While men do more of the paid work in Australia than women, because they spend less time off work caring for children, women do more of the unpaid, caring work. When the value of both paid and unpaid work is taken into account, women do half of all the work performed in Australia.

Yet women continue to face a gender pay, income and superannuation gap. In effect, women are penalised for taking on the bulk of the unpaid caring work in Australian households.

It need not be this way. In northern European countries, men do around three-quarters as much unpaid work as women, whereas Australian men do only a little over half that of women – ranking Australia a lowly 15th among OECD countries in this scale.

Mothers and the Australian workforce

The number of mothers in paid work in Australia is lower than many other OECD countries.

Since Australian women spend so much time out of the workforce bearing and caring for children, the gap between male and female workforce participation rates is a full 10 percentage points – the 16th largest gap in the OECD.

The labour force participation gap in northern European countries is around half that of Australia, while in Canada it is around three-quarters of Australia’s gap.

Looking specifically at mothers, the proportion of Australian mothers in paid work, at 69 percent, is lower than in 23 other OECD countries.

Of mothers who are employed, almost 60 percent of those with a child under the age of six work part time compared with less than 8 percent of employed fathers. And for parents whose youngest child is aged 6-14 years, close to half of all employed mothers work part time compared with less than one in 10 employed fathers.

Australian women of child-bearing age are far more likely than men to drop out of the labour force altogether. In the age group 30-39 years, women are around three times more likely than men to be outside the labour force.

The workforce disincentive rate

KPMG has developed a measure of the disincentives facing working mothers – the workforce disincentive rate (WDR).

Australia’s tax and transfer system sends contradictory signals to women: it encourages them into tertiary education but penalises them much more heavily than men for wanting to get ahead in their careers.

Around 72 percent women aged 25-29 years had attained a formal qualification of Certificate III or above in 2020, compared with 65 percent of men in the same age group. More than 58 percent of students at university are women.

But when mothers seek to increase their days of work beyond three per week, they are penalised very heavily.

The WDR is the percentage of earnings from an extra day worked that is lost from a reduction in Child Care Subsidy, a reduction in Family Tax Benefit and other government income support payments, increased personal income tax and increased out-of-pocket childcare expenses.

The growing gender pay and income gaps

Pay, income and superannuation all present significant gaps in earnings.

KPMG has found WDRs for mothers in the range 75-120 percent. If a working mother’s WDR is 75 percent, she and her household keep only 25 percent of her earnings from working an extra day. If her WDR is 100 percent, her household gains nothing from her extra day’s work. If her WDR is greater than 100 percent, the mother not only earns nothing in net terms from an extra day’s work, the household budget actually shrinks.

A WDR of 75 percent indicates that the family loses 75 percent of the income a mother earns from performing an extra day’s work. A WDR of 100 percent reveals the family is no better off from the mother working an extra day. A WDR of 120 percent reveal that the family budget is worse off by 20 percent of the extra income the mother earns from increasing her working days by one per week.

Compare these WDRs of 75-120 percent with the top personal tax rate for men of 47 percent. Working mothers face much harsher work disincentives than men.

These heavy penalties faced by working mothers for doing extra paid work help explain the large gaps between men and women in pay rates, income and superannuation payouts.

The gender pay gap is 20 percent. KPMG estimates that, based on the rate of reduction over the 4 years before the pandemic struck, it will take until 2046 for the gender pay gap to be eliminated.

The gender income gap at age 30 is around 28 percent and during the peak earning years of 45-49 it opens up to more than 36 percent.

In the years approaching retirement age, the gender superannuation gap can be anywhere between 22 percent and 35 percent.

Existing policy settings are based on a 1.5 earner model in which fathers do most of the paid work while mothers do part-time paid work but most of the unpaid work. In effect, paid work, dominated by men, is being valued more highly than unpaid work, which is mostly performed by women.

KPMG advocates a parent equality model involving parents sharing different burdens at different times, but with a view to caring responsibilities being fairly divided over the parents’ lifetimes.

The parent equality model entails greater acceptance of part-time work for fathers where, for example, fathers drop back from five days per week of work to four days and mothers increase their working days beyond three per week.

Recommended policy reforms

Policy reforms that would move couples towards a parent equality model include:

  • KPMG’s proposals to reform the Child Care Subsidy as set out in The child care subsidy: Options for increasing support for caregivers comprising raising the Child Care Subsidy to a nearly fully funded 95 percent from its current 85 percent and, as an interim measure, the elimination of per-child subsidy caps and an increase in the maximum subsidy for the lowest-income families.
  • A restructured Commonwealth paid parental leave scheme that would encourage more equal sharing of leave entitlements between mother and father, as set out in A better system of Paid Parental Leave.
  • The inclusion of taxpayer-funded Superannuation Guarantee contributions in the Commonwealth paid parental leave scheme.
  • Allowing unused concessional contributions to be made for recipients of Commonwealth Paid Parental Leave without time limit.
  • By promoting greater parental equality, KPMG’s policy proposals would allow parents to select the optimal balance of work and care responsibilities for their circumstances and open up the choice for mothers to take up additional opportunities in the paid workforce.

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Further reading

Read more of KPMG Australia's insights and thought leadership on diversity and gender equity.