Imagine, it's 2025 and you're about to file your organisation’s first mandatory gender pay gap reporting with MBIE. You saw this in the news, but never really gave it much thought.
Until now, when you're required to report on your pay gap, which you know will have ripple effects on your ability to attract and retain good employees. You wish you'd started looking into this whole thing earlier.
In August 2023, the government announced plans to legally require businesses to report on their gender pay gaps. Given how close the general election is, it’s unlikely we’ll see a draft of any legislation before polls close, and there will be further delays if we have a change in government.
Regardless of election results or impending legislative requirements, it's clear that the “should I or shouldn’t I?” dance organisations are doing around gender pay reporting will continue to gain momentum.
Globally, we’ve seen our neighbours in Australia legislate gender pay gap reporting this year, joining UK, France, Spain, South Africa, and Sweden, who all have gender pay gap reporting laws.
Across the globe, awareness of the gender pay gap has been growing, from the #StopTheRobbery campaign by UN Women (highlighting the 23% global gender pay gap) to the #NoPayDay campaign by Global Women NZ that encourages women to put an out of office on their email on 28 November - the day that represents the end of their paid employment (the remaining 9.2% of the year, Kiwi women are effectively working for free).*
At both a political and social level, the movement and voice for gender pay equity is strong, and I believe that employers need to think about when, not if, they’ll need to open their books and show they pay fairly.
* Please note: figures in this article are averages. We know that the gender pay gap is even larger for women of colour, disabled women, and different minority groups in different locations.
What is the gender pay gap?
Glad you asked! The gender pay gap is the difference between the average earnings of men compared to women. The gender pay gap sits under the broad umbrella term of pay equity, which is ensuring that men and women are paid the same amount for the same work, or work that is different but of an equal value (the Equal Pay Act 1972 prohibits discrimination in pay on the basis of sex).
The rate differs vastly across the world. The World Economic Forum (WEC) estimates the global gender pay gap is 31.4%. Here at home, Statistics NZ has our current gender pay gap at 11.9%, up from 9.2% in 2021-22 and 9.6% the year before that.
While we compare well with other countries, there is still a significant gap between what men and women earn in Aotearoa New Zealand (NZ women lose nearly $8 billion a year, according to research by MindTheGap, a NZ organisation specialising in helping businesses report and close their pay gaps).
What causes the gender pay gap?
The causes of the gender pay gap are complex. The Ministry for Women has found that only 20% of the gender pay gap can be explained by tangible factors, such as education, occupations and industries, and part-time work (as well as access to flexible work). The remaining 80% is down to intangible factors like behaviour, attitudes, biases, occupational segregation, and unequal distribution of unpaid care & domestic labour.
Put simply, the gender pay gap exists due to a range of historic social expectations, from women undertaking the majority of caregiving and domestic work to conscious and unconscious bias at a macro and micro level that affects women's access to, and experience in, the workplace.
Does reporting on gender pay gaps help?
It sure does! Research from MindTheGap found that legislative requirements to report on gender pay gaps can reduce it by 20-40%.
A longitudinal study from Harvard Business Review examined the gender pay gap in Denmark before and after their mandatory reporting legislation passed in 2006. Results show a 7% reduction in gender pay gap within 2 years.
What's interesting in this case is these organisations also saw an overall 2.8% decrease in their wage bill, and increased transparency did not negatively impact their net income.
Should we report on gender pay gaps?
Ultimately, like all organisational information that you choose to share publicly, whether you report on your gender pay gaps is a business choice and you should weigh up the pros and cons.
My advice is that reporting gender pay gaps will likely become either legally mandated or socially expected in the next 1-5 years.
If we have learnt anything from significant recent social movements like Strike for Climate Change, #metoo, and #blacklivesmatter, it's that social pressure can be as effective as legislation at creating change.
We also know that organisations who report on their gender pay gaps:
- Increase diversity of hiring, specifically around women but also other diverse groups.
- Increase the number of women in senior leadership positions.
- Lower their overall wage costs.
- Improve productivity, employee retention, and team cohesion.
- Report higher customer satisfaction and profits.
- As always, I recommend identifying why you would or wouldn’t report on your pay gap.
Maybe you don't want to because your organisation is really small. Maybe you do want to report because you are in a male-dominated industry and want to attract more female talent. Maybe you just think it's the right thing to do (100+ New Zealand employers already report their pay gaps with MindTheGap, including Westpac, Genesis Energy, Chorus, and Fletcher Building).
If we know why we are doing something then we can talk to our people about it and we are making informed, proactive business decisions - rather than waiting for the legislation coconut to hit us on the head.
Okay, I'm keen to try this!
The first step is identifying your gender pay gap. At a super simple level, you can identify the median and average salary of your male and female employees and find out the difference. From there, you can compare that to the national average.
If you want to dive deeper, you can group people with like-for-like roles, looking at size, scope, and complexity of roles. If you have enough people doing the same jobs, you may want to look at specific roles.
Once you know what’s happening, you can then dig into the data to understand where and why it's happening, and then look at strategies to address any gaps.
If you do have gender pay gaps, some may be justifiable, e.g. we have 10 women and 10 men in the same role, but all the women have started in the last 2 years and all the men have been here for 10+ years.
However, just because you can justify it, it doesn't mean you shouldn’t address it. In this example, the remedy is to increase the women's salaries at a higher rate than the men to ensure the gap closes.
Other strategies to reach pay equity are things like unconscious bias training delivered annually to all employees or more targeted action like increasing Aroha’s salary because it is so out of line with everyone else’s.
Start somewhere, one small action done well is better than nothing. Then you can look at year-on-year growth. The gap won’t change overnight, but once you start reporting, you can understand how you are making a difference with small, regular, meaningful changes.
For more help, try the Manatū Wāhine Ministry for Women’s What's my Gender Pay Gap tool.
