It is calculated on the average weekly ordinary time earnings (AWOTE) for full time employees that the ABS publishes on a biannual basis. AWOTE does not factor in part time or casual earnings or income earned from overtime payments.
When calculating the gender pay gap, the amount of female weekly ordinary time earnings are first divided by the amount of male weekly ordinary time earnings.
The formula below is used for calculating the GPG:
GPG = 1 minus (female ordinary time earnings/male ordinary time earnings) x 100
In individual organisations the same calculation can be used, though part time employees can be included in the indicator by converting their salaries to the full time equivalent.
The gender pay gap results from a combination of factors, including:
- women’s traditional caring role, combined with a lack of flexible work options, can force them into casual and non-career part time jobs
- women are under-represented in leadership and senior management positions
- female graduates may start on a lower salary than male graduates, even in the same industry and workplace – and this differential is maintained throughout their careers
- men may receive bigger attraction and performance bonuses than women and
- male dominated work has historically been better paid and better organised than female dominated work.
The gender pay gap as mentioned above is based on full time earnings so the fact that more women work part time is not part of the calculation of the gender pay gap. It is also based on ordinary weekly earnings that do not take into account overtime earnings.
More detail is provided in the 'What are the causes of the gender pay gap?' section below.
As discussed above, there are a range of factors that contribute to the gender pay gap. More detail is provided on three of these factors:
Unsupportive working arrangements
A lack of permanent part time jobs and flexible working arrangements restricts the ability to combine quality employment and family care responsibilities. This means women with children or other caring responsibilities are less able to participate in the paid workforce. This in turn can significantly reduce women’s earning potential both in the short term and longer term, as well as their capacity to accrue superannuation and retirement savings.
Women may be forced to ‘choose’ the flexibility of lower paying part time or casual work, or not seek career advancement because of caring responsibilities. Often there are fewer opportunities for training and career development in part time or casual employment or in industries where these types of employment are widespread.
Over representation of women in casual and non-career part time employment
There is a greater predominance of women than men employed on a casual basis. This type of employment is associated with a lower overall level of wages and in recent years the gap between part time/casual and full time average hourly earnings has been increasing. Full time employees are more likely to be paid above the award or minimum wage rate and more likely to be covered by an enterprise agreement. This trend has major negative implications for the current and long term gender pay gap.
Fortunately in recent years there has been significant growth in ‘quality’ part time employment. This is secure part time work with equitable status, pay and working arrangements. Further growth in this area should help reduce the gender pay gap and provide employees with greater opportunities to work part time for family or other lifestyle reasons. People who have quality part time jobs have a similar job content and status as full timers; they are encouraged to participate in training, career and professional development programs, and they feel confident in applying for promotion.
Women are under-represented in management and senior positions within many organisations. This decreases gender diversity and increases the organisation's gender pay gap.
Sex segregated labour market
Australia has a highly sex segregated workforce. This means that women and men tend to be clustered into separate occupations and industries. Those occupations and industries that are male dominated have historically been more highly valued with ‘men’s work’ paid more than ‘women’s work’. The notion of ‘men’s work’ and ‘women’s work’ largely persists.
One of the key issues for working women and the wages and benefits they receive is how their work is valued. Often the skills and work associated with female labour have been seen as natural and innate and, hence, have not been highly valued in the labour market.
Women’s work is undervalued because of:
- the absence of appropriate classification structures
- poor recognition of qualifications
- the absence of previous and detailed assessments of their work
- gendered characterisations of the work undertaken by women and
- inadequate application of previous equal pay measures.
Research has found that a significant portion of the gender pay gap is associated with being in female dominated work. Women employed in industries that were close to 100 per cent female dominated earned 32 per cent less than women with identical job characteristics employed in industries that were close to 100 per cent male dominated. Women also received lower wages in female dominated occupations within industries.
There is no simple answer to why WA’s GPG is higher. It is likely that high wages in the mining and resources sector influence WA’s GPG, but identifying the magnitude of this influence is difficult. Less than 10 per cent of all WA employees work in the mining industry, but the flow-on effect of this high paying industry on associated sectors such as construction and professional and scientific services plays a significant role in elevating average earnings across a number of male-dominated industries.
Research has estimated that one in five WA employees work in either the mining industry or an industry that supports or services the mining industry. Skills shortages in mining-related sectors have resulted in higher than average earnings over a long period of time. As men are more likely to work in these industries, male average earnings are now significantly higher than those for women in WA.
 ABS (2011) Workforce Participation and Workplace Flexibility, Western Australia, catalogue no. 6210.5.