Research Shows That Increasing Job Flexibility Will Reduce the Gender Wage Gap & Boost the Economy

Research Shows That Increasing Job Flexibility Will Reduce the Gender Wage Gap & Boost the Economy

According to a recent AMP/NATSEM study the gender wage gap in Australia stands at 17.6% male to female earnings or $1—1.5million over a lifetime which, if erased, could increase our GDP by 8.5% or $93 billion. So how do we close the gap? Well, the Diversity Council of Australia lists “Making flexibility really work so it is just part of way we do business” as one major factor.

NATSEM, the National Centre for Social and Economic Modelling, is a major research centre within the University of Canberra and they published a paper in September 2010 titled, “The Impact of the Gender Wage Gap on the Australian Economy During 1990-2008” in conjunction with AMP, an Australian financial institution.

The table below, taken from the AMP/NATSEM study, shows that an increase in the gender wage gap of one percentage point is estimated to decrease GDP in total by $5,497 million, assuming the population is held constant at 21.21 million. But, if the nation committed itself to eliminating the entire gender wage gap, Australia would be rewarded with an 8.5% increase of GDP or $93 billion.

Table taken from the AMP/NATSEM paper, "The Impact of the Gender Wage Gap on the Australian Economy During 1990-2008”, Sept 2010

So the next logical question is: How do we go about eliminating the gap?

It’s commonly accepted that increasing a nation’s total number of hours worked will boost its GDP. According to the Australian Productivity Commission,  the nation’s overall workforce participation rate has increased over the last 25 years — from 61.3 per cent in 1980 to 64.4 per cent in 2005. But we still lag well behind other countries in the number of women aged 25-44, also referred to as the childbearing years, that participate in the workforce.

It’s true that there are already more women joining the workforce – in fact, there are roughly 1 million more women in the workforce than there were 10 years ago. But women’s ability to work more hours is affected by a number of issues including unemployment rates, the availability of appropriate and affordable child care, the availability of parental leave and access to flexible working hours. Therefore, we have to target these issues if we are to tap into this underutilised segment of the workforce.

The term “flexible work” refers to a number of things including: Home-based work or telecommuting, job-sharing arrangements, career breaks or extended leave, and flexible working hours such as part-time hours, flexible start/finish times, abbreviated or condensed working weeks or term-time hours. The Diversity Council of Australia (DCA) says, workplace flexibility is “not just about the hours of work but about the way someone works”.

DCA is the independent, not-for-profit diversity advisor to business in Australia. In 2010 they published a Pay Equity Report with KPMG which broke down the components of the gender wage gap as follows: 35% discrimination, 8% experience (years), 3% current employer tenure, 9% years not working, 10% industry segregation, 18% occupational segregation, 14% share in part-time employment. At least four of which could be solved or reduced if there were more flexible work options.

Nareen Young, CEO of DCA, spoke on diversity and strengthening the workforce at the Executive Level Leadership Network Annual Forum last year. In her presentation, Young pointed out that research shows work flexibility “enables employment of a diverse workforce; assists organisations become ‘employers of choice’; generates productivity benefits through retaining experienced and skilled staff; reduces costs from turnover recruitment and retraining; and, can assist organisations better meet customer needs and adapt to change”.

A 2007 Managing Work/Life Balance International Survey, demonstrated that leading work-life employers in Australia reduce turnover by 15%, reduce absenteeism by 16%, and increase parental leave return rate by 40% on average.

There is a wealth of information supporting the notion that Australia’s gender wage gap has genuine implications for the country’s overall economic growth, as well as for individual economic well-being and equity. And adopting flexible work options across the working world is a major step towards closing the gap.

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