PSA says government 'walked away' from genuine opportunity to create jobs, grow economy
The New Zealand government's decision to cancel pay equity claims in May 2025 cost the country 13,000 jobs and $13.5 billion in economic growth, according to a new analysis from the Public Service Association (PSA).
The PSA's analysis was based on the Treasury's own MATAI macro-economic model, which the union said shows that reinstating pay equity settlements would grow GDP by 0.6% over four years and generate an additional $5 billion in tax revenue.
"Our analysis shows the Government had a genuine opportunity to grow the economy, create jobs, and boost tax revenue by continuing with pay equity settlements, and it walked away from it," said Fleur Fitzsimons, national secretary of the PSA.
"This was short-sighted economic management, plain and simple, depriving over 150,000 women of the pay rise they need and deserved."
The analysis reinforces the union's opposition to the government's urgent move last year to cancel pay equity claims as it amended the Equal Pay Act 1972 to require stronger evidence that there are reasonable grounds to believe work is historically and currently undervalued.
Under the amended rules, the threshold for a job to be considered predominantly performed by females was raised from 60% at any time to 70% for at least 10 consecutive years.
The government defended the legislation as an improvement to the pay equity process, with Prime Minister Christopher Luxon arguing it would save billions in public spending.
But the PSA, citing Treasury data, pointed out that pay equity delivers a return of $2.25 for every dollar of net government spending.
This is much greater than the $1.6 return for every dollar spent from the government's own Investment Boost policy.
"The Government says growing the economy is its top priority, but it turned down a $2.25 return on every dollar. That's not economic management; it's an own goal," Fitzsimons added.
The PSA said cancelling pay equity claims and gutting the Equal Pay Act 1972 were an "act of constitutional vandalism and wage theft which must be overcome."
"We will leave no stone unturned until New Zealand women receive pay equity starting with care and support workers many of whom are now back on the minimum wage," Fitzsimons said.
"We need to see clear commitments from opposition parties to pay equity which means and properly accounting for it in their fiscal plans and fixing the Equal Pay Act 1972."
