InvestSMART
The Intelligent Investor Growth Fund is listing on the ASX. Initial Offer now open

At last, gender pay gap set to narrow

This agreement promises economic and social gains.

This agreement promises economic and social gains.

IMAGINE you work with disabled people or manage family support services or care for the homeless, victims of domestic violence or the mentally ill. Not only is your work vital to those who find life most difficult, it is essential to the well-being of the community as a whole. You may be a tertiary-educated social worker or a lawyer at a community legal centre you might have experience or an industry qualification that gives you specialist skills. But if a person's pay is an indication of the esteem in which he or she is held, you have long been greatly undervalued. You earn, on average, 20 per cent less than the average wage for all working Australians.

There are many reasons for this, none of them satisfactory. One relates to gender, another to the relative bargaining power of those working in the the not-for-profit sector compared to those in the public service or private enterprise. Last week, Prime Minister Julia Gillard acknowledged that ''this is something Labor's Fair Work system can fix''. She has committed her government to an agreement with the Australian Services Union that will give pay rises to more than 150,000 community sector workers. This will eventually bring their pay into line with the national average wage.

It is not a magic wand and workers will need to be patient as the agreement is phased in, at a cost to the federal budget of more than $2 billion over six years (as well as additional funding that will still be required from the states). But it is politically astute of the Prime Minister to remind traditional Labor voters - by her actions rather than just rhetoric - that the party she leads still takes seriously its obligation to look after workers' interests and to value equity over individualism.

Fair Work Australia made clear in May that ''gender has been important in creating the gap between pay in the [social and community services] industry and pay in comparable state and local govern-ment employment''. Public sector pay scales reflect the fact that historically most employees were men, whereas equivalent non-government roles have always been female-dominated. The tribunal accepted that attitudes to work seen as traditionally female meant their skill, experience and labour were inadequately remunerated.

Ending discriminatory pay regimes will do more than benefit women and their families it makes good economic sense. In 2009 the Australian Council of Social Service found that 64 per cent of community service organisations had difficulty attracting workers with appropriate qualifications and experience. And it is widely recognised within the sector that low wages are a significant reason for staff turnover.

Ms Gillard's announcement is a further illustration of her government's increasing confidence in its ability to implement change - the ''Clean Energy Future'' bills, which include the carbon tax, and plain packaging for cigarettes have recently passed into law increasing the superannuation guarantee rate to 12 per cent will soon follow. All will have significant social consequences, as will anticipated changes to gambling rules.

Of course, the decision to look after the welfare of low-paid workers will not come without a political price. It is difficult to see how these pay increases, even if introduced incrementally, can be achieved while keeping the budget in surplus, in the short term at least. As this newspaper has argued before, the government should not let its fear of opposition taunts drive it into undoing the good economic stewardship it has shown so far. It must remind voters of the findings of the National Centre for Social and Economic Modelling, which has estimated that eliminating the whole gender wage gap could eventually be worth around $93 billion or 8.5 per cent of GDP. Clearly, the gains from improving the lot of low-paid workers will ultimately reap far greater rewards than retaining inequality in the interest of a surplus next year.


Join the Conversation...

There are comments posted so far.

If you'd like to join this conversation, please login or sign up here

Related Articles