The extent of segregation between men and women in the labour market in Australia

The policy proposal of the Commonwealth Government to increase the labour force participation rate of women to offset the emerging gap between fiscal capacity and fiscal commitments resulting from population ageing is misguided and misinformed and threatens reproduction, the very cause of population ageing. There is no doubt that the relationship of women, particularly mothers, to the labour force will be increasingly important as the Australian population continues to age, however, the below chart proves that women are currently not utilised in the labour market to the same degree as men.

The Index of Dissimilarity (ID) is a simple technique used to compare differences and/or similarities between two or more populations, in this case, to assess the level of segregation between women and men in the labour market, taking into account age, educational attainment, occupation, the presence or absence of children and the presence or absence of a partner. It generates a single figure index that identifies the minimum percentage of one population that would need to change for the frequency distributions of both populations to be the same.

The chart illustrates the ID for labour force status between men and women for each partner and child status variable combination, by educational attainment, for three broad age groups; 20 to 34, 35 to 49 and 50 to 64 years; as well as for the total population.

Each trend line shows the percentage point difference between the labour force status of men and women by their highest level of educational attainment. Each show the extent to which similarly educated men or women, with the same partner and child status, would have to change their level of labour market attachment for their labour force status to be the same.

Essentially, for all levels of educational attainment, the greatest degree of labour force dissimilarity exists for those partnered with children, and the least for those not partnered with no children. In other words, the presence of both a partner and a child, requires a greater proportion of men and women to change their level of labour force attachment for the labour force status to be the same.

Therefore policy intervention aimed at increasing female utilisation and thus productivity may be a more effective strategy in managing the projected impact of population ageing.

The Importance of Paid Parental Leave

The skill shortages being experienced in Australia today are a direct result of a severe reduction in the birth rate since the early 1970s, caused by women participating in the labour market at an increasingly greater rate.

Any policy addressing skill shortages and/or population ageing should therefore not be considered in isolation of fertility related policy.

Paid Parental Leave provides an opportunity for the government to set in place a policy to achieve an increase in both the level of labour force participation rates and increase fertility to replacement rate (2.1 births per woman in her lifetime).

The recently released Productivity Commission Draft Inquiry Report identifies the importance of paid parental leave to the economy and society. It believes such a scheme would:

· Generate increased child and maternal health and welfare benefits
· Stimulate lifetime employment rates of women
· Increase retention rates for business, with reduced costs for training and recruitment
· Promote the normalcy of combining working and a caring role for children

Any potential parental leave policy introduced in Australia should encourage reproduction, participation in the labour market and maximisation of the utilisation of available qualifications and skills.

The blog ‘The extent of segregation between men and women in the labour market’ discusses the current labour market scenario. An appropriate paid parental leave policy has the potential to close the gap between the utilisation of men and women in the labour market.