Between Kiwis and Koreans: placing Australia in the race for pay parity

New Zealand's pay gap puts Australia's to shame, but it's difficult to say exactly why.

Serious worried woman at desk

In the past, growing numbers of women workers actually increased household income inequality. Source: H. ARMSTRONG ROBERTS/ClassicStock/Corbis

"Pay equity to get 'jump-start'". A “breakthrough moment” for equal pay. The headlines suggest that 2017 has already delivered New Zealand women significant new powers to tackle pay inequity.

Groups of Kiwi women who believe their work is underpaid can now complain directly with employers, following their government's decision to back principles developed by an expert group.

The change means costly and slow court proceedings will be avoided and employers must ask themselves why a women with similar skills to a man gets paid less - itself a significant interpretation of the 1972 Equal Pay Act that was only established in 2014.

Last week NZ Minister for Women and State Services, Paula Bennett, said this milestone was a single, positive step towards pay equity, but that the government's work continued.

"There will no doubt be things we learn as we apply the new principles in a real life negotiation process."

It may be only a single step, but it's the latest of many in the country which was first to give women the right to vote. By some measures, the steps have been effective.

According to OECD comparisons, New Zealand is among the leaders in its gender pay gap.

The gap is still there, but at a 6 per cent difference between the male and female full-time median wages it's significantly smaller than almost everywhere else in the world.

By comparison Australia's pay gap is 15 per cent, and Korea's is 37 per cent.
Dr Deborah Russell, a senior lecturer in taxation at Massey University in New Zealand, said the recent development was a reasonably significant milestone in the nation's efforts to close the pay gap.

"It's very early days, and we'll have to see how it's going to work out," she said.

"But there does seem to be a willingness to do something about it."

Korea highlights

In Korea, a new TV drama called "Working Mum, Parenting Daddy" was launched last year. The concept is novel in the country with the OECD's highest pay gap.
The causes of the pay disparity were explored in a research paper from the International Monetary Fund in 2015, which studied differences between Korea and Nordic countries boasting small pay gaps.

The Nordic countries were found to provide more childcare benefits and services than in Korea and their childcare systems were more flexible, helping shorten career breaks for mothers.

In addition, a larger share of public spending is devoted to early childhood education than in formal education in the Nordics than in Korea.

Other factors linked to the disparity were greater recognition in Nordic countries for fathers in childrearing, and long and inflexible working hours in Korea that prevent well-qualified mothers from returning to regular employment.

Acknowledging the problem, the Korean government launched the Task Force on Gender Parity and Empowerment of Women in 2014 along with 142 organisations, including 30 of Korea's largest companies.

According to one newspaper report, the share of women who have been promoted has increased from 16 per cent to 30 percent of the total during the task force's operation. However, it's due to disband later this year.

The weird West

Perth may be closer geographically and culturally to Auckland than it is Seoul, but the Western Australian gender pay gap is closer to Korea's than New Zealand's.

The mining state languishes at the bottom Australia's pay gap ladder by a significant margin, according to November 2016 figures from the Workplace Gender Equality Agency (WGEA).

At 24 per cent, the full-time average income gender pay gap is one and a half times the national figure and more than double those of Tasmania, the ACT and South Australia.

Libby Lyons, director of WGEA, said Western Australia was such an outlier mainly because of the makeup of its workforce.

"Western Australia has the lowest proportion of women in the workforce, and the lowest proportion of female managers of any state," she said.

"And mining accounts for a much greater portion of the economy in Western Australia, than in other states."

Beyond the makeup of the workforce and the type of work available, it's difficult to explain exactly why women appear to be valued less in Western Australia than they do in the rest of Australia and New Zealand.

The gender pay gap in WA predates the mining investment boom. The only substantial research focused on the causes of Western Australia's large pay gap was from Alison Preston and Geoffrey Crockett almost two decades ago.

Some of the pay gap could be explained by established causes - more favourable industrial distribution of males, more favourable education levels, and more overtime work.

Removing these left an "unexplained" gender pay gap. Westerm Australia's was significantly higher than the unexplained gap for the rest of the Australia.

New Zealand's relatively small pay gap by international standards, on the other hand, is a result of a young country avoiding the "entrenched" gender attitudes, according to Dr Russell.

While small pay gaps can mean women workers are valued more highly, it can also mean fewer men are earning extremely high salaries.

RMIT's Professor Sara Charlesworth believes fewer male high earners partly explains New Zealand's record.

"This is a kind of paradox - in boom times, for example in WA, you have the largest gender pay gap in Australia at the height of the mining boom because men move into highly paid jobs but women stay in low paid jobs," she said.

"When things go down, you see a contraction of the gap."

Beyond the gap

If closing the pay gap was as simple as establishing an appropriate legislative framework addressing wage discrimination, Australia's gap should be smaller than it is.

According to Professor Charlesworth, Australia's set of legislation supporting equal pay is actually superior to New Zealand's, and is "pretty much a Roll's Royce system" compared to the "rudimentary" Kiwi alternative.

Professor Charlesworth, who is writing a paper comparing regimes across the Tasman, notes Australia has both anti-discrimination laws for individuals and provisions under the Fair Work Act that provide a sectoral approach.

Australia also has the Workplace Gender Equality Act which requires companies to report about their performance - something lacking in New Zealand.

What Australia lacks, she argues, is "political will".

The independent Fair Work Commission knocked back a bid in 2015 by childcare workers - of whom 96 per cent are women - for more pay. It argued the workers needed to show they were undervalued with reference to men in a comparable sector, a shift back towards a more traditional approach that had been abandoned in previous decisions.

"The issue to be addressed is gender undervaluation of work," Prof Charlesworth said.

"You don't have to compare women to men to argue that this work had been undervalued because this work was traditionally seen to be done by women."
Despite continued commitment - and the recent pay complaint breakthroughs - movement towards closing the pay gap in New Zealand has slowed in recent years and has even shown signs of increasing.

By measures of hourly earnings the gap has actually increased from 9 per cent in 2012, to 12 per cent last year, during a period of steady economic growth.

According to Dr Russell, pay gap comparisons are useful, but the gap as we understand it today may never be closed. Instead, more discussion around the structures of society is required to improve outcomes for women.

"One of the excuses people often give for pay inequity is that women take time out to have children and that they choose to do that," she said.

"To what extent do women really do choose that or whether it's just gender expectations.

"Somehow men are able to have families without it affecting their careers and their pay, but women aren't."


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By Jackson Gothe-Snape


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