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Dublin: 22 °C Friday 25 July, 2014

Aaron McKenna: Gender pay gap is a major problem… for all of us

And the solution is far more complex than equal-pay legislation – it goes to the roots of our social system.

Aaron McKenna

THE GENDER PAY gap, like most gender equality issues, is a long running and contentious issue. An OECD report released during the week shows that Irish women go from earning 17 per cent more than men prior to having children to 14 per cent less than men after their firstborn. It’s a hell of a swing, but I wonder how much deep thought we’ve given to the nature of this pay gap and what it might cost us change it… Or not change it for that matter.

There is a strong and fine libertarian argument to be made that we all make our own choices in life, and the choice to have children will of course affect earnings for whoever becomes the primary care giver. Success in work is based not on years since joining an organisation, but on years spent in active service, gaining experience and showing positive results. If one knocks off work for six months every couple of years, it will hold back career progression.

If a man and a woman join an organisation the same year, but over the following decade the woman has three children and takes her six months’ maternity leave each time then she will have served at least 15 per cent less time in the job. She will also likely miss out on opportunities that arise during that period for specific promotions, the chance to work on special projects or stay at the cutting edge of her professional development. In one way it’s not fair on her – she is doing a hard job that is essential for the greater good of society. On the other hand, is it fair to deny the person putting in more time on the job the chance to do better?

Wellbeing

This is the usual back and forth when the topic of gender pay equality comes up, and it’s a circular argument bound to get any man into trouble with his betters. I think we need to consider a lot more than just the cost to individual women when looking at earnings after childbirth: This is an issue intimately linked to our demographic and societal wellbeing in decades to come.

Firstly, it is clear that on average the gender pay gap favours women heavily prior to childbirth, which comes as a surprise to many used to hearing one side of the story about men earning more; likely thanks to the old boys’ network and an aversion to giving raises to silly women. Women are typically better educated and get better jobs than men early in their careers – the pay gap is less about gender than it is having and taking care of children.

We currently have what statisticians rather charmingly call a “replenishment rate” that has fallen to 2.1 children per woman in Ireland. To maintain a healthy balance of population growth into the future, we need at least 2.5 children per couple. This is so that we have enough children to pay for our retirements.

Crippling

If, like me, you’re in what I hope is the first half of our lives, then we are currently supporting our elders without crippling ourselves financially. The fewer children we have, however, and the deeper they will need to dig into their pockets to support us by the time we take up gardening.

A survey of women at work has shown that they would, on average, prefer to be having 2.7 children if only they could afford it; either directly in terms of childcare and so on or indirectly in the cost to their careers. A woman who has three children is effectively shooting herself in both feet as far as her career is concerned if she wants pay equality.

There are solutions to this, some of which cost little but I daresay would only move the needle a notch; and some of which are outlandishly expensive and would involve throwing out old notions about child benefit.

In the first place, let’s rule out any arbitrary laws about gender-related pay. We should make it easier for women to work after having children, but the idea of imposing equal salaries without equal service is neither fair nor workable.

Sharing the burden

Instead, we should do as they are moving towards in the UK and allow men to take paid parental leave from the same pot as women. If mum wants to return to work within a few weeks of giving birth, dad can step in take paid paternity leave in her place. Who knows how many couples would choose to make full use of this sort of a measure, but it means that the option is there for it to become a team effort, rather than a hit solely on women after having a child.

That’s a reasonably simple and cost-neutral idea, though it will create more havoc for employers… But oh well, we’re talking about having children, not trips to Spain.

A big thing that cripples career minded women after having children is the cost of childcare. The average cost of childcare per year is €9,932 per child. The average woman earns about €25,000 per year, or €21,000 after tax. Going back to work and putting her child into day care is the equivalent of a 47 per cent tax on her prior earnings. Have two kids and you’re paying for the pleasure to go to work.

Ballooning

Some among you may cry “The government should do something about this!” There are 356,000 children aged under four in Ireland as of Census 2011, so doing ‘something’ will cost anywhere up to €3.54 billion per year just for this age group, let alone the kids in primary school who would still need minding during working hours. This ‘something’ is also a ballooning cost – in Census 2006 we had 302,000 children in this bracket, so the cost in the intervening 5 years has nominally risen by over half a billion a year.

Child benefit is sometimes derided as the result of previous governments attempting to put off the childcare issue by providing a cash payment to parents. It costs us about €2 billion per year, so even if we took it off everyone – rich and poor – come what may, it wouldn’t cover a universal childcare system. Not even close. Any midway solution, like reducing benefits and childcare provision for richer people, would still leave a large bridge to cross whilst politically annoying huge swathes of voters.

I doubt we’ll be fixing the childcare issue this side of Ireland’s lost decade, but if we want women to put their talents to good use in our economy and have enough children to put us through our retirements it will need to be dealt with in the future.

Aaron McKenna is a businessman and a columnist for TheJournal.ie. He is also involved in activism in his local area. You can find out more about him at aaronmckenna.com or follow him on Twitter @aaronmckenna.

Read: More columns from Aaron McKenna on TheJournal.ie>

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