Submission to HREOC Inquiry Based on the Following Paper

Submission to HREOC Inquiry based on the following paper

Part-time Work and Women’s Careers: Advancing or Retreating?

Jenny Chalmers and Trish Hill

Paper prepared for the HILDA Survey Research Conference 2005

Jenny ChalmersTrish Hill

Centre for Applied Social ResearchSocial Policy Research Centre

RMITUniversityUNSW

@unsw.edu.au

The most common approach to reconciling paid work with parenting in couple families in Australia is for the father to devote his energies to full-time paid work, while the mother takes primary responsibility for caring and also works on a part-time basis in the paid labour market. Employed parents without partners, primarily women, tend also to work on a part-time basis. In an ideal world the part-time worker should expect to be fully integrated in the paid labour market, with all the employment benefits and opportunities for career and training progression associated with full-time employment (O’Reilly and Bothfield, 2002). However, recent research from the United Kingdom (UK) suggests that part-time workers give up more than the extra income they would have earned if they had worked full-time hours. Human capital theorists have for many years worked under the belief that workers become more productive, and are rewarded financially for this, through time spent at work. The UK research reveals that full-time work experience does increase earnings accordingly but that part-time work experience, far from adding to earnings, detracts from it (Olsen and Walby, 2004; Francesconi and Gosling, 2005; Myck and Paull, 2004). Part-time workers give up earnings growth of around four per cent per year, simply by reducing their hours of work (Olsen and Walby, 2004).

Explanations for this apparent devaluation of part-time work experience abound (see Olsen and Walby, 2004 for an account). It is well known that part-time workers receive less training than their full-time counterparts, leading to lower on the job human capital accumulation (Harley and Whitehouse, 2001). Another argument is that women who tend to work part-time do so, either because they were not looking to have a career in the first place or because their labour market ability is lacking in some unobservable way. Yet even after controlling for unobserved heterogeneity part-time work experience does not seem to advance careers (Myck and Paull, 2004). The recent research has looked to the nature of the labour market itself as the driving force. Part time jobs in England, as in most OECD countries, are largely restricted to lower level occupations and poorly paid retail and service sector industries (Fagan, 2004). Despite this segmentation, women from all educational levels and with wide-ranging occupational backgrounds have worked part-time at some time over their working lives. Empirical research shows that to move between part-time and full-time hours women are often to forced to change jobs, even employers. Indeed the evidence suggests that moves to part-time hours are associated with a reduction in occupational ranking while moves to full-time hours are associated with an increase in occupational ranking (Waldfogel, 1998; Blackwell, 2001; Manning and Petrongolo, 2004).

In terms of the segmentation of part-time jobs and the relatively high levels of part-time-time employment, the Australian and UK labour markets are remarkably similar (Harley and Whitehouse, 2001). While working conditions have been more regulated in Australia than in the UK Australia is now experiencing a period of deregulation. This policy direction stands in contrast to the UK where working hours are now of subject of increasing regulation. In 2003 the UK gave workers with young and/or disabled children the statutory right to request flexible working arrangements including the right to request to work part-time hours in their current job (DTI, 2003).

This paper presents findings from the first Australian study to determine whether part-time work experience in Australia causes women’s careers to advance or retreat. The Negotiating the Lifecourse data (NLC) is the only large scale representative data set in Australia that includes measures of full-time and part-time work experience. We use the first wave of the NLC data to estimate the impact of accumulated years of part-time and full-time work experience on the wages of women working full-time in 1996/1997. Our findings corroborate the recent British research. Part-time work experience detracts from career advancement as measured by earnings. Our estimates suggest that a woman who reduces her hours to a part-time level on the birth of a child, for example, can expect to earn less per week than she did before working part-time when, and if, if she returns to full-time hours. Not only should she expect to earn less per week than when she last worked full-time, but she should also anticipate giving up the increase in her earnings that she would have experienced if she had remained working full-time.

There are those that that would prefer to interpret these findings as nothing more than an illustration of difference between women; perhaps claiming that the woman who prefers to work part-time rather than full-time while her children are pre-schoolers has no serious intention of advancing her career anyway. In response to such an interpretation we we break the possible nexus between accumulated years of part-time and full-time work experience and unobservable ability at work and/or “devotion to a career”. Our approach is to “construct” work histories for women, leaving out any unobserved differences. We use the suite of cross-sectional ABS Income Distribution Surveys (IDS) and Surveys of Income and Housing Costs (SIHC) to estimate models of labour force participation for women covering the years 1978 to 2000. We model participation in terms of individual characteristics of women such as their age, marital status, number and age of dependent children. Combined with ABS data describing labour force participation of women in terms of marital status and age from 1964 to 1977, we construct work histories for each of the women that responded in the first wave of the Household Income and Labour Dynamics Survey Australia (HILDA). We chose to attach the work histories to HILDA, since it includes detailed family formation histories and has four times the respondents of the NLC survey. We then estimate the impact of constructed years of part-time and full-time work experience on wages of women working full-time in 2001.Our findings suggest that there may be some truth in the claim that the group of women tend to work part-time more often than others could not expect to earn as much anyway. However, even after accounting for this difference we find that part-time employment does not advance careers.

The implications of these findings are far-reaching. It goes without saying that this represents another private cost borne by the primary carers of children in Australia, mothers. Our findings also talk to those that are seeking to encourage fathers to have more involvement in their children’s lives, involvement which, given the demands of the average full-time job, could not be seriously expected unless the father himself cut back his hours of work to a part-time level. Unless men’s experiences of part-time employment are very different from women’s, the couple that decides to share the caring and paid work responsibilities by both working part-time will end up with two stalled careers. Finally, we should not overlook the loss to Australian employers and taxpayers in general. If a woman’s salary reflects her productivity these findings suggest that the very act of working less than 35 hours per week some how inhibits women from honing and learning productivity enhancing skills, if not depleting her of those skills. Some of these skills are learned through employer and tax-payer funded training courses.

While this paper did not explore the reasons why part-time employment is not associated with growth in productivity enhancing human capital available research can offer explanations. Keeping within the bounds of the human capital theory paradigm, Australian research finds that part-time workers do not receive the same level of training as their full-time counterparts (Hartley and Whitehouse, 2001). A substantive body of research illustrates the difficulties associated with combining paid work of any hours and caring responsibilities, suggesting that parenting responsibilities may hamper the accumulation of human capital at work.

By far the most compelling explanation comes from recent British researchers focusing on the labour market structures. Just as in Australia, part-time jobs in Britain are concentrated in service sector industries and in lower level occupations. Recent research found that women who want to work part-time hours find it difficult to keep the job that they were working full-time in. As noted above, a remarkable number have to change employers and a significant number even have to change occupation, usually moving to a lower status job (Manning and Petrongolo, 2004). On returning to full-time hours these same women face the same labour market rigidities.

In light of the findings presented in this paper we welcome the recent decision of the Australian Industrial Relations Commission (IRC) in the Work and Family Test Case to give employees the right to request part-time work on their return to work from parental leave until their child reaches school age. We hope that this right will be extended to all parents with caring responsibilities, not just those with pre-school age children and those with access to parental leave. However we are concerned that the industrial relations changes that are in the wing might threaten the incorporation of this provision into awards and the capacity of the IRC to review and extend its operation.

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