Slow gender gap progress puts focus on childcare support

Childcare support and access are crucial to closing the gender pay gap, and policies focusing solely on parental leave are insufficient to realise pay equity

Efforts to close gender pay gaps, including through policies aimed at getting men to take more parental leave, are driving slow progress, but pay parity remains generations away. For women to catch up faster, a new public/private compact around family and childcare may be required, according to experts at UNSW Business School.

Globally, women earn on average about 20 per cent less than men, a pay gap primarily driven by gender discrimination and childcare-related career interruptions. While men’s and women’s pay has been converging very slowly, the lack of meaningful progress means it will take an estimated 134 years at current rates for the gap to close fully.

In Australia, the base-salary gender pay gap for full-time workers is 12 per cent. Measures from the Workplace Gender Equality that also consider part-time workers and overtime, bonuses, and other payments that tend to increase men’s income show an even larger average gap, of 21.7 per cent.

Deeply ingrained cultural expectations make the problem particularly challenging in Australia, undermining efforts to equalise childcare and the distribution of unpaid labour in the home. According to Professor Pauline Grosjean from the School of Economics at UNSW Business School, solving these complex problems will ultimately require a societal reckoning, not easy fixes. “This is a bit of a cautionary tale against any magic remedy – we need to really think about social norms and expectations,” she said.

A collective problem

Women, burdened with primary childcare responsibilities, face significant career setbacks that, in turn, have massive consequences for their financial futures, including their retirement welfare. Meanwhile, Australian men are among the least likely in the industrialised world to take parental leave, even when employers offer it – a major systemic contributor to gender gaps around pay and promotions.

Increased attention to these gaps amid the rise of environmental, social and governance (ESG) concerns has helped drive efforts by governments and businesses to promote progress, with policies aimed at various systemic contributors to pay inequity meeting different levels of success. For example, many companies now make parental leave available to both new parents even when the local government does not require it, and some countries have implemented policies aimed at incentivising, or even requiring, new fathers to take leave.

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While these policies have met with some success, the limitations of the solutions attempted thus far illustrate the systemic nature of the problems underlying these disparities.

However, they also offer hints as to what a more holistic solution might look like, and it increasingly appears that the essential element that’s missing is a better childcare support framework for families. According to Prof. Grosjean, it’s a collective problem that societies, not just families, are responsible for solving. “I think people conceptualise this too much as a private problem to solve, and it shouldn’t be; the collective has to intervene,” she said. “There’s been a lot of progress around hiring and promotion of women, so now the problem really is associated with the birth of a child.”

Understanding the pay gap problem

In Australia, in particular, stereotypes about men as breadwinners and women as caregivers remain entrenched, with men facing stigma for prioritising family over work. While employers increasingly offer generous parental leave, men still feel less able to take it.

“Traditionally, women take time off work to care for children, which can lead to slower career progression, lower investment in human capital and fewer promotion opportunities,” explained Evgenia Dechter, Associate Professor in the School of Economics at UNSW Business School.

“In anticipation of having children and the associated career interruptions, some women may choose careers where flexible and part-time arrangements are feasible, even though promotion opportunities may be more limited,” she added. “While individual preferences should guide personal decisions, we want to avoid situations where public policies restrict choices and negatively affect careers.”

These norms and stigmas frustrate efforts to close the pay gap by keeping men at work and pushing women into the home, with serious knock-on effects. Gender differences have lasting repercussions for women’s careers and livelihoods, with the pay gap contributing to a retirement gender gap. As a result, Australian women end up with just one-third of men’s retirement savings.

“Spending longer out of the labour force to care for children can impede career opportunities by causing individuals to lose touch with potential employers, miss out on acquiring new skills and not participate in work-related training,” A/Prof. Dechter said. “The availability of affordable, high-quality childcare can encourage mothers (and fathers) to return to work sooner, thereby increasing their attachment to the labour force and improving their career opportunities.”

The ‘double-edged sword’ of long leave

While getting men to take more leave and shoulder more of the childcare burden would advance gender equity goals, efforts to do so have shown the limitations of targeting aspects of the problem rather than employing holistic solutions. The idea is that forcing men to take parental leave helps to challenge the norms and expectations around childcare, freeing men to be more engaged parents and equalising the division of labour at home.

However, “while equal parental leave opportunities may encourage both parents to take time off to care for children, it is unlikely to significantly narrow the gender gap on its own,” A/Prof. Dechter explained. “One reason is the existing gender pay gap: if women earn less than men, the incentives for men to work without interruption will remain higher, and families may still be encouraged to adhere to traditional time allocations,” she said. For these policies to work, addressing the underlying pay gap is crucial.

Read more: How pay transparency laws have reduced salaries by 2 per cent

“Another reason is the potential career penalties associated with taking parental leave,” A/Prof. Dechter said. “However, if both men and women take parental leave and it becomes a standard practice, it could reduce the stigma associated with taking leave. It will definitely take a long time before we see substantial effects on the gender gap.”

As Prof. Grosjean explained, parental leave is also a “bit of a double-edged sword, even for women”, so efforts to equalise leave use only go so far in promoting equity. Related policies, like those around pay transparency, also show limitations. “We know that long leave is detrimental to women’s careers, because women get de-skilled and it’s hard to come back,” she said.

Lessons from Sweden

Illustrating the challenges around mandated leave, Prof. Grosjean noted that among the countries that have attempted to mandate that fathers take more leave, a study evaluating the introduction of paternity leave in Sweden found it led to an increase in households splitting up. “You see a decrease in marital stability after men are forced to take leave,” she said, noting the research showed several explanations for this.

First, the researchers found that more traditional households were more likely to separate after the mandatory leave policy began. “Where initially the woman works in a not-so-good position and doesn’t work very much, and the man works – all of this points to a culture clash. It clashed so much with cultural norms, and some men were not really taking on responsibility.”

The research showed that households at a high risk of separation after the new policy were those in which the mother didn’t work much to begin with; the fathers in these households would be less likely to use their leave to contribute to childcare, ultimately contributing to instability.

“After a few years, people have time to adjust, and you don’t see these effects anymore when then reform is further extended,” Prof. Grosjean said. “This whole game points to the fact that you’re going to go against cultural norms, and this is going to be really hard for some people. There might be some teething issues, but eventually, you do see more equal responsibility and equalisation of outcomes, and you’ll no longer see this initial effect on marital stability because people can integrate what’s going on. Maybe they choose a different type of spouse if their expectations are different.”

Promoting equal leave

One policy that appears promising for equalising leave and childcare involves providing non-transferable leave to both parents to further encourage its uptake. According to A/Prof. Dechter, while potentially effective, this approach is not easy to implement due to high costs, and its effectiveness would hinge on the size of the public benefit.

“Some families might still find the option to continue working more attractive,” she said. Sweden’s current approach is a better model, where parental leave is paid at 80 per cent of salary for the first 390 days, making it financially attractive for both parents to use leave. “In contrast, in Australia, parental leave is a fixed amount, which means that lower earners have a higher incentive to take the leave.”

Sustainable solutions to gender inequality in the labour force

The growth of flexible work arrangements is also positive, as remote work and flexible hours can facilitate the transition for parents returning to work from parental leave. “Such policies can be viewed as an investment in employee satisfaction, retention and overall organisational culture,” A/Prof. Dechter said. “In terms of how public policy can help, the government can encourage firms to provide paternity leave by offering subsidies or tax incentives to help offset the costs for businesses.”

Childcare support and social security

Because of the challenges around equalising leave, experts generally don’t focus on this as the most effective way of reducing the gender wage gap, Prof. Grosjean explained. “All the evidence points to early childcare being, really, the thing that is moving the needle. And the evidence suggests that it’s not only an economic tool; it’s also a cultural tool,” she said.

The cultural expectations around women and early childcare are exacerbated by a lack of public support in Australia, where parents pay some of the highest childcare fees of industrialised nations, and the gap between paid and unpaid labour is large. “The expectation is that women quit the labour force for five or six years until the child goes to primary school. That’s because parental leave is compensated up to a percentage of minimum pay rather than a percentage of salary,” Prof. Grosjean explained.

“The legal way parental leave is set up is that the lower income earner will be the one to take it, and so as long as you have gender wage gaps such that men still earn more money than women, then it seems pretty evident that, as a financial choice, you’re not going to give up the high income,” she added. “If it were instead a percentage of your income, things would be different; you would lose less money by giving up the high income.”

Ultimately, the problem requires a combination of legislative and corporate solutions. Many Australian employers already offer generous leave provisions based on salary rather than minimum pay, and there is a role for public subsidies where they can’t afford that.

Prof. Grosjean added that the government must contribute to this, calling it a “classic example of positive externalities”. “There are many positive externalities in having men take time off – for gender equality, for themselves, for children, for the wellbeing of their partners. So I think there is a role for public subsidy of time off for men and women. And we need to present this in partnership with early childcare measures.”

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However, a better early childcare support system is “a matter of public willingness to subsidise childcare so that families can have access to affordable and good quality childcare,” Prof. Grosjean said. Governments and businesses must be part of a solution that includes equal pay, equal leave and subsidised childcare. 

“This is why we need to think about any public policy that will help this. It is insane to just expect that women will take care of the child on their own for six years and for that to be the social model in Australia. It’s a matter of public investment in early childcare. That’s it," she concluded.