Imagine planning for your future, aiming for financial stability and security. But there’s a catch – systemic issues that make this journey harder for you just because you identify as a woman.
In Australia, one in six women experience financial abuse. And if you’re single with children, good luck finding a place to live. Single mothers are disproportionately affected by the current housing crisis, experiencing homelessness and marginal housing at a rate four times the national average. And if they are lucky enough to find a place to live, as a single parent, they can expect that nearly 60% of their income will be spent on rent.
Put succinctly, women face significant challenges in achieving financial wellbeing.
Emeritus Professor Siobhan Austen is an esteemed feminist economist at Curtin University. In this article, we chat with Professor Austen about the factors impacting women’s financial independence and security, and look at steps you can take to protect your own financial wellbeing.
What is financial wellbeing, exactly?
Esteemed feminist economist Emeritus Professor Siobhan Austen, from Curtin University, explains:
“When we’re talking about financial wellbeing, we’re talking about women’s access to – and ability to – control economic resources. This might be in terms of meeting their own needs but often it is also to meet the needs of their children or the people they’re caring for more broadly.”
Women’s financial wellbeing can be negatively impacted by multiple factors, such as taking on more unpaid work and earning less than men, with these cumulative effects becoming particularly evident in retirement.
But why is this the case?
Well in the past, Austen says there was little economic research on gender equity. She also describes early economic policy as “poor”, resting on the assumption that financial security for women was provided by, or the responsibility of, their partner.
“The logic was that most women were partnered, and the financial security could come through that relationship with their partner,” she said. “So, even if women had no money, if their partner’s got money, they’re fine, and the government doesn’t need to be concerned about their financial wellbeing.”
It was this flawed approach to financial equity that got Austen into economic research in the first place.
“It grated, so, I became motivated to generate good economic research that documents women’s issues,” she says. “The [outcomes] can inform policymakers and politicians providing them with reasons why government needs to be concerned about gender equity and what’s needed for gender equity to be advanced.”
The impact of parenthood and unpaid work
One major hurdle is the role of parenthood and unpaid work. If you identify as a woman and plan to have children, you might find yourself stepping back from your career.
“Women tend to be the ones that drop out of paid work when couples have a child,” says Professor Austen. “And if they are still engaged in paid work, quite often they are participating only part-time.”
She adds that even with the recent improvements to Australia’s childcare system, it still isn’t effective at supporting women wanting to go back to work after having children.
“Women are often up against a system that says, well, if you go back to work and start earning an income for yourself, there’s going to be these difficulties in getting good quality childcare that you can afford,” says Professor Austen. “In fact, the household’s economic position might actually go down, because for many situations where the woman is working less than four days a week, they end up spending more on childcare than they earn at work.”
Time out from the workforce can have long-term financial consequences.
“If you take time out of the labour market, it’s going to have a direct effect on what happens to your superannuation savings,” says Professor Austen.
“It also has an indirect effect, because taking time out alters your career trajectory, which also alters your earning capacity as you progress through your working years.”
So why are women the ones who keep taking on the care-giving roles?
According to Austen, it’s a “complex issue” that has both economic and societal factors.
“We have very strong normative structures that make it acceptable for women to take on these caregiving roles – and these also make it quite difficult for men to take on those roles,” she says.
“It’s not a simple fix – there’s no one thing that drives the gender pay gap or that can be shifted to address it. But that doesn’t mean these things don’t need to be worked on. There is an important role for policy in making some of those decisions and alternatives easier.”
Occupational segregation and the gender pay gap
Gendered work poses another challenge. In Australia, many fields of work are female-dominated (nursing, teaching, childcare) while others are male-dominated (engineering, construction, trades). This division of work by gender is called ‘occupational segregation’.
The issue with occupational segregation is that the wages in female-dominated jobs tend to be much lower than those in male-dominated jobs. Thus, it’s a significant contributor to the gender pay gap.
“The wages of a plumber exceed by a large margin the wages of a childcare worker, yet both require a similar level of education,” says Austen. “The work that childcare workers and healthcare workers do is incredibly valuable at a community level, but this isn’t reflected in their pay. It stems from a pay disparity where female-dominated occupations are paid much lower than male dominated occupations.”
This type of pay disparity applies to what is called horizontal job segregation, where men and women work in different types of occupations. But there is also vertical job segregation, where male employees are more concentrated in the higher-status and better-paid positions, such as managers or CEOs.
This disparity can then influence the likelihood of women taking on the family’s primary caregiver role in the future.
“One of the flow-on impacts of that wage inequality is that it’s self-reinforcing, because it feeds into decisions that partners make,” Austen explains. “For example, when a child is born, families often decide that the lower-earning partner (usually the woman) will take time off work to care for the child. This decision, while economically rational in the short term, we now know can have long-term financial consequences.”
Flow-on effects on retirement and superannuation
The cumulative effect of these financial disparities becomes most apparent in retirement.
Women tend to have lower superannuation balances than men, leaving them less financially prepared for retirement. Professor Austen highlights that “more than half of women up until now have been leaving paid work and entering retirement with no support at all, whereas that figure for men has only been around 20%.”
“Super is set up as something that’s individual to each person as part of their employment relationship. In terms of policy, however, the money is designed to support the partner and his or her dependants,” explains Austen. “But the issue we have is that the partner actually has no rights to information about what’s in the superannuation account, and no rights to say how that money is used.”
Recent changes in divorce legislation have given greater rights to partners to access these resources, with both parties required to include information on their super as part of divorce proceedings. However, says Austen, the remaining problem is that women who aren’t divorcing don’t have any rights to information on their partner’s super.
“When it comes to older households in Australia,” she says, “the majority of the super is owned by the man, with the woman financially dependent on him.”
In good relationships, this isn’t an issue. But, as Austen points out, there are many relationships that aren’t so open or cooperative.
“Women are left quite vulnerable in those relationships, where they may have to ask the man’s approval to purchase something for themselves or the household,” says Austen. “Basically, in those households, the man will have the ultimate say so, and that causes a significant gap in financial wellbeing.”
The importance of good economic policy
To address these disparities, significant policy changes are needed.
“On a positive note,” Austen says, “the current federal government is probably making one of the strongest efforts that I’ve seen of any government in recent decades to try and shift the dial.” These efforts include increasing wages in female-dominated occupations and making childcare more affordable and accessible.
She adds: “The government’s also trying to get employers to increase support for men to take paid parental leave – enforcing the idea that looking after children is something that’s shared by both men and women.”
But Austen thinks this isn’t enough.
“Policy often assumes happy households: this idea – the myth really – that again, if he’s got money, then she’s okay, because the money in the household will be shared equally,” she says, citing the Age Pension as a good example of this type of notion.
“The age pension is means tested on household income and wealth,” she explains. “So, if you’re a woman who’s married to a man with a high level of super, you can’t get the pension. It’s a policy that’s based on this assumption that any money that he’s got in his super is available for everybody in a household. And sometimes it’s the case – but sometimes it’s not.”
A Christmas wish list of policy reforms
For Professor Austen, there are numerous policy reforms on her Christmas list.
First up, she’d like to see Aged Pension prioritised over superannuation.
“Superannuation gives amazing tax benefits to people who are able to pour money into super, and these people are much more likely to be men than women. And I think the problem that’s arisen is that you’ve got some people who are on very, very large incomes, and they benefit disproportionately from these tax concessions,” she says.
“It’s incredibly important that we continue to protect and enhance the Aged Pension, because it’s this that provides retirement security and financial wellbeing for older women. When pension money comes into a household, it can be split halfway and put into separate bank accounts,” explains Austen. “As a result, you get women with resources in their own name under their own control, and a greater equality of resources within the household than you do with superannuation.”
She’d also like to see Australia’s tax and benefits system organised at an individual level.
“We keep talking about individuals being responsible for their own financial wellbeing, and we tax people on the basis of their individual income. But then when we come to something like means testing for family services payments or study support, we say, well no, you’re part of a household and you’re subject to what your partner earns. I think, as a matter of principle, we should organise our tax and our benefits system on an individual level. Which, incidentally, would be a positive for gender equality.”
Building a strong aged care sector is also incredibly important to Austen.
“A strong aged care system is essential not just for women’s financial security, but for their fundamental life outcomes and dignity.
“Women tend to outlive men. So, we see a lot of men coming to the latter part of their life with a wife who cares for them at home, whereas a lot of women are spending the latter part of their lives in aged care,” says Austen.
And last on her Christmas wish list, but definitely not least, Austen would like to see an increase in paid parental leave.
“There are strong economic and equity arguments for an increase to paid parental leave. Parents want to do what’s best for the child, and it’s often a preference for the child to be cared for at home in those early years. Yet the parent who provides that care tends to end up with really large economic penalties that have long-term consequences,” she says.
“We need a strong paid parental leave system that says caring for your child at home is an incredibly important role that you take on within your household. So, within our community, we’ll support you for that period of time. That just makes good sense for creating and maintaining a strong community.”
Steps towards improving women’s financial wellbeing
Understanding these issues is the first step towards making informed decisions about your future. Here are some key takeaways:
1. Education and career choices: Pursue higher education and consider career paths that offer growth and financial stability. Curtin offers a diverse range of courses in high-paying fields, such as business analytics or information technology. Plus, there are multiple entry pathways into university study that include ATAR and non-ATAR options, so everyone can have the chance to go to university.
2. Financial literacy: Educate yourself about financial management, savings, and investments. Being financially literate empowers you to make informed decisions and plan for a secure future. There are heaps of services offering excellent free advice, such as the government’s moneysmart website. The Curtin Tax Clinic also offers free tax advice and can help with submitting your tax return.
3. Advocacy and awareness: Be aware of the systemic issues that contribute to financial disparities and advocate for policies that promote equity. Curtin offers business courses in Finance and Financial Planning, and Economics, which can equip you with the skills needed to advocate for and raise awareness on gender disparities around money and financial wellbeing.
4. A meaningful career: If you want to make a difference in the world and help improve women’s financial wellbeing, consider studying our Bachelor of Commerce, where you can major in fields such as Finance, Financial Planning, and Economics.
