The Nouveau Poor – gender pay gap, stretched super inequality in times of pandemic
Sixty-one. This is the number of extra days that women currently have to work in a fiscal year to earn as much as their male counterparts. And when it comes to retirement, the gender gap gets worse, writes Harry chemay.
Few policies affect the lives of Australians as directly as retirement pensions. For some, this has created opportunities for tax-advantaged wealth in their golden years. But for a system that now exceeds $ 3.3 trillion in total value, the results it produces are far from fair and highly sexist.
Decades after the adoption of the Gender Discrimination Act in 1984 and the more recent Gender Equality in the Workplace Act of 2012, the gap persists. According to the Agency for Gender Equality in the Workplace (WGEA), there is now a “gender pay gap” of 14.2% between the average earnings of women and men in the labor market .
Men and women doing the same work are, at first glance, required by law to be paid the same amount. But pay equity, or the lack of it, is only a small part of the gender pay gap.
Rather, the gap refers to a series of problems whereby women enter the labor market with pay parity close to that of men, but with a gradual divergence thereafter in employment opportunities, career paths and the ability to earn income for life.
All of this worsens over time into poorer outcomes later in life, especially when it comes to financial security in retirement. Superannuation is simply not a level playing field between the sexes.
Super is great for men, not so much for women
The retirement pension is based on the advantage of compound interest to increase the impact of contributions. This cumulative effect works best on a solid foundation of contributions made as early as possible.
This is the first disadvantage women face. Statistics from the WGEA show that despite having better academic results than men when entering the workforce (of all women aged 25-29, 48.3% have a bachelor’s degree or above compared to 36.1% of men the same age), the median starting undergraduate salary for women is 2.5% less than for men.
From there, things only get worse for women, especially in the private sector, where the gender pay gap is currently 20.1% for total annualized full-time pay. .
Women are also more strongly represented in part-time work. While women represent 47% of all employed people, they represent 68% of all part-time employees.
But even women with a high career trajectory are not on an equal footing, with women occupying less than 33% of key leadership positions and just 18% of CEO positions.
Even in the absence of career breaks, men’s higher lifetime incomes translate into higher employer pension guarantee contributions, giving men a head start in compound issues. and an unassailable lead, on average, in the race for retirement security.
By linking the guarantee to average weekly earnings, which full-time women currently earn on average $ 261.50 less, gender inequality is built into the architecture of the modern pension system.
Tackle the super gender imbalance
Last year’s Retirement Income Review (RIR) addressed the issue of the adequacy, fairness and sustainability of the retirement income system in a mammoth report of over 600 pages commissioned by the government.
He said the 2017-18 median balance for super people aged 60 to 64 (the age range in which most Australians retire) was $ 163,985 for men and $ 128,507 for men. women.
But if we look at the different age groups, the gaps exceed 60% in the most important years of “peak income” before narrowing slightly at retirement age.
The RIR has also found that career breaks to raise children are a significant barrier to retirement equity.
Women represent 94% of all caregiver leave. A study shows that a woman with a child aged two or less in 2001 experienced an average reduction of 77.5% in her income over the following 15 years, compared to those without children. Men with young children did not incur any similar punishment.
Government policy is to mitigate this by paying for paid parental leave. It would cost the budget some $ 2.2 billion a year, paid at minimum wage to eligible people for up to 18 months. But it excludes pensions. An easy solution at a relatively paltry price of around $ 220 million. Pennsylvania.
Relationship breaks at the end of life
The other big gender factor in retirement security revolves around relationship status.
According to the RIR, about 19% of women and 15% of men aged 60 to 64 were divorced and single in 2016, up from 6.7% and 6.3% in 1991 respectively.
The report found that women generally did not enforce their rights to their ex-partners’ super assets in settlement proceedings, ending up with less super assets than they might have.
This is fully consistent with the fact that single women, especially those with low incomes, have fewer resources to cover living expenses in retirement than single men.
A man is not a pension plan, housing security is
The face of tomorrow’s troubled retiree will likely be that of a single tenant woman.
A study by the Australian Human Rights Commission found that women over 55 are the fastest growing homeless group in the country. This strongly suggests that the difference between a relative security pension and a poverty pension is based on the retired owner status.
Ownership of unencumbered homeownership produces a sort of retirement “income”, which is the amount not spent on rent. This works out to about $ 20,000 per year, the national average rent for a home.
Avoid rents and get a full single-age pension, along with retirement and a little private savings, and retirement may not yet be fields and foie gras, but it will not be. no longer precarious.
University research clearly shows that the boundaries of homeownership are increasingly porous. Women who leave homeownership later in life find it increasingly difficult to re-enter the market and, if they do, retire without significant debt.
Neither approaching retirement as a single tenant, nor being heavily burdened with mortgage debt, is desirable if retirement security is the goal.
Commonwealth rent assistance must be increased to help the growing number of retired tenants, especially single women for whom the current maximum rate is $ 140.80 per fortnight.
Dilapidated housing affordability also poses a real and current threat to the future financial security of all Australians, regardless of what generation they belong to.
This, unfortunately, appears to be a policy issue carried over into perpetuity. Upsetting voters sitting on mountains of owner-occupied and investment property wealth is not a good election strategy.
Australia’s New Poor
Precarious and discontinuous work, combined with precarious and increasingly unaffordable housing, leads to precariousness in retirement.
The modern face of poverty in Australia is changing to that of older single women in precarious housing, increasingly due to relationship breakdowns later in life.
This is the harsh reality facing a growing number of single women over 55 who, as a result of the effect of the gender pay gap and its interaction with a highly sexist pension system, are approaching their retirement with apprehension.