Billions lost in New Zealand's gender pay gap

Gender and ethnic pay gaps improved this year, according to new research from Strategic Pay, but the data also warned there are still billions in lost earnings due to discrepancies.

Strategic Pay's third annual Pay Equity analysis revealed that $17.6 billion, or 11% of wages and salaries, are lost as a result of gender and ethnic pay gaps. This is despite slight improvement in figures, according to the analysis, where the public sector gender pay gap went down by 1.9%, and the private sector's pay gap decreased by 0.8%. The not-for-profit sector reported the lowest pay gaps.

"Both the public and not-for-profit sectors have likely benefited from initiatives to target pay gaps, including a number of large pay equity settlements and compulsory reporting of pay gaps within the core public service," said Cathy Hendry, Strategic Pay managing director. 

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According to Hendry, Strategic Pay’s analysis differs from Statistics New Zealand because Strategic Pay looked "beyond just base salary" and reviewed benefits including vehicles or insurance. Its data was gathered from more than 192,00 employees in New Zealand, who belong to 1,141 public, private, and not-for-profit organisations. In its findings, the report also discovered an hourly pay gap between ethnic groups, with Māori men earning 17% less, Pacific men earning 23% less, and Asian men earning 11% less  than their Pākehā or European counterparts.

Women have it worse. Pākehā or European women earn 12% less than their male counterparts. Compared to Pākehā or European men, wahine Māori also earn 23% less, Pacific women earn 24% less, and Asian women earn 17.4% less.

The research cited discrimination as the "main driver" for these pay gaps, with Hendry stating that "cultural change" must happen within organisations to make significant impact on the disparity.

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"When you broaden the analysis to incorporate ethnicity, the enormity of the deficit experienced by women and ethnic minorities reinforces the need for employers to comprehensively address pay disparity," Hendry said. "Not just by raising pay, but through cultural change within organisations."

According to Hendry, the "systemic and structural gender and racial inequality" in the labour market and society also need to be fixed to address these disparities.

"Organisations need to play their part and address their own pay gaps and examine any unconscious bias in recruitment and promotions," she said.