Reply to Joe Hockey

A few weeks ago the Minister for Employment and Workplace Relations, the Hon Joe Hockey MP, issued a media release where he welcomed the release of recent ABS data showing “… narrowing of the wage gap between men and women”. (ABS Wage Data Shows Women are The Winners). The data he referred to were from the ABS Average Weekly Earnings Survey (ABS 6302.0). In the four quarters to February 2007 women’s total weekly earnings (seasonally adjusted) increased in nominal terms by 3.5 per cent compared with a nominal increase of 2.6 per cent for men. This comparison is, however, misleading in that it fails to take into account differences in hours work. If the average hours worked by women increased over the period studied then, even in the absence of changes in the hourly rate, this would generate an increase in the average weekly income of women. To account for this factor one normally compares either the earnings of men and women in full-time employment in the absence of information on hourly earnings.

In the full-time labour market the average weekly ordinary time earnings (AWOTE) of adults (seasonally adjusted) increased (in nominal terms) by 2.5 per cent for women and 2.9 per cent for men in the year to February 2007. Rather than contribute to a narrowing of a wage gap, the faster wage growth experienced by men has caused the gender wage gap to widen (although the change is marginal and not significant). By February 2007 the gender wage ratio (measured as the common ratio of AWOTE of adult women and men) was equal to 84.3 per cent. The relatively faster movement in the average wages of adult men in private sector employment has, in turn, also contributed to a deterioration in the gender wage gap in that sector. At February 2007 the private sector gender wage ratio was equal to 81.1 per cent amongst adults employed full-time.

The focus on the full-time labour market does, however, obscure part of the story when it comes to women’s wages. Women now comprise just under half (44.6 per cent) of the workforce and a sizeable share (43.7 per cent) are in part-time employment. ABS data from the Employee Earnings and Hours Survey (6306.0) allow us to compare male and female hourly wages (and thus bring part-timers into the analysis). A comparison of the hourly pay of part-timers and full-timers reveals quite sizeable gaps. By way of example at May 2006 (the time of the last survey) the average hourly earnings ratio of non-managerial part-timers and full-timers covered by collective agreements was 85.6 per cent (a gap of nearly 15 per cent). The corresponding ratio amongst those covered by AWAs was 72.1 per cent (a gap of nearly 28 per cent). Around 70 per cent of all part-timers are women.

It is clear from the above that the gender wage gap remains a significant and on-going feature of the Australian labour market. There is no evidence to support the Minister’s claims that the workplace relations system is closing the gap. If anything evidence appears to suggest widening gaps between part-timers and full-timers. Gender pay gaps are also wider amongst those covered by AWAs – at May 2006 the AWA average hourly ordinary time gender pay gap was equal to 15.1 pre cent; amongst those covered by collective agreements the corresponding gap was 8 per cent.

Full analysis of ABS data

ABS Wage Data Show Women are the Winners: A Comment
 

Professor Alison Preston
Alison Preston is co-director of the WiSER (Women in Social and Economic Research) unit at Curtin University of Technology