MD of a Kiwi business claims the path to authentic pay equity is 'a slow road'
New Zealand has had the Equal Pay Act for 50 years, women now surpass men in terms of education levels, and there’s 114,000 more women than men in New Zealand (NZ). When you combine all that, you’d be forgiven for thinking we may have achieved pay equity by now. However, according to Cathy Hendry, managing director of Strategic Pay, “it’s a slow road.”
The official Statistics NZ (SNZ) pay gap is currently 9.2% but new research from Strategic Pay (SP) and #mindthegap’s third annual Pay Equity analysis shows the gender pay gap is significantly higher at 16.7%. Furthermore, the data reveals that it’s New Zealand’s private sector businesses that are dragging the proverbial chain when it comes to closing the gap.
“Women in general are underrepresented at every level in the private sector but private sector organisations simply aren’t putting initiatives in place to actually address the problem,” said Hendry, whose own private company has a gender pay gap of -1.2 and along with 54 other businesses, have voluntarily reported their pay gap on the public #mindthegap register.
Read more: Billions lost in New Zealand’s gender pay gap
“In the public sector, they’re having to report on it,” Hendry said. “As soon as you start reporting on it, then you start going, ‘Maybe I need to do something to address it.’”
But over in the private sector, many businesses don’t think it’s a problem because they simply haven’t looked. “If you don’t think you’ve got a problem, how do you know until you actually know?” Hendry said. “What we’re finding is, when you look into pay gaps, you can explain some of it [the gap] and address it.”
Hendry said the first thing an organisation should do is start measuring the overall pay gap, but also the pay gap by job level and using “job evaluation” as a tool to stamp out unconscious bias. “It seems to be unconscious bias that creeps in, so ask yourself when you’re doing pay reviews, are they fair? Look at your starting rates – are they fair? Are you bringing males and females on at similar levels?” Hendry said.
What is job evaluation?
Job evaluation is the act of taking a role and using methodology to “size” it. You break down each role in your organisation then look for common elements within each role. This gives you a better understanding of the size of the role and you can use that data to determine what the role should be paid in the market. “It’s really bringing some formal structure and saying, ‘We’re paying this job based on the complexity and size regardless of who’s sitting in the seat,’” Hendry said.
Read more: Paula Bennett slams the gender pay gap
Why is the SNZ data different?
The major difference between the SNZ data and the SP data is the inclusion of employee benefits packages. SNZ findings are driven solely by base pay, but SP extends their data set to include an employee’s full benefits package. Hendry said that private sector businesses are in a better position to offer benefits than not-for-profit or public organisations and when benefits are more widely offered in a sector underrepresented by women, it widens the gender pay gap.
She also highlighted the effect of a benefit like Kiwisaver. “When you include Kiwisaver in the analysis, there’s that compounding effect where women who are earning less, are also earning less Kiwisaver proportions, leaving them with less for retirement,” she said.
It doesn’t stop at gender. A study run by Motu also found that when the gender pay gap is combined with the ethnic pay gap, the deficit shows a total loss in earnings of a staggering $17.6 billion.
“Organisations should be considering these minorities, growing them, and giving them the opportunity to get up to these roles and get paid fairly,” Hendry said.
