Salary sticks

Most discussions around pay equity involve raising women's wages to the equivalent of men's. But there is an alternative.

- BY SOPHIE MOULLIN

Thank you for inviting me to prepare this brief analysis of the proposed Pay Equity Second Amendment (Swings and Roundabouts) Bill.

I was astounded to hear of the government's bold proposal to save approximately $0.6 billion per annum in public spending by securing pay equity between men and women. Levelling wages in male-dominated occupations down to those in female-dominated fields of equivalent skill and responsibility is, by any measure, an ambitious move that, to my knowledge, has never been attempted by any government anywhere.

Undoubtedly, the proposal is well-intentioned and, I am told, popular with the ladies across all party affiliations. In this submission, I acknowledge the potential merits of downward pay equity. However, as an apolitical economic expert, I feel compelled to alert Parliament to the risks this naive policy poses to macroeconomic stability and national competitiveness.

I can see the political appeal of pay equity. Although many men still shirk frontline public service roles, implementing immediate pay equity among direct government employees - levelling every corrections officer's pay down to that of a nurse, for instance - could free up a whole 1% of public spending to do a lobbyist a favour.

Private companies contracting with the government stand to pocket even more savings as pressure for downward pay equity spreads. Parity between construction supervisors ($52/hr) and aged-care supervisors ($32/hr), for example, could deliver an estimated 38% reduction in labour costs with only modest losses in retention, productivity and public confidence.