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Consider how an ECEC career will impact financial wellbeing, Curtin Professor says
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Freya Lucas
Jul 31, 2024
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Feminist economist Professor Siobhan Austen is encouraging young women to consider the financial implications of their career choice in a bid to safeguard their financial future.
An extract of a recent conversation between Professor Austen and Curtin University writer Yvette Tulloch appears below. To read the full conversation please use this link.Work such as Professor Austen’s is of particular note for highly feminised sectors such as early childhood education and care (ECEC) in terms of contributing to the broader conversation which surrounds pay and conditions discussions and any potential wage rises.
In Australia, Professor Austen shared, one in six women experience financial abuse, and single mothers are disproportionately impacted by the current housing crisis, experiencing homelessness and marginal housing at a rate four times the national average, and spending nearly 60 per cent of their income on rent.
Put simply, she said, women face significant challenges in achieving financial wellbeing.
“When we’re talking about financial wellbeing, we’re talking about women’s access to – and ability to – control economic resources. This might be in terms of meeting their own needs but often is to meet the needs of their children or the people they’re caring for more broadly,” the Professor explained.
The scope of this definition widely ranges from earning less superannuation to taking on more unpaid care work, plus there are multiple factors that have an effect on women's financial wellbeing, especially as they approach retirement.
In the past there was little economic research based on gender equity, with the prevailing logic being “most women have a partner, and the financial security can come through that relationship with their partner,” she explained.
“So, women have got no money, but their partner’s got money, therefore they’re fine, and the government doesn’t need to be concerned about their financial wellbeing,” she said.
It was this perception that drew Professor Austen into economic research, with a view to generating good economic research that documents women’s issues.
Professor Austen hopes the outcomes of her research will inform policymakers and politicians and provide them with reasons why the government needs to be concerned about gender equity and what’s needed for gender equity to be advanced.
The impact of parenthood and unpaid work
One major hurdle is the role of parenthood and unpaid work. If you identify as female and plan to have children, you might find yourself stepping back from your career, she cautioned.
“Women tend to be the ones that drop out of paid work when couples have a child, and if they are still engaged in paid work, quite often they are participating only part-time.”
Even with the recent improvements to Australia’s ECEC system, it still isn’t effective at supporting women wanting to go back to work after having children.
“Women are often up against a system that says, well, if you go back to work and start earning an income for yourself, there’s going to be these difficulties in getting childcare,” she explained.
“In fact, the household’s economic position might actually go down, because for many situations where the woman is working less than four days a week, they end up spending more on childcare than they earn at work.”
Time out from the workforce can have long-term financial consequences, not only in terms of superannuation, but also time out being detrimental to a career progression.
Why are women in caregiving roles?
The reason why women end up in caregiving roles, personally or professionally, is a complex one, Professor Austen said, with a variety of economic and societal factors underneath it.
“We have very strong normative structures that make it acceptable for women to take on these caregiving roles – and these also make it quite difficult for men to take on those roles,” she said.
“It’s not a simple fix – there’s no one thing that drives the gender pay gap or that can be shifted to address it. But that doesn’t mean these things don’t need to be worked on. There is an important role for policy in making some of those decisions and alternatives easier.”
In Australia, many fields of work are female-dominated (nursing, teaching, ECEC) while others are male-dominated (engineering, construction, trades). This division of work by gender is called ‘occupational segregation’.
The issue with occupational segregation is that it’s a significant contributor to the gender pay gap.
“The wages of a plumber exceed by a large margin the wages of a childcare worker, yet both require a similar level of education,” Professor Austen said.
“The work that childcare workers and healthcare workers do is incredibly valuable at a community level, but this isn’t reflected in their pay. It stems from a pay disparity where female-dominated occupations are paid much lower than male dominated occupations.”
This type of pay disparity applies to what is called horizontal job segregation, where different genders work in different types of occupations. But there is also vertical job segregation, where male employees are more concentrated in the higher-status and better-paid positions, such as managers or CEOs.
This disparity can then influence the likelihood of women taking on the family’s primary caregiver role in the future.
“One of the flow-on impacts of that wage inequality is that it’s self-reinforcing, because it feeds into decisions that partners make,” Professor Austen explained. “For example, when a child is born, families often decide that the lower-earning partner (usually the woman) will take time off work to care for the child. This decision, while economically rational in the short term, we now know can have long-term financial consequences.”
Flow-on effects on retirement and superannuation
The cumulative effect of these financial disparities becomes most apparent in retirement.
Women tend to have lower superannuation balances than men, leaving them less financially prepared for retirement. Professor Austen highlights that “more than half of women up until now have been leaving paid work and entering retirement with no support at all, whereas that figure for men has only been around 20 per cent.”
“Super is set up as something that’s individual to each person as part of their employment relationship. In terms of policy, however, the money is designed to support the partner and his or her dependents,” explains Austen. “But the issue we have is that the partner actually has no rights to information about what’s in the superannuation account, and no rights to say how that money is used.”
The importance of good economic policy
To address these disparities, significant policy changes are needed.
“On a positive note,” Professor Austen said, “the current federal government is probably making one of the strongest efforts that I’ve seen of any government in recent decades to try and shift the dial.” These efforts include increasing wages in female-dominated occupations such as ECEC and making ECEC more affordable and accessible.
To read the full and original conversation please use this link.
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