Equal Pay for work of Equal Value

Given the considerable discussion and public comment in relation to the equality of pay, there is merit in addressing the challenge faced by employers in endeavouring to be fair in rewarding their workforce.

Equitable reward is a matter considered by the Fair Work Commission, included in Enterprise Agreement negotiations and embraced in personal negotiations between employers and employees. It has regard to a significant number of factors which incorporate the value of work itself which is often determined using a job evaluation methodology.

There is a difference between “work value” and the value of work. A perfect example, at the entry level of employment, would be the diversity of training provided to university graduates who have completed 3 or 4 years of training prior to entering the workforce. While job evaluation may suggest that the majority of workforce entry positions are equivalent in work value terms, the market would place a different value on those roles irrespective of gender or other factors. Governments, for example, fund many positions with tax payers’ dollars, so these roles are often less well rewarded than positions equivalent in work value in the private sector where young graduates can contribute to the almost immediate generation of profit.

Given the diversity of careers sponsored by university education, the career paths and opportunities across the disciplines pursued will also vary and within the first few years following graduation, the roles which young graduates commence in the world of work will be vastly different and their pay will be different. Their pay will be influenced by their level of experience and further specialisation in their fields; whether those jobs are generating revenue or deemed as “cost centre jobs”; accountability for people management; whether they are client facing or back office jobs; job specific requirements such as overseeing multiple functions or operating across a diverse geographic span as well as the capacity for the employer/industry to reward those graduates and supply in the market of those particular skills. Should the degree of complexity and the diversity of academic requirements for completing an undergraduate degree have an uplifting effect on a graduate position’s work value and pay?

A consideration generally not taken into account, is the high school entry performance required to commence the degree program which may vary from 65% to 95% of a perfect score, thus the input attributes of the candidate for graduation also vary because of the intellectual demand of the course and the competition from talented high school students to enter a particular discipline or field of study. University data also reveals considerable gender variation in the pursuit of certain careers by males or females. A similar proposition could be put in relation to those entering the world of TAFE, while working part time. Again, across the trades there appear to be different choices between males and females and different rates of remuneration will be influenced by the factors nominated above for graduates.

Within the context of the above description, assuming all elements of the work environment and the education required to undertake the work are common, it is difficult to argue that pay should not be equivalent. Where variable hours are required, differentials should reflect that requirement. Where variable performance is evident, performance should be acknowledged and rewarded.

Factors which are generally not taken into account in determining equivalence of pay is the time an employee takes to travel from their home to their place of work and the cost of that travel as well as their domestic circumstance. These are factors which will influence an employee’s capacity to contribute at work, the time they have available to meet the demands of their job, their ability to remain undistracted during their period of work and in many instances their opportunity to pursue higher levels of work and the demands of career progression. These are not universally gender specific factors.

Requiring equivalence of pay for all individuals undertaking a comparable role, offering different inputs, performing differently and working in environments with variable capacities to pay, is a highly problematic goal. Adopting principles of equal pay for equal contributions in comparable work will always remain appropriate and should be a goal of every employer. The challenge is applying a universal pay level for a deemed standard job across all employers, in all locations, given variable individual capacities, the quality of their input and output of their training and their effectiveness on the job.

Egan Associates have, over many years, been actively engaged across all sectors in assisting organisations determine work value. More recently, we have developed online processes to enable organisations to evaluate positions and explore pay anomalies across their workforce.

For further details of these services please contact one of our consultants on  (02) 9225 3225.