the same job. In public sector, highly skilled occupations have high degree of gender segregation (Fawcett Society, 2014). It has also been proved that there are few women in the high skilled positions such as management and administrative positions. Studies have proved that men are three times more likely to be in the management or administrative positions. Women have been mostly overrepresented in low skilled professions such as clerical jobs. Australia has a segregated labor market. This leads to women and men being segregated into different occupations. Male dominated industries are highly valued historically leading to better pay. Women are undervalued due to lack of detailed assessment of their work, lack of appropriate structures for classification and gender characterization of their work. Research proved that women who worked in industries that were fully dominated by female workers were earning 32% less than those working in male dominated industries (Fawcett Society, 2014). Industrial segregation has been a major contributor to wage gap. Industries have been traditionally segmented based on gender. Unsupportive work environment is another contributor for the existing gender pay gap in Australia. Women have family care responsibilities which they have to balance with their jobs. In Australia, there are less permanent jobs which offer flexible working arrangements. This implies that women who have family care responsibilities are less likely to participate in fulltime jobs. The result is reduced women earnings and inability to have retirement savings and lower chances of career advancement due to caring responsibilities (Miller, 2005). Women are thus forced to look for less paying part-time jobs. Part-time jobs offers low chances for career training and development. There is overrepresentation of women than men in part-time and casual jobs. This sort of employment has been associated with low wages (Fawcett Society, 2014). The wage gap between fulltime jobs and part time jobs has been increasing over the years. Fulltime employees are paid above the minimum wage and covered by an agreement. Motherhood thus has a great effect in determining whether one will work part-time or full time. The probability to work full time falls sharply after the birth of the first child. Thus, work environment does not favor women. Most of the managerial careers treat all employees as if they are men. This implies that they fail to recognize the needs of female employees. Female employees are not provided with child care and parental leave with flexible careers. The domestic division of labor leaves women with a lot of household duties. This leads to reduction of hours a female worker have in their careers. Male employees are thus advantaged with more than 3.3 extra hours per week. This leads to female managers having less working hours as compared to their male counterparts. Male managers have 3.2 extra years of experience as compared to their female counterparts (Miller, 2005). These factors lead to female managers earning less than their male counterparts. Years of experience in an occupation determine the pay. Women are more affected by lack of years of experience in a profession due to interruptions. Women are more likely to be interrupted during their careers due to child bearing and rearing (Graduate Careers Australia, 2014). This leads to reduction in years of experience as compared to the male counterparts. There are various effects of interruptions on work on the level of pay and career advancement. Work interruptions lead to reduced working periods leading to reduced pay. The women human capital value reduces when their work is interrupted which also leads to reduced pay. When the women return to work after an absence, the results of deteriorated human capital leads to reduced chances of promotion. Women who are absent due to family responsibilities are also at high chances of missing work trainings. It has also been observed that women may reach labor market withdrawal when they are more likely to gain experience and career advancement (Fawcett Society, 2014). All these contribute to women being in low pay. Human capital theory explains that individuals are more likely to invest in training and development in employees who will give better returns. Most of the industries anticipate getting less return from women due to fact that they have more work breaks. Women are also less likely to invest in education. This also affects the hiring decisions made by firms since they anticipate getting less returns. Presence of children especially young contributes to high chances of women withdrawals. Women with children thus earn less than those without. A study carried out in Australia proved that women with dependent earn less than those without children. The presence of children in a family has been a major determinant of lifetime earnings (Fawcett Society, 2014). A study carried out in 2009 proved that lifetime earnings for men with children were almost double that of their wives. The economic value placed on the women work is another factor that contributes to the gender pay gap. Definition of low skilled jobs taken by women is in most cases influenced by the stereotypes rather than the level of skills required. Traditional job valuation overlooked the importance of the aspects of the jobs done by female workers. Male jobs have been defined with the notion of man being the breadwinner (Miller, 2005). Women are less paid than men in similar jobs. It has also been observed that jobs associated with women attract lower wages. Even in the instances where women skills are recognized, they are not valued as male. Valuation is seen to use the male skills model. There are those who perceive that women skills are natural leading to lower valuation. Most of the male jobs are value added processes (Workplace Gender Equality Agency, 2013). This leads to their jobs being highly rated than women. It is important to note that the existing stereotypes determine career decisions when entering into the labor market. There are structural and institutional factors that affect gender pay gap. This is seen especially when carrying out improvement assessments. Wage structure and occupational based segregation have played a major role in the rising gender pay gap (Workplace Gender Equality Agency, 2013). These are norms and assumptions that work to disadvantage women. Most industries concentrate female wage towards the lower end as compared to male wages. This makes any change to wage structure to have great impact on women than men. Due to fact that female wage distribution is below male wage distribution, wage policies which does not consider gender acts to lower male female wage differences. Male dominated industries seem to enjoy higher wage increases than female dominated industries. The characteristics of the new created jobs have an effect on the widening gender pay gap. Most of the job created is temporary and part-time which have adversely affected women earnings. Since the economic crisis of 2008, it has been proved that women have moved to low paying jobs in large numbers (ABS, 2014). The number of female in underemployment has also almost doubled. Large firms offer better pay than small firms. Women are more likely to be employed in small firms as compared to men (Fawcett Society, 2014). There have also been increases in the number of women who have moved to self employment (Workplace Gender Equality Agency, 2013). The matters have been made worse by the fact that most of the industries that have experienced growth are male dominated and low end wage female sectors in Australia. Women are underrepresented in senior roles. Women are mostly in the lower positions and there are few women in the managerial positions. Men have continued to dominate the high positions in the workforce with better pay. In Australia, men make up to 70% of the top earners (ABS, 2014). This is associated with the discussed low career progression in women and bias in promotions. It has also been established that women also face a gender pay gap even in senior positions (Workplace Gender Equality Agency, 2013). In 2014, a study found that women took 35% less than their male counterparts despite being in same managerial positions. The type of industry one is working for also determines pay. In Australia, different states have different gender pay gaps based on the type of industry available. For example, western Australia has the highest gender pay gap estimated at 23.9% while capital territory have the lowest gender pay gap at 9.9% (Gender pay gap statistics, 2014). This is due to fact that most of the industries in the Western Australia are male dominated. In Western Australia, major industries are in mining, manufacturing and construction where men dominate the largest percentage of workforce. In contrast, the Australian Capital Territory is made up of jobs in public administration and safety which are characterized by low gender pay gap. Women residing on the western Australian would be required to work extra 98 days to be at par with men. In Tasmania, women would be required to work extra 33 days in order to be at par with men (Gender pay gap statistics, 2014). Thus, gender pay gap is dependent on the nature of industry. Sector of employment have a great effect on wage gap in Australia. There have been larger wage gap in the private sector as compared to the public sector (Juan & Deborah, 2008). There has been little progress in addressing gender pay gap in both private and public sectors. In the public sector, gender pay gap stands at 14.6% which is an increase from 13.9% in 2008 (Gender pay gap statistics, 2014). The private sector has a higher gender pay gap which stands at 21.6%. Pay freezes in the public sector have been blamed for the increase in the gender pay gap. Pay freeze disproportionally affects women in the sector. In the public sector, there are few women in the senior management roles. A study done showed that while women represented 53% of the workforce in the public sector, only 33% of them occupied senior positions (Gender pay gap statistics, 2014). The main mode of setting salary in private sector is based on individual agreement. This is opposed to the public sector, which uses collective agreement. Public sector use collective agreement which makes them to have a transparent pay scale (Juan & Deborah, 2008). This makes it possible to standardize pay between men and women than in the private sector. The decrease in the public sector employment has played a major role in widening gender pay gap. Between 2010 and 2014, there has been significant loss of jobs in the public sector amounting to 372,000 and a gain in 1.9 million jobs in the private sector (ABS, 2014). Most of the jobs in the private sector have been taken by men. Research has proved that women face a larger gender pay gap in the private sector than in public sector (Juan & Deborah, 2008). This makes the gender pay gap to continue widening. Also private sector has been offering low job security and lower pay (Gender pay gap statistics, 2014). The sector is also poor in offering flexible working conditions. Therefore, this enhances gender pay gap. The gender pay gap varies a lot depending on area of employment. The financial and insurance sectors have the highest gender pay gap of 31.9% in Australia. This is followed by the heath care which has 26.6% (Gender pay gap statistics, 2014). The industries with the lowest gender pay gap are public administration, safety and wholesale trade. The industry occupational and pay structure affects their gender pay gap. The health care and social assistance industry have the highest number of women in fulltime employment. Despite this, women in this sector are underpaid compared to men. This is due to fact that most of the senior professionals in the sector are men. Almost 86% of the CEOs in the health care and social assistance sector are male. This has led to a large gender pay gap of 31.7% (Gender pay gap statistics, 2014). This is a clear indication that type of industry affects the gender pay gap. Conclusion Gender pay gap refers to the difference that exists between men and women average weekly fulltime earning when expressed as a percentage of men earnings gives a gender pay gap. Gender pay gap in Australia can be explained by the factors ranging from occupational segregation to social, historical and labor market factors. Industrial segregation has led to women working in industries with lower pay. Historically, female dominated industries have low pay than male dominated industries. Most of the jobs lack flexibility which can cater for women lifestyle which involves family responsibilities. Women are occasionally out of work due to child bearing and rearing. This leads to reduction in years of experience for women. It is also important to note that women skills are undervalued in their careers in most cases. In most industries, women occupy lower position than men leading to lower pay. It is also important to note that different industries have different levels of gender pay gap. This is demonstrated in Australia territories which gender pay gap is dependent on type of industries in the states. Also private sector has a large gender wage gap than public sector which is associated with method used to set wages. All these factors have contributed to a widening wage gap in Australia and led to some of the industries having a large gender wage gap then others. References Australia Bureau of Statistics (ABS) 2014, 6302.0, Average Weekly Earnings, Australia Nov 2013, viewed 11th February 2015, http://www.abs.gov.au/ausstats/abs@.nsf/mf/6302.0. Fawcett Society 2014, The changing labour market 2: women, low pay and gender equality in the emerging recovery, Viewed 11th February 2015, http://www.fawcettsociety.org.uk/wpcontent/uploads/2014/08/The-Changing-Labour- Market-2.pdf Gender pay gap statistics 2014, Workplace Gender Equality Agency, Gender pay gap statistics, March 2014, viewed 11th February 2015, https://www.wgea.gov.au/sites/default/files/2014-03-04 Gender_Pay_Gap_factsheet_website.pdf Graduate Careers Australia 2014, ‘An analysis of the gender wage gap In the Australian graduate labour market 2013’, Graduate Careers Australia, June 2014, Viewed 11th February 2015, http://www.graduatecareers.com.au/wpcontent/uploads/2014/06/GCA%20Gender%20W age%20Gap%20Paper%20-%202013%20GDS%20 %2017%20June%202014%20FINAL.pdf Juan D. B & Deborah A. C 2008, Occupational Segregation and the Gender Wage Gap in Private- and Public-Sector Employment: A Distributional Analysis, Discussion Paper Series, IZA Discussion Paper No. 3562, Viewed 11th February 2015, http://ftp.iza.org/dp3562.pdf Miller, P.W 2005,‘The Role Of Gender Among Low-Paid And High-Paid Workers’, The Australian Economic Review,Vol.38, no.2, p.405-17. Workplace Gender Equality Agency 2013, Gender equality industry benchmarking spreadsheet, Sydney, Workplace Gender Equality Agency. Read More