Gender pay gap in VET graduates - a review

Office for WomenEconomic SecuritySuperannuationThe Gender Pay GapLeadership
Tuesday, November 25, 2014
Publication author(s):
Patrick Lim - National Centre for Vocational Education Research
Publication abstract:

A gender wage gap of 16—18 per cent has persisted in Australia for the past 20 years despite the equal pay decision by the industrial court in 1972. There is a wide body of literature available that looks at the issue of the gender pay gap. This review has focussed on the impact that education and training has had on the gender pay gap. In particular, what impact does vocational education and training (VET) have on this gap?

Gender pay gap in VET graduates – a review

Contents


Tables

  1. Gross weekly wages ($) for males and females by academic orientation and post-school pathway
  2. Average annual income of students employed full-time, aged 15 to 24, who completed TAFE training in 2001, at 2002 and 2004
  3. Average annual income of graduates employed full time by field of education for males and females, 2011
  4. Average annual income of graduates employed full time by industry for males and females, 2011
  5. Gross weekly wage by gender for early school leavers, LSAY Y95/Y98
  6. Average weekly wage at age 22 by gender disaggregated by highest education level obtained by age 22
  7. Average weekly wage for those working full-time at age 22 by gender disaggregated by Industry, where the highest qualification is a VET qualification

Review

A gender wage gap of 16—18 per cent has persisted in Australia for the past 20 years despite the equal pay decision by the industrial court in 1972. There is a wide body of literature available that looks at the issue of the gender pay gap. This review has focussed on the impact that education and training has had on the gender pay gap. In particular, what impact does vocational education and training (VET) have on this gap?

It has been established that females tend to undertake courses that typically lead to occupations that are relatively low paid (for example hairdressing) relative to men. It is also well understood that Australia has a highly gender segregated workforce and that many female dominated industry sectors are poorly paid compared to male dominated industries.

So, what about VET graduates? The typical occupations of most VET graduates (Certificate III and above) sits between the low-skilled (low-paid) and high-paid professionals. However, some occupations require high-level VET qualifications (Certificate IV) but are low-paid- for example most caring occupations require Certificate IV’s - are low paid and are over-represented by women. The number of studies that directly investigate the gender wage gap of VET graduates is small, but, there are a number of studies that indirectly compare male and female wages.

Karmel & Liu (2011) using the 1995 cohort of the Longitudinal Surveys of Australian Youth (LSAY) showed that males and females have quite similar pathways into post-school education and employment. There is one exception; that males are twice as likely as females to undertake a traditional apprenticeship. Further, females are more likely to undertake university study (43 vs 36 per cent). Regardless of the postschool study pathway, male and female young people are equally likely to have no post-school study (~30 per cent). As part of their study, Karmel & Liu (2011) investigated the weekly wages of the post-school pathways for males and females. They show that females do substantially worse, within each pathway. However, Karmel & Liu (2011) also showed that the best pathways differ between males and females, the best pathways for young females is completing senior secondary school and undertaking higher education. Young males on the other hand have good outcomes from alternative pathways, particularly through the completion of a traditional apprenticeship. The results from their analysis are reproduced in table 1.

Table 1: Gross weekly wages ($) for males and females by academic orientation and post-school pathway

Pathway Low academic orientation High academic orientation
Males Females Males Females
ESL1, no post-school study 907 776 889 798
ESL, apprentice 934 N/A 916 N/A
ESL, Trainee/other VET 944 N/A 750 N/A
ESL, further post-school study   704   889
Completed Year 12, no post-school study 880 707 963 887
Completed Year 12, apprentice 1033   1153  
Complete Year 12, trainee 863   907  
Completed Year 12, apprentice/trainee   683   914
Completed Year 12, other VET 854 721 944 805
Competed Year 12, university study 934 832 1002 989

1ESL = Early school leaver

Ryan (2002)and Sherman (2006) both found that VET qualifications provided better wage outcomes for males relative to females. Ryan (2002) established that male and female wage outcomes increased as the time from training increased. Table 2 (sourced from Sherman, 2006; table 7) shows that the wage gap for young people who completed TAFE training in 2001 was larger 3 years out from completion than 1 year after for the 20 to 24-year-olds.

Table 2: Average annual income of students employed full-time, aged 15 to 24, who completed TAFE training in 2001, at 2002 and 2004

Age Group 2002 ($) F/M wage ratio (2002) 2004 ($)  F/M wage ratio (2006)
15 to 24 years 27 577  - 36 479  -
Male 28 606   39 496  
Female 25 633 0.8961  31 820 0.8057
15 to 19 years 21 495   31 082  
Male 22 375   32 314  
Female 20 189 0.902 29 761 0.921
20 to 24 years 30 410   40 500  
Male 31 155   43 600  
Female 28 824  0.925 34 091 0.782

Annual income data reproduced from Sherman (2006), table 7, page 19.

Table 2, which presents the average annual income of full-time employed graduates by field of education, shows that females earn at most 92 per cent of male wages. In the worst case (20 to 24 years in 2004), females earn 78 per cent of males.

Tables 3 and 4 have been extracted from the 2011 Student Outcomes Survey (National Centre for Vocational Education Research,2010) to provide some further information on the impact of VET qualifications on the gender wage gap.

Table 3 presents the reported average annual income for full-time employed VET graduates in 2011 by fields of education and gender. From this, it is clear that there are substantial differences between males and females even within the same fields of education. Generally, females earn less than males (up to 74 per cent) with the exception being females employed after they have completed VET studies in Information Technology. Table 4 repeats the exercise but now considers average annual income by industry of employment. In this case we observed that for all industries, female VET graduates earn less than their male counterparts (up to 73 per cent in other services). We note that tables 3 and 4 apply for all VET graduates, and any previous educational experience has been ignored, as has the level of qualification undertaken.

Table 3: Average annual income of VET graduates employed full time by field of education for males and females, 2011

Field of Education Male
Average annual income ($)
Female
Average annual income ($)
F/M ratio (%)
01 Natural and Physical Sciences 61300 46800 76
02 Information Technology 47800 52100 109
03 Engineering And Related Technologies 58100 49300 85
04 Architecture And Building 50900 48500 95
05 Agriculture, Environmental And Related Studies 52900 48500 92
06 Health 67800 50500 74
07 Education 73400 66100 90
08 Management And Commerce 59500 47800 80
09 Society And Culture 54000 44500 82
10 Creative Arts 43200 40600 94
11 Food, Hospitality And Personal Services 44500 37300 84
12 Mixed Field Programmes 47800 44700 94

Source: 2011 Student Outcomes Survey, NCVER (2011)

Table 4: Average annual income of VET graduates employed full time by industry for males and females, 2011

Industry Male Average annual income ($) Female Average annual income ($) F/M ratio (%)
Agriculture, Forestry and Fishing 51400 45600 89
Mining 88000 67600 77
Manufacturing 53800 43700 81
Electricity, Gas, Water and Waste Services 67900 59000 87
Construction 53400 50900 95
Wholesale Trade 51200 44100 86
Retail Trade 43800 37700 86
Accommodation and Food Services 43100 38000 88
Transport, Postal and Warehousing 62100 49400 80
Information Media and Telecommunications 56000 46500 83
Financial and Insurance Services 62000 50200 81
Rental, Hiring and Real Estate Services 51200 41200 80
Administrative and Support Servcies 60500 46100 76
Professional, Scientific and Technical Services 48800 43000 88
Public Administration and Safety 65600 60000 91
Education and Training 66100 60400 91
Health Care and Social Assistance 53900 46700 87
Arts and Recreation Services 50900 47200 93
Other Services 45900 33300 73

Source: 2011 Student Outcomes Survey, NCVER (2011)

Fitzenberger & Kunze (2005), Ryan (2002), Watson (2011) and Herault et al. (2011) all show that VET qualifications do attract a wage premium, on average, for all graduates. The wage premium is however lower for females with Ryan (2002) reporting a 5 per cent lower wage premium. All authors show that the gap in wage premiums increase both with time since qualification and qualification level. Watson (2011) also shows that females are penalised more for lower level qualifications than males with qualifications at the same level. Herault, Zakirova & Buddelmeyer (2011) also found that there are wage penalties for female trainee and apprentices who complete some Certificate II and IV level qualifications. This result is consistent with the findings of Karmel & Mlotkowski (2010) who find that completion of some traineeships lead to wage penalties. A similar result is seen among university graduates who subsequently complete a VET qualification (Karmel & Nguyen 2006).

Lim & Karmel (2011) when investigating the vocational equivalence to Year 12 compared the gross weekly wages of fulltime workers of early school leavers by various VET qualification levels (qualification obtained by age 19). The results from their paper are presented in table 5. It is clear that female early school leavers fare much worse than males in terms of pay regardless of the certificate level undertaken. Females who undertake an apprenticeship earn nearly half the weekly salary of males. Again, the impact of the field of study will require further investigation.

Table 5: Gross weekly wage by gender for early school leavers, LSAY Y95/Y98

Qualification level Gross weekly wage – males Gross weekly wage - females F/M Pay ratio
Completed Year 12 and TER in bottom half 945 783 0.829
Year 11 or below and apprenticeship completed 1317 744 0.565
Year 11 or below and Certificate II completed 906 760 0.839
Year 11 or below and Certificate III completed 1063 703 0.667
Year 11 or below and Certificate IV or higher completed 868 756 0.871
Year 11 or below and other certificates completed 1045 814 0.779
Year 11 or below and no further training completed 981 717 0.731
Year 11 or below and traineeship competed 916 733 0.800

Lee (2010) investigated the change over time in occupational prestige. Occupational prestige is a measure of occupations on a scale of 0 —100 that incorporates various inputs to assign occupations to a position on the scale. Lee (2010) investigated gender by qualification interaction and found that females tended to have higher occupational prestige, and this became more pronounced for young people without Year 12. Lee’s results suggested that females work in more prestigious occupations but earn less than their male counterparts. In terms of completing a VET qualification, the increase in occupational prestige was greater for males than females suggesting that males benefitted more the females from VET qualifications.

Tables 6 and 7 present some simple tables from the 2003 cohort of the Longitudinal Surveys of Australian Youth (National Centre for Vocational Education Research, 2011). We begin by analysing the gross weekly wage at age 22 disaggregated by highest education level obtained (table 6). From table 6, we see that for all qualification levels, with the exception of postgraduate degrees (noting that this is a small sample size) females earn substantially less than their male counterparts. Females whose highest qualification is a Certificate I earn nearly half the wage of males with the same qualification.

Table 6: Average weekly wage for those working full-time at age 22 by gender disaggregated by highest education level obtained by age 22

Highest Education Level Obtained Male Average gross weekly wage Female Average gross weekly wage F/M ratio (%)
1 Certificate I 1211.46 704.03 58
2 Certificate II 937.49 775.41 83
3 Certificate III 1145.65 774.35 68
4 Certificate IV 992.55 785.47 79
5 Certificate - level unknown 1240.52 808.71 65
6 Advanced diploma/diploma (incl. associate degree) 899.22 838.57 93
7 Bachelor degree 1055.31 940.28 89
8 Graduate diploma/graduate certificate 1112.00 1001.96 90
9 Postgraduate degree (PhD/Masters) 914.28 1002.61 110
10 Did not complete a qualification 959.67 806.04 84

Source: Longitudinal surveys of Australian Youth (LSAY), Y03 cohort

Table 7: Average weekly wage for those working full-time at age 22 by gender disaggregated by Industry, where the highest qualification is a VET qualification

Industry of employment (ANZSIC 1993) Average gross weekly wage ($) - Males Average gross weekly wage ($) - Females F/M ratio (%)
A AGRICULTURE, FORESTRY AND FISHING 943.97 853.60 90
B MINING 2056.75 1611.82 78
C MANUFACTURING 959.47 871.72 91
D ELECTRICITY, GAS and WATER Supply 1240.86 940.49 76
E CONSTRUCTION 1176.73 776.56 66
F WHOLESALE TRADE 854.24 805.43 94
G RETAIL TRADE 838.34 750.72 90
H ACCOMMODATION AND FOOD SERVICES 781.22 750.32 96
I TRANSPORT and STORAGE 1055.47 800.24 76
J COMMUNICATION SERVICES 916.02 709.63 77
K FINANCE AND INSURANCE 998.51 887.75 89
L PROPERTY AND BUSINESS SERVICES 994.40 809.43 81
M GOVERNMENT ADMINISTRATION AND DEFENCE 1006.85 958.40 95
N EDUCATION 817.69 676.34 83
O HEALTH AND COMMUNITY SERVICES 923.82 784.29 85
P CULTURAL AND RECREATIONAL SERVICES 983.04 720.04 73
Q PERSONAL AND OTHER SERVICES 1021.06 838.53 82

Source: Longitudinal surveys of Australian Youth (LSAY), Y03 cohort

Table 7 presents the gross weekly wages of males and females by highest VET qualification obtained by industry of employment for full-time employees at age 22. From this we can see that for all industries females earn less than their male counterparts, with accommodation and food services, wholesale trade and government administration and defence being the most equal. Accommodation and food services is also the lowest paid industry and is highly regulated by awards. The industries that have the greatest discrepancies are construction, cultural and recreational services, transport and storage and electricity, gas and water supply.

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