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The Gender Gap in Retirement Savings and Unlawful Age Discrimination against Older Workers’

Speech by Elizabeth Broderick
Sex Discrimination Commissioner and Commissioner responsible for Age Discrimination

Australian Human Rights Commission

Brotherhood of St Lawrence conference
Metropole Conference Centre
44 Brunswick St (cnr Gertrude St) Fitzroy
Melbourne

12.00pm Wednesday 2 November 2009

Thank you very much for the invitation to speak here today.

In my role as the Sex Discrimination commissioner and the Commissioner responsible for Age Discrimination I have met many inspirational women and men from all walks of life. Many of these have been Aboriginal and Torres Strait Islander people.

So, firstly I’d like to acknowledge that we are gathered here today on the traditional land of the Wurundjeri peoples of the Kulin Nation, and I pay my deepest respects to their elders past and present.

I would also like to pay my respect to all elders, of all ethnicities - women and men, who for many decades have fought for equality.

Over recent months I’ve been talking about the fact that, for statistical purposes, the official age of a mature age worker is 45. Yes that includes me!

The reason I have been highlighting this point is that age discrimination in employment is one of the great unspoken barriers to workplace participation faced by people in our country today.

Yet we don’t tend to think of ourselves as being in the firing line for this sort of discrimination - which can have profound effects on our confidence and self esteem, as well as grave impacts on our ability to secure or maintain employment - until we are much older.

I have also been talking about the gender gap in retirement savings, a situation which results in many women in Australia seeing out their retirement years in poverty.

I have been highlighting this issue because I want people to realize that this outcome – poverty in retirement for many women - does not happen suddenly. It is the cumulative impact of the many linked incidents of discrimination that women face throughout their lifetimes. I have started to reframe this issue as “Is poverty to be the reward for a lifetime spent caring?”.

But in this story, age and sex discrimination are not divorced from one another. They have more in common than you might think and importantly, many of the effects of unlawful sex and age discrimination impact upon the employment experience.

By drawing these two spheres of discrimination together - age and sex - I want to make the point that as our demographic change takes hold, a failure to address the cumulative impacts of sex and age discrimination in employment will lead to poor life outcomes for many Australians.

As you have probably guessed by now, this is not going to be a particularly happy story. I can assure you, I prefer not to be the harbinger of doom and gloom. But it is part of my job to shed light on some of the tough realities facing women and men in these situations, and once these problems are revealed, we can do something about it.

A story is the best way, I think, of putting this information in context. During the course of this story, I will be endeavouring to illustrate three things:

As with all good stories, we have strong characters. So today I want to introduce you to our characters - Bob and Cheryl.

When we first meet Bob and Cheryl, they are in their twenties. Cheryl is 22 and Bob is 29.

Bob works in the car manufacturing industry as a line manager.

Cheryl has just embarked on her career in child care and is commencing part-time tertiary study for a nursing degree.

Everything is going well, so a few years later, Bob and Cheryl decide to start a family. As Bob is earning well, on a higher income in the car company, they decide that Cheryl can take some time out of the workforce to devote to caring for their child in the first few years of its life.

But when Cheryl returns to work from maternity leave, she is told that her position no longer exists and she is relegated to a role below her skill level and with fewer training and promotion opportunities.

Over the next ten years, Bob and Cheryl come to realize that their young son, though appearing healthy at birth, was born with a disability that has only become evident with age. Cheryl finds that the time required to care for him is steadily increasing. Soon she finds she has used all her leave and she is forced to quit her job to find casual work - which is, inevitably, more precarious and less skilled work than her previous full time position.

To make matters worse, once she takes up her new casual position, she finds herself subjected to sexual harassment by her immediate superior. Finding this issue too much to confront in addition to all her other concerns and responsibilities, Cheryl resigns, only to find she is out of work for six months before she can secure another casual position.

So what is the point of putting you through this disheartening story?

Well, let’s look at the decisions Cheryl has made and I’m sure you will agree that she could not be seen to have made a bad or wrong decision at any point. She is working in an industry that desperately needs well trained, committed workers, is caring for her child and taking on the additional responsibility and care needs of a person with a disability. You can’t dispute that Cheryl is playing a crucial role in her family and community. Nor could anyone dispute that the success of the Australian economy relies on people just like her making exactly the decisions she has made - decisions that contribute to our population and economy and then save the government money.

Yet, if we look at each point in her lifecycle, she has paid a penalty in terms of her future opportunities, her paid work options and her ultimately her financial security. Each event I have described impacts upon the next stage in her life - and often, negatively.

Cheryl’s story illustrates the gender inequality women face throughout their working lives and the dire financial consequences, in later life.

And it starts right back with women’s education decisions.

When countries around the world are ranked against one other, Australia comes first in terms of educational attainment for women. But, alarmingly, it is ranked 50th when it comes to workplace participation - even though over half our enrolments and graduations from higher education are women.

Cheryl’s story - which I should stress is not at all unusual - illustrates this point. She is educated and has the opportunity to engage in tertiary education. But each life event forces her to make a decision, which finds her increasingly in marginal work on a casual basis - another part of her scenario that is definitely not unusual.

Education in Australia is highly gender segregated. Unlike men, women are mostly concentrated in areas of study linked to lower earning industries. Women also constitute a much higher part of our casual workforce and are more likely to be underemployed.

Much of this work centres around caring industries (aged care, child care). But this does not reflect bad decision-making on the part of women. It is simply that these feminised industries are undervalued when we compare them to other male dominated industries. It is about equal pay for work of equal or comparable value.

Let me give you a monetary comparator for this pay disparity. If the existing pay gap continues, the average 25 year old male will earn $2.5 million over the next 40 years, while the average 25 year old female will earn $1 million. In case you missed it, that is $1.5 million less - 60% less.

Cheryl left employment because she was sexually harassed. Sexual harassment can happen to both men and women, though it is predominantly experienced by women. It is not an easy thing to deal with, and the associated complaints mechanisms are often difficult to use. Most women just want the sexual harassment to stop. So it is easy to see that removing oneself from proximity to the problem is often the choice of least resistance.

Now we move to the next major event in Cheryl’s lifecycle - her pregnancy.

The Commission’s complaints statistics and other research show that pregnancy, and return to work following maternity leave, are times when women are commonly vulnerable to discrimination. This comes in the form of demotions, missing out on promotions, redundancies, denial of family friendly conditions and even, in some cases, bullying.

The struggle to balance paid work and caring responsibilities is possibly the most fundamental barrier to workplace participation for women.

By international standards, the workforce participation of mothers continues to be low in Australia. Women who have children are likely to earn around half that of men who have children. And there is a stark difference in the projected lifetime earnings of women with children compared to women without.

It is these gaps in lifetime earnings that illustrate the financial penalty women pay because of their gender and their caring responsibilities.

If you take the cost of child care, commuting and the loss of tax benefits into account, it is simply not financially ‘worth it’ for many low-paid women like Cheryl to continue in paid work after having a baby.

Let’s leave Cheryl for a moment, because over in Bob’s world, all is not as rosy as you might have been expecting.

Some years back, Bob was successful in being recruited into a rival car company at a higher managerial position.

Bob and Cheryl’s son is now a teenager and the routine and struggle to care for him and balance these responsibilities in their daily lives has hit a certain rhythm.

Bob is now 45. Cheryl is 38. And suddenly, after a takeover and restructure at the car company, Bob is made redundant.

In a family structured in the manner of Bob and Cheryl’s, with Cheryl balancing major caring needs with precarious employment, this is indeed a very stressful development.

What is worse, Bob is having trouble getting interviews for other positions. Though he knows the training he had in his former position ensured his skills are up to date, he has applied for 40 jobs and received only two interviews. At one of those interviews, he was told that they did not think he would ‘fit into the environment’, whereas at the other, he was told he was ‘too qualified’ for the job, despite it being practically the same as the last position he held.

Not only is Bob starting to wrestle with self-doubt and lack of confidence, brought on by this situation, he is starting to wonder if something else is afoot. He is wondering if he is being discriminated against because of his age.

And quite possibly he is.

Age discrimination goes largely unnoticed within our community and, worse still, is largely accepted as normal.

Think for a moment, about the treatment of ‘age’ in our society - in our country.

Consider the labels - Gen Y, Generation X, Baby Boomers and Veterans - so heavily used in media, marketing, social commentary and in popular culture. They are bandied about without any thought to the potential consequences of reinforcing age based stereotypes. Interesting, albeit simplistic, comparators they may be. But at their very worst, they encourage divisive intergenerational competition with observations like ‘older people are seen to have had a good run’ and ‘are now denying opportunities to younger workers’.

The thing that Bob does not know is that, statistically, he has now reached the point where he is considered to be a mature age worker. He has reached the point where people are starting to make decisions about him based on ageist stereotypes - regardless of the merit he is able to demonstrate.

Unlawful age discrimination in recruitment and selection has been described as systemic. And recruitment has been identified as the point in the employment cycle during which employers most extensively apply age as a discriminator.

Some employers recruit based on a rigid ‘absolute skills fit’ model, while for others, it doesn’t seem to matter how up to date your skills are - they still don’t want you.

But finally, after 8 months out of work and of solid job searching, Bob does secure a position, though it is lower down the corporate ladder than before, requires far less skills from him and pays significantly less.

Now Bob is facing a new frustration. He is noticing that, while other people younger than him are being sent to training, he is not asked to attend. He is also noticing that negative assumptions are made about his ability to pick up technology and new processes in general. Younger staff members even joke with him, saying things like, “but you’re too old to do that, Bob” or “people in your generation don’t understand these things, Bob”, or “Bob, you’ll be retiring soon, anyway, won’t you?”

Under ordinary circumstances, Bob might see the humour in these comments, but given the broader way in which he feels he is being treated by the company, he is starting to see the workplace, and the community, as predisposed against him.

He manages to stick it out, but by the time he is 51, he has had enough of younger people being promoted over him and the jibes about his presumed age-related aptitude. The company offers voluntary redundancies on the back of a new restructure, and Bob takes one, only to see a young person is placed in his position and almost immediately promoted.

Bob is also now faced with the new reality that his mother has developed dementia, so he and Cheryl must together share additional aged care responsibilities for her.

After taking various casual and part-time positions, some requiring a very low skill set and paying poorly, Bob gives in and retires when he turns 65, placing the main income his family will receive in the hands of the age pension.

By this time, despite efforts to retain employment and provide for his family, Bob feels he has failed and has developed depression.

Unfortunately, the strains on the family unit - of multiple caring responsibilities, of precarious employment and of financial stress - mount up on Bob and Cheryl and they decide to divorce.

And that takes us to our end point - retirement.

Bob is not alone in his predicament. He is one of many Australians who find, as they get older, despite all the study, training and skill-building they have done throughout their lives, that assumptions are made about them once they pass “a certain age”, effectively rendering them unemployable. Despite what people seem to think, up-to-date skills won’t necessarily get you a job when age-based stereotypes preclude a proper merit-based assessment.

We should not underestimate the psychological impact of systemic ageism on individuals living in a society that is promoting a self-fulfilling prophecy among over 45s that they are on the ‘way out’. On the one hand we are being told by the Government that we should be working to at least 67 years of age, yet on the other hand we are being told ‘see ya’ at age 45. Faced with barriers that are often both invisible and accepted, there would be an obvious tendency to tell yourself, ‘I’m a failure – it must be me’.

Research has shown that the internalisation of negative age-based stereotypes by mature age workers undermines their attitudes towards future job seeking prospects and trainability. In this situation re-entry into the workforce is then, not just seen as impossible, but worse still, it is accepted as impossible. This process of self-selecting out of the workforce can act as a vicious accelerator of both entrenched long-term unemployment and poverty.

It is not ‘choice’ - as we have seen with Bob - if you need or want to work, but cannot and are forced onto a pension. Adequate social security is critical, but without the ability to access employment, we risk effectively condemning a significant number of older Australians to a life of near poverty. Before the federal government’s increases to the Age Pension, more than one in four senior Australians were living in poverty and we had the fourth highest old-age poverty rate among OECD countries - more than double the OECD average.

If you are a woman, the prospects are even slimmer.

Earlier this year, I released an issues paper called ‘Accumulating poverty’, which set out the retirement consequences for women of gender inequality across the life cycle. For instead of accumulating wealth under the current retirement system, many women are far more likely to be accumulating poverty.

Cheryl’s story is a perfect illustration of this point.

Of course, in our story, Cheryl – and Bob – are also involved in elder care.

In 2005 it was estimated that informal carers provided approximately 1.2 billion hours of care in Australia at an estimated replacement value of $30.5 billion.

This work is not recognised or financially rewarded as work within the retirement income system. So while the community and the government continues to benefit immensely, those who do this important work are rewarded with retirement in poverty.

Women who become divorced, like Cheryl, are often in an even more precarious situation. The number of divorced or separated women entering retirement is expected to rise in the next two decades. Compared to men, women are more likely to experience financial insecurity following divorce because they commonly experience a much greater drop in income than men. In 2003, men who separated experienced an average drop in their household disposable income by $4,100 per year, whereas women who separated experienced a drop of $21,400.

So I ask you, if our birthright is equality, why is poverty the end point for so many women?

Each time Cheryl has been absent from the workforce or worked on a part time or casual basis, or for lower pay - events which have been often and have characterised her working life, just as they do many women - the amount of superannuation she is accumulating is drastically reducing. Compare this to Bob and, even though he has had to retire early, the fact that he has had a longer period in paid work will mean he is significantly better off than Cheryl.

In summary, we need to urgently start addressing the cumulative impacts of age and sex discrimination in employment if we are to avert increasinglyy poor outcomes for a significant number of people in our ageing population.

Firstly, we need to understand that unpaid caring work is largely the responsibility of women in Australia - that caring delivers a significant social and economic benefit, even though it sits outside the retirement income system and that women pay the greatest financial penalty because of this role.

Secondly, we need to take steps to uncover and make visible the spectre of unlawful age discrimination in employment, which people face as they move past their mid forties, and ensure our employment practices operate on a merit-based approach that has no pre-conceived notion about age and ability.

And thirdly, we need to recognize and act against the cumulative aspects of both these forms of discrimination - the psychological self defeating aspects of age discrimination and the linked events of sex discrimination over a woman’s lifecycle - that, in both cases, contribute heavily to the dire probability of poverty in retirement.

So what can we do?

These suggestions are not startlingly original, but they are important.

First and foremost, on both issues, we need legal reform.

It is increasingly evident that more substantial reforms are needed to make the retirement income system better reflect the reality of a woman’s lifecycle. It is time to start a new debate about how the system can properly value unpaid caring work, in addition to what is currently offered through the Age Pension. It is time to make adjustments that factor in the time women take out of their career to carry out the invaluable work of caring, for which they are paying significant financial penalty. It is time to remove the barriers to women’s workforce participation, to strengthen the family responsibility provisions of the SDA to provide better protection for men and women and to close the gender pay gap. These measures must be accompanied by accessible, affordable, quality child care and other care services that will support employees with their caring responsibilities across the life course.

We need to consider a raft of reforms.

We have fought long and hard for a paid parental leave scheme, but now we need to look at things like: expanding the superannuation co-contribution scheme beyond people on low incomes; granting greater tax incentives for people on low incomes to make voluntary contributions to their super schemes; instituting a national scheme of social insurance for carers; implementing credits that are paid to those who have cared when they retire.

In the age discrimination arena, as a starting point, we need a cross-departmental audit of laws and policies to identify and address the existence of any barriers or disincentives to mature age workforce participation that can result in discriminatory outcomes. Then we need to take action to remove them.

We need more research to support the work we must do to dismantle ageism. There is precious little, if any, research into the forms, effects, nature and extent of age discrimination in Australia. This must change – because the problem is already too big and, as our population ages, it will only get bigger.

But none of this will be worth undertaking unless people are aware of these forms of discrimination and inequality, understand it, know what they should do to counter it and know where they should turn if they experience it. Thus, it is imperative that we invest in strong communication strategies to build awareness and educate people about these issues.

Both these forms of discrimination happen through no fault of the victim. And both can happen to anyone, regardless of our level of education, our social standing, our location, our race or beliefs. And as our population ages, the problems that result from these forms of inequality will only become more acute.

As advocates, we have no option but to keep pushing until we manage to achieve change. Otherwise the stories of people like Bob and Cheryl will never improve. I am hopeful that these stories can have a different ending, that together we can shape a more just and equal future – that is the challenge that faces us all.

Thank you.