Accelerating gender pay equality

Just over 50 ago the Equal Pay Act 1972 was passed to prevent pay discrimination based on gender. Despite this, the gender pay gap still sits at 8.2 per cent.

And the gap is even bigger when ethnicity is also taken into account, with the pay gap for Māori women compared to all men being 15 per cent, increasing to 17 per cent for Pasifika women. There is also significant variability depending upon age, with women in the 55 to 59 year group having a 13.3 per cent pay gap compared to men of the same age.

Gender pay gaps also differ by region, with the Nelson/Tasman/Marlborough/West Coast region having the biggest gap of 12.7 per cent. There are also industry differences, with the financial and insurance services having the largest pay gap at 29.3 per cent.

While the gender pay gap has reduced steadily from 16.3 per cent in 1998, Council of Trade Unions economist Craig Renney has calculated that, based on the current rate of change, it will take another 31 years before the pay gap is finally closed – 83 years after the Equal Pay Act was passed.

Boards can and should be taking a leading role in closing the gender pay gap. Directors need to set the tone by considering their own gender and diversity alongside the board’s role in organisational strategy, setting key performance indicators (KPIs) for the CEO, oversight of progress towards pay equality and transparency.

To help organisations to take meaningful action, Minister for Women Nicola Grigg launched the Gender Pay Gap toolkit last month. The toolkit enables organisations to determine the pay gap at an organisation-wide, level-by-level or like-for-like jobs basis.

The toolkit also enables organisations to calculate their pay gaps consistently. But just as importantly, it has been designed to empower solution-focused conversations that will make a difference over time.

The drivers behind the pay gap can be hard to measure, with factors such as unconscious age bias, leave policies, workplace culture and “motherhood penalty” influencing remuneration decisions. The toolkit encourages businesses to look beyond the numbers to understand the drivers, and to make informed decisions tailored to their own needs to enable the implementation of meaningful change. 

While New Zealand doesn’t have a mandatory pay gap reporting regime, unlike Australia, the UK and Canada, there are benefits in doing so – and many boards have chosen to publicly report the pay gaps in their organisations. In particular, employees and key stakeholders value transparency, and reducing the pay gap can improve employee productivity and morale, enhance public trust, support the attraction and retention of talent, and provide a more gender equal workplace.

Considerations for directors:

• • Are the board and committees gender balanced? If not, what action is being taken to address this?
  • Is your board aware of the size of the organisational gender pay gap, if any?
  • Do all directors have a good understanding of what is driving the organisation’s gender pay gap? 
  • What are you doing within your organisation to accelerate pay equality? 
  • What expectations are the board setting on how quickly and ambitiously to improve gender equality? 
  • How are gender equality outcomes reflected in CEO and senior leadership KPIs? 
  • Do you receive regular reporting on key gender equality metrics such as: 

o   Gender pay gap

o   Sexual harassment complaints

o   Men’s take up of paid parental leave

o   Women in leadership and key management roles