How can you reduce the gender pay gap

Recently, we have heard some of the history surrounding the gender pay gap, but it still remains a controversial issue both in New Zealand and around the world. So what is really going on? Cathy Hendry, experienced career woman, proud mother and senior remuneration consultant at Strategic Pay, speaks about gender equity and pay today. 

When analysing New Zealand pay scales, the gap between men and women has been a cause for concern. “We have looked at our database in depth, and have identified discrepancies around gender at all levels of roles, so I think it is pretty safe to say that we do have a gender gap in terms of pay in the New Zealand market,” says Cathy Hendry.

Statistics New Zealand found that the gender pay gap was still 11.8 percent in 2015, although this has declined since first measured at 16.3 percent in 1998. But in recent years the pay gap hasn’t shown signs of dropping off, continuing to fluctuate around 10 percent. Moreover, if we look only at stats from the past four years, though volatile, the pay gap is arguably increasing.

It isn’t as simple as just men being paid more. According to Hendry, it is a “clouded issue.” There is an abundance of contributing factors, from the types of roles that women are more inclined to work in to conflicting priorities of motherhood. The goal of equal pay, therefore, may be an idealistic vision.

“With the feminist revolution and women wanting to have an equal footing in the workforce, we’ve also made it more difficult with many women juggling their career with kids and traditional women roles,” she says.

“But when you take all of that out of it, there does still seem to be some discrimination.”

A recent study from The Economist assessed the rampancy of the Glass Ceiling in OECD countries, finding that New Zealand is actually the highest ranking non-European country. Coming in ninth with a relatively high score of 68.3 (out of a possible 100), New Zealand is well above the OECD average of 56, indicating good opportunities for progression and lower levels of discrimination towards women in leadership roles.

But Hendry emphasised an important issue that could counteract the positive movements. Businesses have been shifting away from formal pay scales that link pay and performance towards market-based pay structures, which may proliferate unequal pay as normal practice.

This is extremely evident in in the US, where 64 percent of employers used market-based pay structures in 2012, according to research from WorldatWork and Deloitte. The study illuminated the increase, citing previous research from 2002 showing that 75 to 80 percent of businesses were using traditional, formalised pay structures.

“My concern is that in a market where the pay is biased towards a gender gap – or ethnicity gap, or any other disparity there – that we might actually be creating more issues by moving away from some formal approaches to pay.”

How can you champion the cause?
According to Hendry, biases do exist whether intentional or subconscious. However, the shift away from formal, objective performance measures may lead to more opportunities for subconscious bias and discrimination.

“If you can put in good structure where people are paid according to the size of their role, regardless of what their gender is, then pay increases are applied on merit and performance and you are going to counteract those biases that do exist in the market,” says Hendry.

“We’re able to, for businesses that do have some formal pay structure, run audits and help organisations identify where there may be issues and then provide steps and solutions to reduce and resolve gender discrepancy.” 

 

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