For the past twenty years the gender pay gap in Australia has hovered around 16%. There has actually been a steady rise in pay inequality in more recent years, with the gap increasing from 14.9% to 17.8% between 2004 and 2012 (source). The private sector pay gap is notably larger than the public sector; 21.0% compared to 12.8% in November 2011.
The 20th century saw working conditions improve dramatically, with women no longer obliged to renounce employment upon marriage and the legal recognition of ‘equal pay for work of equal value’ in 1972, which mandated that award rates be set on ‘work value’ grounds and not on the basis of the sex. Fair Work Australia’s recent ruling that low wages in the community sector are a product of gender-based undervaluation is a positive development, yet progress in closing the gender pay gap and achieving equality in the workplace largely appears to have stagnated.
The Equal Opportunity for Women and the Workplace Agency (EOWA) breaks the gender pay gap down into components here. 9% of the gap can be attributed to women having less access to overtime, over-award payments and other benefits, and 43% to differences in workforce participation. Yet nearly half the gap – 48% – is unexplained pay inequality.
A common explanation for this discrepancy is that men are more aggressive in reaching their career goals; men ask for pay rises and promotions and they get them. Research generally supports this explanation and this is one reason why we see large numbers of women in tertiary education and at the lower levels of professional industries but noticeably absent as you approach and pass the glass ceiling. A seemingly logical response is to suggest that women simply change their behaviour, toughen up and start negotiating in order to get ahead.
However economic and psychological research suggests that behaviour is perceived differently depending on which sex it is displayed by. Research by Hannah Riley Bowles, Linda Babcock and Lei Lai, from Harvard University and Carnegie Mellon University, reveals that people react differently to men and women negotiating promotions and salary. When women ask for more they are seen as pushy and ‘less nice’ and are penalised more than their male colleagues. Economic research by Fiona Greig, also confirms that women are subject to greater social costs, a ‘backlash’, when they defy gender stereotypes and behave more aggressively in the workplace.
These results suggest that women are actually responding to incentives and acting rationally when being unassertive in the workplace. Bowles says ‘The point of this paper is: Yes, there is an economic rationale to negotiate, but you have to weigh that against social risks of negotiating. What we show is those risks are higher for women than for men.’ Women are placed in a damned-if-you-do, damned-if-you-don’t situation when it comes to career advancement, and for many the benefits of inaction outweigh the costs.
These results suggest that legislation and traditional policy can only go so far in closing the gender pay gap. To further reduce pay inequality the environment of the workplace must be changed so that women are no longer penalised for defying gender stereotypes. Simply being conscious of the existence of a gender bias and how this may impact upon something like salary bargaining is a positive first step.
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