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Why pay equalisation is bad news for women

By Kris Sayce - posted Wednesday, 10 March 2010

It's always dangerous broaching a subject when we know you may not like what we write, but as you'll be aware that rarely puts us off.

This morning a couple of news stories caught our eye: "Gender pay gap shows no sign of abating" -; and "Bosses to fund parental leave" -

Our initial response to these stories is: why would anyone want to lose their competitive advantage in the workforce?


That's right, if it's true - and statistics suggest it is true - that female employees are generally paid less than male employees then attempts to “close” the gender pay gap have the potential to rob female workers of one of their competitive advantages - that they are prepared to work for lower pay than male employees.

Whichever way you look at it, whether it's employers “exploiting” female employees or female employees having little choice but to accept lower wages, the statistics suggest that female employees as a whole do accept lower rates of pay than male employees.

Again, that's the stats talking.

Therefore it's reasonable to argue that this is a competitive advantage for a potential female employee. That she can undercut a potential male employee by implicitly or explicitly offering her labour services at a lower cost than a potential male employee.

Let's take a look at a chart showing the male and female employment numbers since 1978:

insert graph here


As you can see, employment numbers for both have risen over this time. The number of male employers has climbed by around 50 per cent, however, the number of female employees has more than doubled.

What's the reason for this? Is it due to pay equalisation? Or is it due to fewer restrictions on women entering the workforce?

Or, is it because employers are able to pay female employees less than male employees? Giving female employees a competitive advantage over their male counterparts.

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First published by Money Morning on March 9, 2010.

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About the Author

Kris Sayce is editor of Money Morning. He began his financial career in the City of London as a broker specializing in small cap stocks listed on London’s Alternative Investment Market (AIM). At one of Australia’s leading wealth management firms, Kris was a fully accredited adviser in Shares, Options and Warrants, and Foreign Exchange. Kris was instrumental in helping to establish the Australian version of the Daily Reckoning e-newsletter in 2005. In late 2006, he joined the Melbourne team of the leading CFD provider in Australia.

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Creative Commons LicenseThis work is licensed under a Creative Commons License.

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