September 4 this year was “Equal Pay Day”. September 4 was chosen because this marks the extra length of time, on average, a woman has to work to earn the same as a man. Less than a fortnight later, Greens Senator Larissa Waters has taken on the issue of pay secrecy, seeking amendments to Australia’s Fair Work Act.
The persistent gender pay gap reminds us of the material impact gender inequality has. And it’s getting worse, as data compiled by the Workforce Gender Equality Agency shows. The gender pay gap has been on an upward trend since its low point of just under 15% in 2004, and is currently just under 18%.
The data clearly establishes the size of the gender pay gap, but the reasons for the gap are often contested. Arguments that women just choose lower paid work overlook the context in which women have to make “choices” about their work.
Current social arrangements place responsibility for family care primarily on women, while the workforce provides limited and grudging accommodation of care responsibilities. This reality constrains the range of choices available. Social pressures also tend to channel women into “female” jobs that often have lower pay rates.
Pay rates for many occupations have been established on a basis that values women’s work lower than men’s. Sex-based differences in pay were legally sanctioned until the equal pay cases of the 1960s and 70s, and set up lower pay rates in jobs that were female dominated such as retail, administration, health, teaching, and community services. These differences have persisted, even after the equal pay decisions and the adoption of the Sex Discrimination Act outlawed sex based rates of pay in 1984.
One avenue for challenging unequal pay is the equal remuneration process provided in Part 2-7 of the Fair Work Act. This process was recently used by the Australian Services Union to bring a claim on behalf of social and community services workers employed in the non-government field. The case was settled by agreement after the Commission found pay rates had been affected by the undervaluation of women’s work.
Another claim is currently underway in the Fair Work Commission on behalf of employees in the long day care and early childhood education sectors, but bringing legal cases like this is a slow, expensive and difficult process and a relatively ineffective way to address a systemic issue.
The available data shows that the pay gap is larger in the private sector, and that sex-based differences in pay even in the same profession begin the moment a student graduates. Graduate pay data shows women graduates encounter a pay gap of several thousand dollars in their first job out of university, which is unexplained after controlling for field of education and other occupational characteristics.
The role of pay secrecy
Anecdotal evidence suggests pay secrecy may be a contributing or facilitating factor to pay inequity. When pay rates are individually negotiated, women tend to do less well, and when pay rates are also kept secret, women may have no idea that a pay difference exists or how much less they are paid than men who are doing the same job alongside them.
Larissa Waters recently described how her excitement in finally having a full time wage in her first job as a graduate lawyer crumbled when she realised that:
“the guy sitting next to me, also straight out of uni, was earning $5000 more. We were doing exactly the same job … we had equal experience - i.e. next to none, as we were both just out of uni - where I had gotten better marks than him! I never would have known there was any difference in our pay unless he’d let his salary slip in a casual conversation.”
Her subsequent job as a lawyer with the Environmental Defenders’ Office in the community legal sector was lower paid but transparent, leaving no scope for hidden discrimination.
The experience of being paid less than male colleagues doing the same job is common, but many women do not realise this. A similar situation occurred in the cases of Charlize Theron and Lilly Ledbetter in the US. Ledbetter worked for her employer for nearly twenty years before finding out she had been paid less than men doing the same work.
At present there is nothing in Australia to prevent employers from including terms in an employment contract requiring employees to keep their pay details confidential.
Many employers prefer to keep pay confidential, as they may regard it as an element of business strategy, and it avoids overt pay competition between employers. But secrecy also facilitates the underpayment of staff who may be just as productive as other workers but who may not realise they are being paid less. With contractual prohibition, employees may fear retaliation for discussing their pay, as it would be a breach of their contract of employment. Removing the power of employers to keep pay secret allows staff to discuss pay and to explore whether they are being paid equitably.
The Fair Work Amendment (Gender Pay Gap) Bill 2015 would amend the Fair Work Act 2009 to make any term in a modern award, enterprise agreement, or contract of employment that prohibits an employee from disclosing their pay in terms of amount or other information about pay unenforceable.
The Bill’s aim is to reduce the gender pay gap by addressing the culture of pay secrecy. As a private members bill, it will not be debated in Parliament unless the government agrees to it. However the bill puts pressure on the government to address the issue.
Addressing pay secrecy has been on the agenda of comparable jurisdictions for some years. In the United Kingdom, provisions were enacted in the Equality Act to prevent employers relying on pay secrecy, but after the Conservative Party took government in late 2010, these provisions have not been brought into operation. They would have operated by protecting individuals who disclose or seek pay information from colleagues for the purpose of checking whether their pay is affected by sex, race or any other factor on which discrimination is prohibited.
In the US, President Obama has acted on these issues as far as is possible without the support of Congress by making an Executive Order in 2014 preventing pay secrecy clauses in federal employment. On September 10 the prohibition was extended to federal contractors.
Both the UK and US provisions are more detailed and fine-tuned than Senator Waters’ Bill. While employers may have some legitimate claims to protection in relation to pay practices, those claims should not prevail over the correction of systemic pay discrimination and inequity based on sex, race or other bases of disadvantage. There may be scope to adjust the Waters Bill to reconcile these interests, but it is clear the injustice of unequal pay, even among people doing the same job with no difference in productivity, requires action.