Reporting on Pay Gaps

As a 15 year old, my first job was as a checkout chick at our local Coles (New World for the Kiwi’s). The world seemed pretty straightforward, I was under the Shop Stewards Award - and I think I got paid around about $4.70 an hour.? There was time and half for a Saturday shift and double time for working on a Sunday or stocktake after hours.? It was based on my age and experience, and that was that. I saw it as a set of rules that made sure we all got paid fairly… little did I know how complex the world of? pay equity really was!

Fast forward a few (ahem) decades;? my experience is broader and my understanding is more nuanced - as it is for society in general. Today it has been 50 years since a law was passed in Aotearoa making it illegal to pay men more than women for the same work. In 2020, this was amended to recognise pay equity rather than equal pay – that is, women who do different jobs but of the same value, should also be paid the same as men. These are both fantastic milestones on the journey to an equitable society…

?But there is still so much work to do.

Despite many efforts, the gender pay gap in NZ has not changed in the last 10 years and recent research suggests it may be worse than we think. The official Statistics NZ pay gap is at 9.2% but research from Strategic Pay puts it significantly higher at 16.7%, with the private sector driving the gap. The difference between the two statistics can be explained in part by the inclusion of benefits such as company cars, health insurance, pension plans etc. When these are included the pay gap widens further. Why??

Firstly, there are more men working in private sector organisations and these organisations are in a better position to offer benefits. Women fill more roles in Not-For-Profit or in the public sector; organisations less able to offer high benefits packages. So by including the benefits package, we can see a truer reflection of the earnings of individuals, extending the gap as men are more likely to be advantaged by greater benefit packages.

When men, on average, have higher paying jobs they are able to make higher voluntary contributions to their pension plans compared to women in lower paid jobs. The higher contribution might look like they are earning less on paper (reduced gross income), but this is in fact just an artificial reduction in the pay gap.

Furthermore, while the public sector has taken steps to address pay equity, the private sector has been slow to change. One of the key differences between the two is the requirement to report on gender pay gaps. Reporting means looking, and this step alone can highlight issues an organisation might not even be aware of. In 2018 the public service set up a fair pay taskforce.? During the period of the Action Plan the public service gender pay gap dropped by 30 percent, from 12.5 percent in 2018 to 8.6 percent in 2021. This is reflected overseas as well. Countries such as the UK who have introduced mandatory reporting for organisations with over 250 employees, have seen a continuous closing of the gender pay gap. This has also brought about a nationwide change in culture, so that while organisations under that size don’t have to report, many more are choosing to do so voluntarily.

The gender pay gap is also only part of the picture. If we add the ethnic pay gap to the picture, the gap widens even more for minority groups..

Last week a 8000 signature petition was handed to parliament to take action on the gender and ethnic pay gaps in NZ by asking big organisations to report their gender and ethnic pay gaps. It would be great to see this leadership from the top. But we don’t need to wait for reporting to become mandated. As organisations, we need to take responsibility, act ethically and voluntarily report on our pay gaps. A great place to start is to visit mindthegap.nz where you’ll find plenty of information, resources and NZ's first pay gap registry - and sign up for the Diversity Agenda to help make our industry more diverse and inclusive.