Fact check: Has the gender pay gap shrunk under the Coalition Government's policies?

Updated

The claim

As a battle rages over female representation within the Liberal Party, Prime Minister Scott Morrison has praised the Government's record in improving gender equality.

"The gender pay gap has fallen from 17.2 per cent to 14.5 per cent under the policies of our government," Mr Morrison told Parliament during question time on September 18.

The following day he repeated the claim and added: "Under the previous Labor government, who always talks a big game on this, the gender pay gap went from 15.5 per cent up to 17.2 per cent."

Has the gender pay gap narrowed under the current government, and can Mr Morrison claim credit for the change? RMIT ABC Fact Check investigates.

The verdict

Mr Morrison's claim is overreach.

His numbers check out, although they differ slightly to those from the government agency officially tasked with publishing the gender pay gap.

However, they oversimplify what has happened to the gender pay gap in recent decades.

When it comes to the role of government policy, the Government claims that job creation and economic growth were key drivers behind the lower pay gap.

But experts told Fact Check a booming economy would likely correspond with a larger gender pay gap, as had occurred during the mining boom when men's wages rose faster relative to women's.

Experts said the current government could not claim credit for decreasing the pay gap, and that the only government measure that may be responsible for narrowing the gap was a policy legislated by the former Labor government.

A talking point

The Prime Minister is not the only member of the Government to have made this claim, with other Government MPs keen to claim credit for a narrowing gender pay gap.

Minister for Jobs, Industrial Relations and Women Kelly O'Dwyer twice mentioned the gender pay gap in Parliament, stating that "the gender pay gap is shrinking under [the Coalition Government's] stewardship".

"It was 17.2 per cent under the Labor Party. It went up under the Labor Party from 15.5, and it has come down under us to 14.5 per cent. It is, in fact, at a record low," she said.

Lower House MP Sarah Henderson also claimed the narrowing of the gap was due to Coalition policy.

"Look what we are doing: looming at 17 per cent under Labor, the gender pay gap now has been reduced to 14.5 per cent. We've got more work to go, but this is a record low."

And backbencher Luke Howarth said: "In the Labor years, just five short years ago, the gender pay gap was 17.2 per cent. That's a fact. Now it's down to 14.5 per cent. That's also a fact."

What is the gender pay gap?

The gender pay gap is the difference between the average full-time earnings of men and women, expressed as a percentage of men's earnings.

In Australia, the Workplace Gender Equality Agency (WGEA) is tasked with measuring the gender pay gap and relies on ABS weekly full-time earnings data, which are released twice a year, to do so.

The ABS presents the earnings data as original estimates, seasonally adjusted estimates and trend estimates.

The bureau defines seasonal adjustment as "a means of removing the estimated effects of normal seasonal variation from the series so that the effects of other influences can be more clearly recognised".

Trend estimates are seasonally adjusted estimates that have been "smoothed to reduce the impact of irregular or non-seasonal influences".

The WGEA uses trend estimates for measuring the gap. The trend figures it uses are for full-time adult average weekly ordinary time earnings, which are before tax and exclude factors such as overtime, pay that is salary sacrificed and junior and part-time employees.

The ABS series began in 1994, with quarterly releases prior to 2012. The most recent gap is based on ABS data for the six months to May 2018, released on August 16, 2018.

The gender pay gap is not the same as unequal pay, which is an illegal practice in which men and women doing the same work are paid different amounts.

For example, a gender pay gap may exist in an industry where men are concentrated at higher ranks while there are more women towards the bottom, creating a pay disparity but not necessarily unequal pay for the same jobs.

Has the gap narrowed?

Over the past two decades, the gender pay gap has hovered between 14.6 and 18.5 per cent.

The WGEA publishes a chart starting in 1998, but does not publish historical data using the available ABS time series which began in 1994.

Fact Check has calculated the gender pay gap back to 1994, using the same formula as the WGEA and the ABS trend data.

The latest gender pay gap, as published by the WGEA and calculated by Fact Check using the WGEA formula, puts the gender pay gap at 14.6 per cent.

While that number differs from the Government's 14.5 per cent claim, a spokesman for Ms O'Dwyer explained this was because they had used seasonally adjusted figures rather than trend figures when calculating the gap.

At the end of Labor's term in 2013, the gender pay gap was 17.4 per cent by trend figures and 17.2 per cent by seasonally adjusted figures — backing up the numbers in Mr Morrison's claim.

In trend terms, the gap when Labor entered government in 2007 was 15.5 per cent.

The widest gap under Labor occurred in November 2009 and August 2011, when the trend figure hit 17.6 per cent.

The data further illustrates a clear decline of the gender pay gap over recent years, with the latest trend figure representing the lowest on record.

So, the gender pay gap has narrowed under the Coalition, and the figures quoted by Mr Morrison check out.

However, in isolation those figures fail to provide a full picture of how the gender pay gap has changed over time.

For example, the claim gives no indication of a widening of the gender pay gap that occurred after the Coalition was elected to government in 2013, including a record high of 18.5 per cent in trend terms in November 2014.

Nor does it acknowledge that the pay gap has remained within a narrow band for more than two decades, and in August and November 2004 was 14.9 per cent in trend terms — almost as low as the recent record.

What role does the Government claim to play?

Mr Morrison made his claim about the gender pay gap in the context of jobs growth.

He told Parliament: "Our workforce participation has increased over the term of our government and that includes 640,000 more women in the workforce from when we first came into government. The gender pay gap has fallen from 17.2 per cent to 14.5 per cent under the policies of our government."

Ms O'Dwyer made her claim about the gender pay gap in a similar way, saying on September 19 "there are more women in work than ever before, and the gender pay gap is shrinking under our stewardship".

In an ABC radio interview days later, Ms O'Dwyer again pointed to jobs growth as the key driver of the decrease in the gender pay gap.

When asked to name a specific policy, Ms O'Dwyer said she would be delivering an economic security statement for women later in the year, where she would "go through a number of the very practical measures that can address [the gender pay gap]".

"But you can't ignore the fact that you actually need to have an economy that is creating jobs, not one that is destroying jobs," she said.

Economic drivers of the pay gap

While Mr Morrison and Ms O'Dwyer referred to positive economy-wide employment trends, experts contacted by Fact Check said a booming economy often led to a higher gender pay gap because men were more highly concentrated in industries more susceptible to the highs and lows of the economic cycle.

Rebecca Cassells, an associate professor at the Bankwest-Curtin Economics Centre, told Fact Check the gender pay gap followed the trends of the economy, and increases and decreases were largely linked to economic conditions.

"When the economy is booming, the pay gap will widen because men typically work in industries which have greater exposure to economic upturns and downturns; so mining and construction," said Associate Professor Cassells, who is a panel member on the WGEA's data consultation group.

"With the global financial crisis and the mining and construction boom easing off, we've seen men's wages on average grow really at quite a slow rate compared to women's and that's because there's an economic downturn."

Elizabeth Hill, a senior lecturer in political economy at the University of Sydney, agreed that economic activity had the greatest effect on the gender pay gap.

"What's going on in the broader economy tells you much more about why you've got that decline," Dr Hill said, adding that the mining boom would have played a role in higher pay gaps in Labor years.



"You've got men employed in the mining sector seeing really significant — hugely significant — increases in their wages and while there's benefit across the economy, it's really happening most pointedly in the male-dominated sectors."

Leonora Risse, who holds a Vice-Chancellor's postdoctoral fellowship in the School of Economics, Finance and Marketing at RMIT University, concurred with Dr Hill and Associate Professor Cassells.

"We had a severe change in economic conditions which would produce a narrowing of the gap regardless of any government policies — what I'm thinking of is the mining boom, which pushed up mining, construction and transport and logistics salaries, which are heavily male-dominated industries," Dr Risse told Fact Check.

"So there was a widening of the gender pay gap during those years and then when the mining boom eased off we went to back to a more default positioning where we didn't have inflated wages of those male dominated industries."

Other influencers

The WGEA says the gender pay gap is influenced by a number of factors, including discrimination and bias, gender-segregated industries and jobs, disproportionate share of unpaid caring work and under-representation in senior roles.

A 2016 KPMG report calculated how much each influencer of the difference in earnings between men and women contributed to the gender pay gap.

Sex discrimination was found to be the biggest driver of the pay gap, accounting for 38 per cent of the difference in 2016.

Industry and occupational segregation, where men and women are concentrated in different types of work, together accounted for 30 per cent of the gap.

Fact Check explored the drivers behind the pay gap more thoroughly in a previous article.

So, can the Government take credit?

None of the experts consulted by Fact Check could point to any policies from the current government that would be having a direct effect on the narrowing of the gender pay gap.

Associate Professor Cassells said she was not aware of any policies that would be leading to a decrease in the pay gap.

"I think it's a stretch to say that the decrease has anything to do with the Government's policies," she said.

Dr Risse said: "If the current Coalition Government wanted to claim credit for somehow facilitating or prompting this improvement in the gender pay gap, I'd be hard pressed to figure out how."

And Dr Hill told Fact Check: "[The decline] is not a specific reflection of any one government's policies around pay equity."

Reporting to the WGEA

The only government policy which experts said may have had an effect on the pay gap was a Labor initiative which passed Parliament in 2012 and was implemented in 2014.

The Workplace Gender Equality Act 2012 requires all businesses with 100 or more employees to report gender pay gaps to the WGEA.

"About half of those businesses that conducted a pay gap analysis took some action in light of the results, so I think that's an important trend we're seeing around the employer response to the gender pay gap," said Associate Professor Cassells.

Dr Risse also said the reporting to the WGEA may be leading to a decrease in gender pay gaps within companies conducting audits.

"The most recent WGEA report shows that increasingly, more companies are conducting an internal audit — so they're conducting their own analysis and they're reporting to that to their own executives, and they're making that publicly available in their annual reports," Dr Risse said.

"That seems to be matched with a decrease in their gender pay gap."

In the days after the Liberal Party's gender pay gap claims, Labor announced an initiative in which the pay gap data being supplied to the WGEA would be made public, a policy which emulates similar legislation in the UK, Belgium, Germany and Austria.

Principal researcher: Ellen McCutchan

factcheck@rmit.edu.au



Sources









Topics: women, gender-roles, liberals, scott-morrison, australia

First posted