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Gender pay gap

By David Leyonhjelm - posted Thursday, 7 December 2017

Reports of a substantial gender pay gap from the Workplace Gender Equality Agency are intended to be alarming. It works; the more naïve media and commentators are suitably alarmed and insist something needs to be done. Wiser heads are not convinced.

The Agency's approach is lazy and simplistic, reporting a crude figure that fails to compare like with like.  As a result, meaningful considerations of a pay gap are lost with no prospect of a sensible discussion to identify whether there are genuine areas of concern and if action is required.  For an Agency with a $6 million annual budget and 30 staff, this is not good enough.

The Agency reports a 15.3 per cent gender pay gap for full time employees, with male workers earning $1,638 and female workers $1,387 on average per week. 


Unfortunately, the Agency doesn’t acknowledge that full time male workers work longer hours (44.7 hours a week) compared to full time female workers (41.6 hours).  If this were accounted for, the gender pay gap per hour worked would fall to 8.9 per cent.

Further to this, a long time ago the Bureau of Statistics reported that, on average, female workers take more hours of paid personal leave (like sick leave, carers leave and parental leave) than male workers.  This makes sense and is likely to still be the case.  Accounting for this would further reduce the measure of hours worked by full time females compared to full time males, which in turn would further reduce the measure of the gender pay gap, at least in terms of pay per hour worked.  But the Workplace Gender Equality Agency doesn’t bother to explore this.

The Agency also doesn’t address the fact that, on average, male workers are more experienced than female workers and, on some measures, more qualified.  This is a result of gender differences in the workforce’s oldest cohorts, who entered the workforce in a different era, and will moderate over time.  Nonetheless, the current differences in experience and qualifications ought to be taken into account when seeking to explain the pay gap.

Where women have the same experience and qualifications as men, but are still paid less, some of this may relate to the uneven representation of women and men in various industries.  For instance, workers in the male-dominated manufacturing industry get paid more than workers in the female-dominated hospitality industry not because of sexism, but because an hour of manufacturing work generates more value to the economy, and more money for the employer than an hour of hospitality work.  This is called market forces, and it helps ensure that what gets produced is what the economy values.

That begs the question of why some women favour industries where their work generates less value and lower pay.  If it is because they get something out of working in those industries beyond money, it is hard to see it as a problem.  Some jobs in typically male-dominated industries have inherent drawbacks, such as physical, outdoor and sometimes dangerous work, and less job security, such as in the cyclical mining industry.

What the Workplace Gender Equality Agency should focus on measuring and reporting is where women are paid less on average than men despite having the same experience and qualifications and working in the same occupations and industries.  If we had a better understanding of this, we could then explore how much it is a result of discrimination and how much is due to women not applying for a promotion that is theirs for the taking. 


Instead, the Agency blames the gender pay gap on discrimination and bias, not the decisions of women.  This is clinging to victim status and is both unbalanced and unhelpful.

If women decide not to apply for a promotion because the upper echelon of an organisation is a repulsive boys club, there’s a problem that needs fixing.  But if it's due to decisions about family life and work‑life balance, what is the problem? 

In fact, the tendency of men to always go for promotion may be where the bigger problem lies.  Many studies have found that as we get older, particularly post-retirement, men are far more likely to experience loneliness and isolation as a result of having invested significantly less in children, family and friends.

We all make our choices, including whether to put our career first. If men make different choices from women, that says nothing about gender inequality.

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This article was first published in the Australian Financial Review.

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About the Author

David Leyonhjelm is a former Senator for the Liberal Democrats.

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