Gender pay gap in VET graduates - a review

Gender pay gap in VET graduates – a review

Contents

• Tables
• Review
• References

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

_{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

_{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

_{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

_{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

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

_{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

_{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.

References

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Chevalier, A 2007, 'Education, Occupation and Career Expectations: Determinants of the Gender Pay Gap for UK Graduates' Oxford Bulletin of Economics and Statistics, vol.69, no.6, 819 - 842.

Emiliani, L, et al. 2012 Educational segregation and the gender wage gap for recent college graduates in Colombia IZA, Bonn 16 Jul 2012 <http://ftp.iza.org/dp6361.pdf>.

Fitzenberger, B & Kunze, A 2005, Vocational Training and Gender: Wages and Occupational Mobility among Young Workers, IZA Discussion Paper 1766 Bonn, Germany.

Graduate Careers Australia 2010, GradStats, Employment and Salary Outcomes of Recent Higher Education Graduates, Graduate Careers Australia, Melbourne.

Healy, J, et al. 2008, Gender pay differentials in the low-paid labour market, 2008 Minimum Wage Research Forum proceedings: volume two, Melbourne.

Herault, N, et al. 2011, The effect of VET completion on the wages of young people, NCVER, Adelaide.

Jyrkinen, M & McKie, L 2012, 'Gender, age and ageism: experiences of women managers in Finland and Scotland'Work, employment and society, vol.26, no.1, pp.61—77.

Karmel, T 1995, The Impact of Increasing Education Levels on the Australian Workforce, Australian National University, Canberra.

Karmel, T & Liu, S-H 2011, Which paths work for which young people?, Longitudinal Surveys of Australian Youth Research Report 57 NCVER, Adelaide.

Karmel, T & Mlotkowski, P 2010, The impact of wages on the probability of completing an apprenticeship or traineeship, NCVER Monograph series, no.04/2010, NCVER, Adelaide.

Karmel, T & Nguyen, N 2006, The value of completing a vocational education and training qualification, NCVER, Adelaide.

Lee, J-S 2010, Returns from education: an occupational status approach, NCVER, Adelaide

Lim, P & Karmel, T 2011, The vocational equivalence to Year 12, Longitudinal Surveys of Australian Youth Research Report 58, NCVER, Adelaide

National Centre for Vocational Education Research 2010, Australian vocational education and training statistics: student outcomes, NCVER, Adelaide.
--- 2011, 2003 cohort: user guide, Longitudinal Surveys of Australian Youth Technical Report 54, NCVER, Adelaide.

Organisation for Economic Co-operation Development 2012 Gender equality in education, employment and entrepreneurship: final report to the MCM 2012 OECD, Paris, 16 Jul 2012.

Russell, H, et al. 2010, Gender differences in pay among recent graduates: private sector employees in Ireland Routledge, Taylor & Francis, Colchester.

Ryan, C 2002, Individual returns to vocational education and training qualifications: Their implications for lifelong learning, NCVER, Adelaide.

Sherman, R 2006, Down the track: TAFE outcomes for young people two years on, NCVER, Adelaide

Watson, I 2011, Education, earnings and the labour market, report for Skills Australia Sydney.