Is the Gender Pay Gap Really Getting Wider?

5th May 2015

The Workplace Gender Equality Agency (WGEA) claims the gap between men and women’s pay has increased to a record high of 18.8%. Referencing the latest Australian Bureau of Statistics (ABS) Average Weekly Earnings, the Agency spokesperson claims that the pay gap is widening. Full-time adult male average weekly ordinary time earnings were $1,587.40 in November 2014 whereas full-time adult female average weekly ordinary time earnings were $1289.30, a difference (gap) of $298.10 per week. The gap between average weekly earnings was 17.4% in November 2013.

The Workplace Gender Equality Agency’s Research Executive Manager, Dr Carla Harris said:

“It is very concerning to see the national gender pay gap at a record high of 18.8% … It’s clear that women aren’t getting the same earning opportunities as men, and this has implications for women’s financial security, particularly in old age.”

Interesting perspective, but do the figures published by the ABS indicate an increase in the ‘gender pay gap’? Is it really clear that women are denied the same earning opportunities as men?

There is no doubt that average weekly full-time earnings of men are higher than that for women in the Australian workforce and this continues a long term trend. However, the difference may be explained by various factors, not the least being occupation related and the number of paid hours worked each week by men compared to women. A closer look at the ABS statistics show further differences in the results depending on the industry and between private and public sector. In November 2014 the WGEA announced the gender pay gap was 24.7%. Why is there a discrepancy and doesn’t that show a reduction in the gender pay gap?

The gender pay gap of 24.7% calculated by the WGEA published in November 2014 is based on average remuneration data drawn from a population representing all employees working under organisations that report to the Agency, rather than a representative sample of Australian workplaces. It includes private employers with 100 or more employees and excludes the public sector, small organisations and many medium sized organisations. Reporting organisations provide data on base salaries (before tax) and on total remuneration (which includes base salary plus superannuation, bonus/performance pay, discretionary pay, overtime and other allowances). The ABS reports on both ordinary time earnings and total earnings (including overtime payments).

The difference in results of the ABS and the WGEA is therefore easily explainable. They measure different concepts, drawn from different employer samples and surveyed over different periods. However, both show gaps in average remuneration between men and women. Isn’t that a measure of inequality? Well, not really.
Dr Harris acknowledged the limitation of the data in measuring inequality.

“… it is important to remember that the national gender pay gap is a high-level figure that shows general differences in earnings between women and men across the board. It is not a like-for-like analysis of women and men doing the same job and therefore, it doesn’t mean that women are earning 18.8% less than men in the same role,” Dr Harris said.

Notwithstanding the limitation of the data, questions remain as to whether or not the gender gap has widened and if so, is it due to limitations placed on the opportunities available for women to earn average income commensurate with the male working population. If so, then there is a serious public policy issue. If that is not the case, and it is due to other factors such as personal career and family choices then the gender pay gap is of less interest to the debate on workplace equality.

I wouldn’t dare speculate an answer to these questions. However, I do know that an accurate measure of gender inequality will not be found in the ABS average weekly ordinary time earnings or the WGEA data explorer gender pay gap.