Gender pay fight skirts the matter of preference

There is very little information in national gender pay gap statistics.

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I’ve have long argued for the abolition of the Orwellian-sounding Workplace Gender Equality Agency. While imposing disproportionate compliance costs on companies, it’s extremely unclear what it has ever achieved apart from pushing unproven propositions about the importance of narrowing the gender pay gap and achieving greater gender equality in workplaces.

Take these assertions from the CEO of the WGEO, Mary Wooldridge: “Evidence shows that improved gender equality leads to improved productivity and profitability and the ability to access broader pools of talent. With so much to gain, employers should consider the risk of inaction carefully. Because it is more than reputation that is at stake.”

Let’s be clear here, the quality evidence shows no such thing. To be sure, international consulting firm McKinsey & Company used to put out an annual review in which the claim was made that more workplace diversity was associated with better company outcomes, in terms of both productivity and profitability. Note that McKinsey was always conflicted because it makes money by advising firms about achieving greater workplace diversity.

Several highly reputable academics attempted to replicate the McKinsey findings and were unable to do so. In turn, McKinsey had to walk back its findings, claiming that correlation of course does not imply causation. It was a pivotal moment.

Of course, the good folk down at the WGEA, overwhelmingly women – where’s the gender equality there, I ask? – know this. But it hasn’t put them off greatly enlarging their mission by asking more and more of companies and making unconvincing attempts to skew the presentation of the data to show that women continue to be hard done by in workplaces.

Let’s be clear what the settled findings are on the reasons for the gender pay gap, established by Professor Claudia Goldin of Harvard University and Nobel prize winner in Economic Sciences and others. Women with the same qualifications and experience earn less than men because they prefer to take jobs with predictable hours of work and little travel. Jobs with long and unpredictable hours and lots of travel attract significant pay premiums, and women show little preparedness to take them.

Even in Scandinavian countries, where the laws are highly supportive of gender equality and the state provides lengthy earnings-related paid parental leave, women earn less than men. It seems the preferences of women to be at home for reasonable periods with their families make a real difference.

Let’s also be very clear on another point: there is very little information in national gender pay gap statistics, notwithstanding the penchant of the Prime Minister and other ministers to brag about any slight changes. Let’s also not forget here that the existence of many low-paid male workers contributes to the national gender pay gap.

We also hear very little of the fact that women shy away from certain occupations – garbage collection and sewerage work both spring to mind – and that more than 90 per cent of workplace fatalities are male workers. These instances of gender inequality are never highlighted by the WGEA.

Happily, International Women’s Day came and went this year without as much fanfare as normal. The fact that it occurred on a Saturday may be part of the explanation. Women were less enthusiastic about the breakfasts replete with cupcakes and sparkling wine on a non-working day.

There were still the usual calls to arms about getting more women on to boards and into senior positions. Again, the serious academic research is not very supportive of these entreaties.

Professor Marianne Bertrand and her (female) colleagues examined the Norwegian case where the law requires a quota of at least 40 per cent women on the boards of listed companies. They found that “seven years after the board quota policy fully came into effect, we conclude that it had very little discernible impact on women in business beyond its direct effect on the women who made it into boardrooms”.

In other words, it was great for the women – sometime referred to as “golden skirts” – who are appointed to the boards but that is where the impact stops. The same phenomenon can be seen here where a relatively small cabal of educated women with very similar social backgrounds sit on the boards of large companies. It’s a very remunerative and prestigious outcome for these women, who tend to shuffle the board positions over time, but it’s not clear whether there is really a wider beneficial impact for female workers.

Just consider the notion that the WGEA should be in the game of naming and shaming companies according to the composition of their workforces or the size of their gender pay gaps. What will be achieved?

There may be very sound commercial reasons why some companies have large gender pay gaps. What may be true on average – and bear in mind this is not proven – will not apply in every individual case. It’s bizarre to think that busybody bureaucrats with no commercial expertise can offer any sensible advice on these matters.

There is also a very unconvincing view that improving gender equality can be a win-win solution. The reality is that favouritism given to female workers is at the expense of male workers. While it’s often appropriate to offer flexible working arrangements to female workers, there are clear instances of other workers – men and young ones – staying back to ensure the work is done in a timely fashion, particularly when clients are involved.

In addition, some companies that have pushed hard to promote women – and have even given financial incentives to managers to do so – have found that very able, enthusiastic and ambitious male workers simply leave. It is also not uncommon to see some women “overpromoted” into jobs with insufficient experience and technical expertise.

The high water mark on these matters, it would seem, has now been reached and not just because of President Donald Trump’s resolute rejection of diversity, equity and inclusion. Let’s be clear, there are many people working in companies with DEI-type briefs and they will resist relinquishing their roles, even if it involves using other names.

But the Corporate Governance Council of the Australian Securities Exchange has now dropped its latest amendments to its “if not, why not” guidelines, which would have extended its coverage to include the ethnic background and sexuality of directors and officers. This follows many years of mission creep as the guidelines became more prescriptive and focused on diversity.

The Bank of England has also recently scrapped its proposal to force more than 40,000 financial services businesses to report diversity and inclusion data on its employees.

In response to the urging of the Chancellor, Rachel Reeves, to reduce red tape to promote economic growth, the bank has taken the view that companies will now not be required to provide this information. This could provide a useful hint to our own WGEA.

The hope is that common sense will finally prevail, and that male and female workers can be treated fairly while considering their qualifications, experience and expertise as well as their preferences. And perhaps we can get a few more female garbos while we’re at it.