Employees are becoming more discerning in their employment choices; being seen as taking a lead in addressing pay equity will help any organisation stand out from the crowd. By Cathy Hendry.
New Zealand’s official gender pay gap, as reported by NZ Stats is 9.1 percent; this figure has remained relatively unchanged over the last five years.
Strategic Pay has also undertaken our own analysis in this area and has found the overall gap to be a lot higher, particularly when other elements of pay such as benefits and variable payments are included.
Unsurprisingly, the topic of gender pay disparity in New Zealand can generate very heated debates. I have often had people challenge me on whether the figures are accurate, saying that when you allow for factors such as education, level of role and experience there is no gender pay gap.
After all, surely no one actively sets out to pay women less than their male counterparts?
Let’s have a look at the numbers in more detail.
The overall pay gap is measured by taking the median hourly earnings for men and comparing them to the median hourly earnings for women. This is a crude measure in that it doesn’t account for the organisational level of roles.
We already know that there is a far higher proportion of men than women in senior, high paying jobs and this will certainly be contributing to this overall gap. But does this mean there isn’t a gender pay gap in New Zealand?
The June 2021 labour market statistics showed 72.6 percent of men are in employment vs 62.8 percent of females. When we consider those that are under-employed (people who are currently employed part time and want more work), 34,000 are men and 72,000 are women.
Why are women over represented in the under-employed and why do women make up such a small proportion of senior leadership team members in New Zealand?
A report published in 2020 by Deloitte showed New Zealand as being one of the lowest-ranked countries worldwide for women in senior leadership roles; this is shameful, particularly when we consider our female representation in politics.
The numbers certainly suggest that the lower proportion of women in the higher paying roles is likely to be a large contributor to the pay gap. However, this does not mean that when distribution of the workforce is accounted for there is no pay gap.
Research conducted on behalf of the Ministry for Women in 2003 found that the great majority (80 percent) of the gender pay gap was driven by harder to measure factors, such as conscious and unconscious bias, that impact negatively on women’s recruitment and pay advancement.
Analysis by Strategic Pay also supports this research outcome given that, when we account for level of role or job size, we are still seeing gaps between male and female pay.
When we consider all the evidence, there is a very compelling argument that New Zealand does in fact have a gender pay gap and pay equity issue. Unfortunately, these figures get worse when you take into account Māori and Pasifika women, who are worse affected than their European counterparts.
There are positive signs in the market that some organisations are trying to address these issues. The core public service announced in 2018 its plans to eliminate the gender pay gap.
There are now gender pay gap action plans for all public service agencies, showing real leadership in this space. A number of private companies have also started reporting on their pay gaps and many are trying to better understand how to encourage greater representation in their senior teams.
Closing the gender pay gap is good for business; studies have found that closing pay gaps will help organisations retain and recruit talent, improve their bottom line and even benefit the wider New Zealand economy.
Employers play a vital role in this issue; as a first step, identifying and understanding any pay gaps within your own organisation will allow for an understanding of what issues there may be. The next step is developing an action plan to address the issues.
Employees are becoming more discerning in their employment choices; being seen as taking a lead in addressing pay equity will help any organisation stand out from the crowd.
In short, New Zealand’s pay gap is most definitely fact, not fiction and we all need to do our part to address the gap.
Cathy Hendry is the managing director at Strategic Pay.