the economics of equal opportunities: introduction

3
E DlTORlA L 99 The Economics of Equal Opportunities: Introduction conomic arguments and calculations pose E a continual and increasing threat to the implementation of equal opportunities policies. If equal opportunities policies im- pose costs on employers, policymakers are quick to suggest that the measures are inappropriate and unaffordable. Ultimately equal opportunity policies have to be defended on ethical grounds, but it has become increasingly necessary for the pro- ponents of equal opportunities to engage with these economic arguments if they are to challenge the economic case and perhaps even use economic calculus to their advant- age. It was with the objective of engaging with these considerations that the Equal Opportunities Commission for Great Britain decided to hold a seminar on the economics of equal opportunities. The editors of this special edition were commissioned to pro- vide the academic leadership for the seminar and to edit the papers presented into a volume which will be published by the Equal Opportunities Commission in Summer 1995. To bring these arguments to a wider audience a sinall selection of those papers are also printed here, with the permission of the Equal Opportunities Commission. We have also taken the opportunity to review the recent research work commissioned by and pub- lished by the Equal Opportunities Com- mission, again to bring this research to the attention of the academic and practitioner community. Engaging with economic discourse brings dangers as well as opportunities. The main danger is perhaps that the conceptual frame- work within which mainstream economic calculations are undertaken will be accepted as neutral and left unchallenged. Such an approach would fail to uncover the assump- tions behind the calculations, and may lead to a fatalistic assumption that equal oppor- tunities cannot be afforded and, more importantly, to a belief that women’s claims on economic resources must always be subordinated to that of a supposed higher need - that of the economy. Yet the solution clearly does not lie in ignoring or dismissing the economic case. Instead the opportunities to interrogate and mobilize the techniques of economic analysis need to be exploited. The seminar provided such opportunities, includ- ing the opportunity to widen the scope of economic analysis; to pay attention to areas of social and economic life that normally lie outside the economic calculations, uncosted and unaccounted for; to identify the inter- relationships between economic institutions and gendered inequalities and to reject the traditional technique of regarding gender dis- crimination as a residual - the part that can- not be explained after the effects of economic forces are taken into account; and to begin to show how economic calculus could be used in favour of and not always against equal opportunities, once an appropriate frame- work for considering costs and benefits has been adopted. The articles chosen for inclusion in this special issue are those which are particularly pertinent to readers of Gender, Work and Organization. The first two articles, by Holtermann and by Bruegel and Perrons deal with the question of how to assess the costs and benefits of equal opportunities at the level of the organization. Bruegel and Perrons take the argument a stage further by ques- tioning whether the organizational level is indeed the appropriate level for such a cost benefit assessment. These articles feed dir- ectly into the debate as to whether there is a so-called ‘business case’ for equal oppor- tunities. Holtermann surveys the quantitative evidence available on the costs to employers of providing conditions of employment which make it easier to combine work and family responsibilities. Estimates of the costs of such policies inevitably involve making assumptions about the take-up of benefits, and the indirect costs in terms of the dis- ruption entailed by a worker’s absence or the introduction of a temporary replacement for a worker on leave. Even at the level of the individual employer, equal opportunities policies are not wholly negative; some bene- fits accrue to employers who do offer family friendly employment in terms of greater worker loyalty, a less distracted labour force, reduced turnover, and reduced absenteeism. But it is very difficult to establish the extent to which any specific policy will affect 0 Blackwell Publishers Ltd. 1995,108 Cowley Road, Oxford OX4 lJF, UK and 238 Main Street, Cambridge, MA 02142, USA. Volume 2 Number 3 July 1995

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Page 1: The Economics of Equal Opportunities: Introduction

E DlTORlA L 99

The Economics of Equal Opportunities: Introduction

conomic arguments and calculations pose E a continual and increasing threat to the implementation of equal opportunities policies. If equal opportunities policies im- pose costs on employers, policymakers are quick to suggest that the measures are inappropriate and unaffordable. Ultimately equal opportunity policies have to be defended on ethical grounds, but it has become increasingly necessary for the pro- ponents of equal opportunities to engage with these economic arguments if they are to challenge the economic case and perhaps even use economic calculus to their advant- age. It was with the objective of engaging with these considerations that the Equal Opportunities Commission for Great Britain decided to hold a seminar on the economics of equal opportunities. The editors of this special edition were commissioned to pro- vide the academic leadership for the seminar and to edit the papers presented into a volume which will be published by the Equal Opportunities Commission in Summer 1995. To bring these arguments to a wider audience a sinall selection of those papers are also printed here, with the permission of the Equal Opportunities Commission. We have also taken the opportunity to review the recent research work commissioned by and pub- lished by the Equal Opportunities Com- mission, again to bring this research to the attention of the academic and practitioner community.

Engaging with economic discourse brings dangers as well as opportunities. The main danger is perhaps that the conceptual frame- work within which mainstream economic calculations are undertaken will be accepted as neutral and left unchallenged. Such an approach would fail to uncover the assump- tions behind the calculations, and may lead to a fatalistic assumption that equal oppor- tunities cannot be afforded and, more importantly, to a belief that women’s claims on economic resources must always be subordinated to that of a supposed higher need - that of the economy. Yet the solution clearly does not lie in ignoring or dismissing the economic case. Instead the opportunities to interrogate and mobilize the techniques of

economic analysis need to be exploited. The seminar provided such opportunities, includ- ing the opportunity to widen the scope of economic analysis; to pay attention to areas of social and economic life that normally lie outside the economic calculations, uncosted and unaccounted for; to identify the inter- relationships between economic institutions and gendered inequalities and to reject the traditional technique of regarding gender dis- crimination as a residual - the part that can- not be explained after the effects of economic forces are taken into account; and to begin to show how economic calculus could be used in favour of and not always against equal opportunities, once an appropriate frame- work for considering costs and benefits has been adopted.

The articles chosen for inclusion in this special issue are those which are particularly pertinent to readers of Gender, Work and Organization. The first two articles, by Holtermann and by Bruegel and Perrons deal with the question of how to assess the costs and benefits of equal opportunities at the level of the organization. Bruegel and Perrons take the argument a stage further by ques- tioning whether the organizational level is indeed the appropriate level for such a cost benefit assessment. These articles feed dir- ectly into the debate as to whether there is a so-called ‘business case’ for equal oppor- tunities. Holtermann surveys the quantitative evidence available on the costs to employers of providing conditions of employment which make it easier to combine work and family responsibilities. Estimates of the costs of such policies inevitably involve making assumptions about the take-up of benefits, and the indirect costs in terms of the dis- ruption entailed by a worker’s absence or the introduction of a temporary replacement for a worker on leave. Even at the level of the individual employer, equal opportunities policies are not wholly negative; some bene- fits accrue to employers who do offer family friendly employment in terms of greater worker loyalty, a less distracted labour force, reduced turnover, and reduced absenteeism. But it is very difficult to establish the extent to which any specific policy will affect

0 Blackwell Publishers Ltd. 1995,108 Cowley Road, Oxford OX4 lJF, UK and 238 Main Street, Cambridge, MA 02142, USA. Volume 2 Number 3 July 1995

Page 2: The Economics of Equal Opportunities: Introduction

100 GENDER, WORK A N D ORGANlZATlON

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employees' behaviour and even more dif- ficult to quantify the effects and so value the benefits which an employer may capture. The costs to firms seem immediate and palpable while the benefits are more distant and less easy to capture. Thus individual organizational initiatives may produce only slow and patchy changes. Yet it needs to be remembered that rising costs do not always bring about bankruptcy, and organizations can be stimulated into removing organiza- tional slack and inefficient practices in an effort to fund better employment practices.

Although approaching greater equality through the kinds of policies which Sally Holtermann surveys appears to create new costs, perhaps new net costs, this is because the costs of existing arrangements are buried in the privatized family economy and mainly in the first instance borne by women and children. Equal opportunity policies can be thought of as shifting some of the costs of social reproduction from individuals, usually women, within the family to employers and the state, and ultimately perhaps to con- sumers and taxpayers. In the absence of equal opportunities policies the costs are privatized and borne by women and their families. Read through the existing 'gender order', these arrangements seem natural and standard, rather than one way of organizing the real resource costs of a particular aspect of social reproduction.

Bruegel and Perrons extend the argument by asking how a broad analysis of the costs and benefits of equal opportunities policies relates to the charge that they erode com- petitiveness. They see the British economy as locked into a specific 'gender order' which is reinforced through interactions between labour market processes, household decisions and state policies. It has detrimental effects on women and imposes costs on firms and the economy at large. Comparisons with other advanced industrial economies suggest that, though gender inequality is universal, its form and rigidity varies cross-nationally. It is not immutable. Given the sexual division of labour in the family, competitive market processes exacerbate inequality between men and women in the labour market, which then feeds back to rationalize family members' behaviour. From the point of view of equal opportunities this is a vicious circle, though again not immutable. Bruegel and Perrons suggest how certain policy measures could initiate a more egalitarian set of cumulative changes.

Bruegel and Perrons take up some of the issues raised in Holtermann's chapter, arguing that employers face both short- and

long-run costs associated with the way in which women's labour is utilized. But in opposition to the mainstream neo-classical view, they emphasize that there is nothing 'optimal' about the employer driven pace and pattern of change. Most innovative of all, they link ways in which women's labour is utilized to the inability of firms to innovate and introduce technical change. Market forces have pushed the British economy along a trajectory where competition has been through low wages. Socially and dynamically, the results are sub-optimal. At this level of analysis, equal opportunity policies serve not only to unlock the gender order but can contribute to improved macro- economic performance, and actually enhance competitiveness.

The third and fourth articles in this issue are also concerned with the interrelationships between gender inequality and practices at the organizational level. Millward and Woodland show how gender segregation in employment is not only prevalent at the or- ganizational level but also associated with significant pay differentials; these differences are even greater than the traditional differ- entials calculated by economists between unionized and non-unionized plants. Thus it is more important for men to work alongside other men than to join a union.

Hunter and Rimmer also take up the theme of how pay practices influence gender in- equality by comparing the experience of women in Australia and the UK. The more deregulated labour market in Britain, where pay determination is devolved to the man- agement of individual firms, has been associated with a wider earnings gap than is the case in Australia. Recent trends towards decentralization of pay determination in Australia are now threatening to widen the gender pay gap, not least because women tend to be concentrated in industries and occupations where there is either little scope for, or little pressure for enterprise-level, productivity-related bargaining. Moreover, it is female-dominated occupations within plants using enterprise bargaining that are more often excluded from such schemes.

This comparison thus points to the importance of the institutional environment in which the organization is located in deter- mining gender pay differences. The signi- ficance of the overall regulatory regime in gender pay outcomes suggests that legislative measures that focus primarily on the in- dividual organization, such as the UK's equal pay legislation can only have limited effects, a conclusion that is echoed by Millward and Woodland. Not only is it extremely difficult to

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Page 3: The Economics of Equal Opportunities: Introduction

EDlTORlAL 101

achieve general improvements in women’s pay if pay policies are determined at the organizational level, as there is no automatic mechanism through which improvements can be generalized, but men and women are not only employed in different occupations but also in different organizations. Economic theories which treat women’s wages as determined by their individual supply char- acteristics, and not by pay and employment practices adopted in the organizations in which they are employed, are based on an outdated theory of pay structures which has little relevance for a decentralized economy where pay determination has passed into the hands of individual organizations and managers. The diversity of pay levels set, and

0 Blackwell Publishers Ltd. 1995

the evidence on variation in pay levels by degree of gender segregation, both indicate that there is considerable scope for managers to exercise discretion in the setting of wages. Thus some better system of regulating organizational pay, including for example a national minimum wage, or equal pay legis- lation which provides for comparisons between as well as within organizations, may be necessary for further progress to be made in closing the gender pay gap.

Jane Humphries Jill Rubery Faculty of Economics Manchester School University of Cambridge of Management

UMIST

Volume 2 Number 3 luly 1995