Why pay equalisation is bad news for women

The problem with the idea of forcing pay equalisation on employers is that it's more likely to create a greater inequality of pay or cause a shift of employment.

Let's think about it this way. What does an employer want from his or her workforce? Well, they want their employees to produce as many products or sales for them as possible in return for paying as low a wage as possible.

At some point an employer will discover an equilibrium rate of pay at which he or she knows that employees will be happy with. In all probability this will entail different rates of pay for male and female employees - the numbers say that's true.

But make no mistake, the employer doesn't set these rates because they are an evil capitalist, they do so based on experience. And it's likely - as the statistics show - that female employees are prepared to accept lower wages in return for their labour.

It's fair to argue then, that as more females have made themselves available to enter the workforce in the last 30 years, employers have hired more females based on the ability to pay them a lower wage than they would pay for a male employee who is doing the same job.

Again, that's not us saying that, the statistics say it is so.

Now, here's the problem with pay equalisation and paid maternity leave. It robs the female employee of their competitive advantage.

When a female is applying for a job, whether we like it or not, one thought process going through an employer's mind is whether the potential employee could leave to have a family. And as you know, when a child is born, overwhelmingly it's the mother not the father that forgoes employment to care for the child.

Of course, it's against the law for the employer to ask if the female candidate is planning to have a child, so they have to guess. And because they don't know for certain they may choose to take out an insurance policy by offering the female candidate a lower rate of pay.

If the employer can get away with paying a female job applicant a lower wage than a comparable male applicant then maybe the employer may take the risk. But what if there is now pay equalisation?

Will the employer still take the risk if he or she believes there's a chance the female employee could ask for time off to look after a new family? Prior to pay equalisation, the employer could have factored that in to the lower wage, but with equal pay the employer can't do that unless the wage rate of male employees is lowered to the same level as female employees.

And that creates another problem. Our guess is that it qualifies as a social problem.