Women — well educated and poorly paid:
Gender pay discrimination in the public service
Liz Gordon and Missy Morton
Presented to: Women's Studies Association Conference, Christchurch, 2 June 2001
Wages are the most direct expression of economic value and status in any society where workers sell their labour for money. Underpinning all arguments regarding the elusive goal of equal pay for men and women are deeply structured positions about the relative value of men and women in society. These positions are present every time a man or a woman takes up a new job, and negotiates a starting wage. They are present at promotion time. They are present in debates about the relative value of the work of, for example, a nurse and a police officer. They exist in both private and public sectors. These positions are powerful, inaccessible and have proved extremely difficult to change. Unequal pay is an abiding characteristic of New Zealand society, and indeed all societies, and neither formal equality nor huge changes in education outcomes have made much difference.
That women have difficulty gaining status in our society can be shown through numerous anecdotes and instances. Let us give just one example from Thursday this week. Later this year there is to be a high-powered conference on 'Catching the Knowledge Wave'. Under the headline 'Conference Committee Represents Broad Cross-section of New Zealand Interests', a group of 35 people were announced as the organising committee for the conference. That only 5 were women, and yet the committee claimed to be representative, speaks volumes for the status of women in our society. One in seven is somewhat less than half.
This paper is authored by two feminist women. One is an academic and community advocate and the other is a politician committed to improving women's lives in her work. Both have experienced first hand the ways in which women's status and economic power is circumscribed by both formal and informal processes within institutions. We are interested in this paper in putting forward a case for immediate action to improve the relative economic position of women in the labour market. We acknowledge that, since the system of national awards was demolished and the Employment Contracts Act established in 1991, there is no simple road to pay equity. However, we will argue that, despite Helen Clark's statement in July 2000 that pay equity for women will not be a priority for this term of government, progress can be made in the state sector accountability structures that will significantly improve the current situation.
Just a matter of time?
Women's position in the labour market has changed significantly since the Equal Pay Act of 1975. That Act outlawed the practice of allowing men and women to be paid different rates for doing the same job. In the decade 1975-1985 there was a relatively large closure of the gender pay gap as a result of this legislation. In essence, women's hourly pay rates went from about 65% of men's, to about 75%. Further flow-on effects brought the figure up to nearly 80% by the end of the 1980s. However, since that time progress on pay equity has essentially stalled in both private and public sectors.
Figure 1. Hourly pay rates by gender, private sector 1989-2000 (INFOS time series)
The private sector is characterised by much lower wage rates than the public, but it can clearly be seen from Figures 1 and 2 that the trends are similar in both sectors.
Figure 2. Hourly pay rates by gender, public sector 1989-2000 (INFOS time series)
However, the apparent 'smoothness' of the progression of pay rates, if not of a closure in the gender pay gap, underemphasises a number of competing trends that characterised the labour market in the 1990s. These were, in particular, a change to the overall structure of the wage hierarchy, with high income earners becoming relatively better off but low and middle income earners losing a significant proportion of their income, the movement of women into many occupational areas that were previously exclusively male, the hugely improved educational outcomes for women and all within a period of relatively high unemployment and oversupply of labour.
The argument that the closure of the pay gap would continue until equality was reached, and that therefore women had to do little but wait, has been clearly shattered by the experiences of the 1990s. Women are better educated, and going into a greater diversity of jobs than ever before, but the gender pay gap has hardly changed in the private sector and has got markedly worse in the public, as Figure 3 clearly shows.
Figure 3. Women's hourly wage rates as a percentage of men's 1989-2000
The last census gave a full, if now out of date, picture of women's relative pay position. The median income of women workers was $19,200 and of men $28,800. Over the year, women earned only 67% of men's incomes.
There is no avoiding the gender pay gap. It exists in every industry. In the 1997 labour market statistics (Statistics New Zealand 1998), women's weekly earnings ranged from an average of $431 in the retail and restaurant trade to a high of $656 in public administration and defence. Men's lowest average was also in the retail and restaurant areas, but they earned a third more than women at $601. The highest paid industry group for men was business and financial services at an average of $945 per week.
Women are working more hours in the paid labour market than ever before. We are better educated. We have waited for the economic rewards to flow to us but they haven't come. The paradox of higher educational levels, and relatively lower pay, in particular at the high-paid end of the labour market, needs to be explained. Has education turned women into human capital that can be cashed in for good wages? And if not, why not?
The educated woman
There has been a dramatic change in the education position of women over the past 20 years. As far as we can see, no one planned for women to flood into the tertiary education system in huge numbers, but that is what has happened.
For this paper we went back and looked at a 1993 Statistics Department publication 'All about women in New Zealand', to examine how women's social and economic position has changed through the 1990s. It was with some surprise that we noted the extent to which women's educational position had altered in those few years; indeed, we found the document to be hopelessly out of date. Using 1991 statistics, the document stated that "women comprised nearly half (48 percent) of all those graduating with a first bachelor degree, up from 29 percent in 1971" (1993 p. 71). Compare this with the outcome statistics from the 1997 academic year, where 7,636 men and 11,108 women gained a bachelor degree. These changes are represented in Figure 4 (above).
A hundred years ago, women in New Zealand made up 40 percent of university enrolments. That figure declined to 30 percent by 1930, and then to just over 20 percent in 1950. By 1970, enrolments of women had once more climbed beyond 30 percent, exceeding 40 percent by 1980 and nearly 50 percent by 1990 (Statistics New Zealand 1993 p. 55). In 1998, 55 percent of university students were female and the gap is still widening (NZVCC, 1998 p. 2).
Much of the enormous increase in university enrolments since the 1960s can be attributed to increased participation by women. Women's enrolment in the universities have increased elevenfold since 1965, whereas there are only three times the number of men enrolled. Population changes and the echo baby boom account for much of the male increase, and so the changed participation rate can be largely attributed to women's enrolments.
We cannot expect all traces of women's subordinate position to be erased based on 20 years of catch-up, but we surely can expect the signs to be pretty good? Unfortunately, they are not. There are clear signs that, in economic terms, women's investment in education shows a declining rate of return, especially for a 3 year Bachelor's degree (Maani, 1999 p. 33). Her report, undertaken for Treasury, shows that the rate of return for having a degree has fallen 7 percent in the past five years. Despite the improved educational levels of the female workforce, the gender pay gap is alive and well among young as well as older workers.
The main source of data about young, well-educated people comes from the Vice-Chancellors' Committee annual survey of destinations. In recent years, that survey has concluded that the gender pay gap has reduced for those leaving University, although it still exists despite women's superior educational achievement. However, five years after graduation the pay gap has reappeared, at around $10,000 per year. It is very clear that young people are beginning to reproduce the old gender patterns of wage earning from previous age groups, whereby men's lifetime earnings are approximately double those of women, on average.
Jacqueline Rowarth looked at a breakdown of data from the 1998 New Zealand Vice Chancellors Committee survey. She notes that despite superior educational achievement, women graduates face a gender pay gap:
The facts appear to be that we have two groups of people, both with the same degree, but one of whom (women) has a higher proportion of A grades. They appear to be of similar age… and it is too early for maternity leave to have made a significant difference… Yet the males are paid, on average, $3250 more than the females" (1999 p. 1).
It is not just in New Zealand, or in relation to the University system, that these trends can be found. In Australia, Jane Kenway talks about the "paradox" of "gender reversals from school to work" (2000 p. 27). Discussing an Australian Federal Government report into the educational attainment of students, Kenway notes that gender is the single key influence on post-school work opportunities. Thus boys tend to under-achieve at school but relatively over-achieve in the job market, whereas, for girls, higher educational qualifications appear not to translate into better jobs. There is no similar research on this topic in New Zealand, but this may well provide a partial explanation for the continuation of the gender pay gap in unskilled work.
Well educated plus poorly paid equals a lifetime of debt
At the same time, women's propensity to borrow money to pay for their education is increasing. In the private tertiary education sector, the biggest borrowers are students enrolled in the traditionally female subjects of hairdressing and beauty therapy at, on average, around $8,000 per student per year, compared to average borrowings of only $5,500 in the public tertiary sector. It is of concern to us that young women are being encouraged to take out large student loans for training in vocational fields which have notoriously low pay, job insecurity and little opportunity for advancement. Some courses are simply an invitation for a lifetime of student debt unmatched by higher wages.
Recent changes to the student loan scheme have gone some way to reducing the debt burden for low-income women. However, unpaid loan debt is still to be adjusted by the inflation rate each year and those who do not reach the repayment threshold will see their loan balance continue to climb. Nevertheless the greatest danger for women is that the repayment schedule — of 10 cents in the dollar above $15,000 — will cause significant hardship given that, for most women, wages will never rise above $20,000 (Department of Statistics, 1996 census).
High student debt is a particular economic problem for women because of the gender pay gap. As noted above, Maani argues that women have a falling rate of return from their education anyway, and this can only be exacerbated by loan debt repayments, which she does not take into account in her calculations. Because of women's different economic position, student loan debt is a policy which, while appearing to be gender neutral, has significantly gendered outcomes. In effect, it discriminates against women because the burden of repayment falls more heavily on them, due both to lower pay and the traditional time out from work to have children.
There has been no proper economic study of the effects of student loan interest rates on the economic position of young women entering the workplace. The Student Debt Casebooks of 1996 and 1999 use an economic model devised by Iverson (1994) to assess the gender impact of loan debt. The 1996 survey (NZUSA/APSU) argued that, under the policy of the time, it would take, on average, 38 years for a woman to repay her loan, while the average man would take 16 years.
The 1999 survey (Choat) argued that the average male would now take 17 years, but a woman with a $20,000 debt would take 51 years to repay it. The 2000 changes to the loans policy is expected to reduce the figures to 15 and 29 years for men and women respectively. The Ministry of Education's own model is calculated on a crude aggregation of loan debt data which is not broken down by cost, course type or sector of enrolment. The Ministry's latest calculations estimate a repayment period of 9.5 years for males and 16.1 years for females (TESLA-I, 2001).
Why don't women in the state sector have equal pay?
State sector equal pay legislation preceded the 1975 Equal Pay Act by more than 10 years. Yet there is evidence that pay inequities occur throughout the state sector and across all occupational classes. Currently pay inequity is greater in the public sector then the private, which is possibly both cause and effect of the consistent finding that "the gender wage gap is larger among higher-paid employees" (Department of Labour 2000).
Figure 3 (above) demonstrates a trend towards an increasing gender pay gap in the public sector over the past decade. Virtually no work has been done on the cause of this trend; indeed even the State Service Commission still argues (Briefing for Minister, March 2001) that the gender pay gap is closing, even though the evidence to the contrary is overwhelming. However, the SSC is carrying out work on what it calls the "lingering issues" in regard to the determinants of gender pay gaps this year. It must unfortunately be assumed from this that the SSC does not see the pay gap as a major problem.
Figures currently available on state sector pay gaps come primarily from two sources. The first is various studies of pay in the academic sector, and especially the Universities. The second is a very crude global analysis of pay in government departments, undertaken through parliamentary questions early this year.
Both of the authors of this paper have been employed as academic staff in Universities. We both consider that we played important roles in the trends outlined earlier in this paper, whereby women now attend and graduate from universities in greater numbers than men. We both know first hand that Universities are not gender neutral when it comes to employing and promoting women staff. The figures are very clear from our own 1999 research. The average female university lecturer earns more than $10,000 less than her male counterpart. The pay gap is biggest at Otago and smallest at Massey. Canterbury failed to respond to our Official Information Act request.
Other data shows clearly that women are severely under-represented in permanent academic positions in New Zealand Universities. A recent AUS Bulletin reported Ministry of Education figures showing that the number of women in academic position remains low. They note that 33% of academic staff were women, up from 28% in 1994:
While there has been a gradual increase in the number of women Professors and Associate Professors, women are still largely concentrated on the bottom rungs of the academic ladder. The numbers of academic women by institution in 1999 were:
Auckland 34.9 Waikato 42.8 Massey 37.1 Victoria 33.2 Canterbury 22.9 Lincoln 25.3 Otago 31.8 AUS Journal, quoting Ministry of Education annual returns of staffing, 1999
While a better gender balance among academic staff will not itself solve the gender pay gap in Universities, there is a clear need for these institutions to urgently address the number and structure of women academic staff.
The second source of information on state sector pay was a survey, conducted earlier this year by Liz Gordon, asking each Minister how many male and female staff were employed in each Ministry or crown entity, and "what was the average pay of each gender group?" The results provide a global snapshot figure and the results, while impossible to disaggregate, are very interesting. They show that, on average, the gender pay gap in the core public service currently stands at $13,000 per year. The pay gap is much bigger in small, Wellington-based, policy-oriented Ministries, and smaller in big, regionalised agencies such as Inland Revenue.
Treasury is a good example of the small, centralised agency with a big gender pay gap and high average pay rates. As at 15 January this year it employed 134 permanent female staff and 171 men. The average male received an income of $95,327 and the average woman earned $62,038 (65%).
The Accident Compensation Commission (ACC) provided a model of the 'average' state sector pay gap of $13,000, with its 1381 females averaging $41,371 and the 564 men getting $54,618 (75%).
Inland Revenue was a large Department with a comparatively low pay gap. The 1,594 men averaged $45,405 and the 2,919 female staff averaged $35,773 (77%).
The state sector is by far the biggest employer of young graduates in the country. The question must be asked whether, given it is now more than 10 years since women started graduating from universities in greater numbers and better qualified than men, whether state sector employment and wage practices are not a key cause of the continued gender pay gap, especially among younger graduates. The State Services Commission argues that between 40 and 80 percent of the pay gap is produced by factors other than de facto, if unintentional, gender discrimination, but this still leaves huge space for discriminatory practices to occur. If a large part of the pay gap is caused by state sector employers continuing to appoint men as managers and women as clerical workers, then in the context of women's superior educational outcomes over the past decade these practices must be scrutinised.
In your face: new legislation will force employers to ask difficult questions
The New Zealand and Commonwealth/State Ministers' conference on the status of women in 2000 noted that:
New Zealand currently does not have a usable legislative framework for pay equity (equal pay for work of equal value). Pay equity legislation and more effective equal pay and EEO legislation would bring particular benefits for New Zealand women.
In the context of the deregulated Labour Market and the abandonment of national awards in 1991, it is difficult to imagine how pay equity legislation could be introduced and enforced. Such legislation would require the co-operation of employers to implement equal pay for work of equal value, and it is unlikely that such co-operation would be forthcoming in the current industrial relations climate. The focus of our work, however, has been on the state sector and its growing pay gap, and we do believe that existing EEO legislation contained in the State Sector Act can be usefully strengthened.
One of the privileges of a backbench Member of Parliament is the ability to draw up Private Members' Bills, and one of us has done just that. Liz's "State Sector (Enhancement of Equal Employment Opportunities) Amendment Bill" was drawn up early this year in response to her concerns about slipping pay parity in the state sector.
The bill does three things. First, it widens the definition of EEO to include pay equity, or equal pay for work of equal value. Second, it strengthens the role of the State Services Commissioner, so that he must ensure the implementation of and compliance with EEO policies, but without prejudice to the existing obligations on state sector CEOs to develop, publish and comply with EEO programmes.
Finally, the Commissioner will be required to include specific comments in his annual report to parliament on action taken in regard to EEO. This third element has been included to answer specific criticism from groups such as the Wellington Working Women's Resource Centre that the State Services Commission has "withdrawn from leadership on EEO issues".
This bill will not solve the problems outlined in this paper. However, the first step to changing attitudes is to force accountability, and the bill improves accountability requirements and allows the hard questions about lack of pay equity to be addressed.
Conclusion: A problem denied
It has been particularly noticeable in preparing this paper that the dominant discourse around equal pay is one of tolerance. It is assumed that equal pay (if not pay equity) will eventually happen, as long as we continue down the current track. Figures from recent years have been used to back up this position. However, the figures quoted in this paper are completely accurate — we have checked and double checked — and show rather a different story. Things are currently getting quite a lot worse, especially in the key public sector, where wages are higher and so many of our women graduates gain work. There appears to be subtle but systematic discrimination, whether intentional or not, that reduces the pay of women staff relative to that of men. We have no idea how this is played out within each person's individual job, but the overall dynamic is consistently demonstrated by the global figures. Whether it is recruitment practices (women are appointed to more junior positions or on a lower pay rates), promotion (do women still shrink from applying while men put themselves forward?). job definitions or whatever, the quantum effects are undeniable.
References
Choat, David (1999) Student Debt Casebook (NZUSA).
Department of Labour (2000) Pay inequality between men and women in New Zealand (Wellington, Department of Labour).
Kenway, Jane (2000) Puzzling about gender, school and school life: five paradoxex for policy AQ (October).
Maani, Sholeh (1999) Private and public returns to investments in secondary and higher education in New Zealand over time (Wellington, Treasury working paper 99/2).
NZ Vice Chancellors' Committee (1998) Annual Report (Wellington: NZVCC)
NZ and Commonwealth/State Ministers' Conference on the status of Women (2000) Legislative framework for pay equity and equal employment opportunities in New Zealand (unpublished minute of conference).
NZUSA/APSU (1996) Student Debt Casebook (NZUSA)
Rowarth, Jacqueline (1999) Guest Editorial: Vive la difference? NZ Science Review, 56, 1-2.
Statistics NZ (1993) All about women in New Zealand (Wellington, Statistics New Zealand).
With thanks to David Williams, Statistician, Parliamentary Library, for supplying the figures and calculations. Source: Quarterly Employment Survey.
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