Te hira o te utu ōriteWhy paying people fairly is important
Being paid fairly is a fundamental human right. The New Zealand Government and the Public service is committed to addressing inequitable pay for female-dominated workforces and closing gender and ethnic pay gaps. This is particularly important for women, Māori, Pacific peoples and ethnic groups who are over-represented in lower paid work and under-represented in leadership roles.
Ensuring everyone is paid fairly benefits all of us. This is because there is a human connection in fair pay — it doesn’t just improve someone’s life, but the lives of those around them, including their families and communities.
In 2022 the biggest increases in pay in the Public Service were for our lowest paid and non-managerial staff. The average pay of Māori women and men increased more than for any other group.
Te whakamārama i ngā āputa utu me te utu ōriteUnderstanding pay gaps and pay equity
Pay gaps and pay equity may sound similar but they are different concepts.
Pay gaps are a measure of inequality and show that some groups earn less than others, on average. Differences in pay could be fair or unfair. Pay differences can result from people doing different jobs, or from bias and discrimination, among other reasons.
Pay should reflect the level of skills, responsibilities, effort, experience and working conditions and not be negatively affected by gender, ethnicity or other biases.
It’s important to identify, measure and understand pay gaps in workplaces so that they can be closed.
Pay gaps in the Public Service are falling
- The Public Service gender pay gap is at its lowest level ever. It fell from 12.2% in 2018, to 7.7% in 2022. The Māori pay gap also fell substantially from 11.2% in 2018 to 6.5% in 2022.
- The Pacific pay gap has also fallen from 21.6% 2018 to 17.7% in 2022, but remains much higher than for other groups. The Asian pay gap has changed little over this period.
- Taking action on gender pay gaps has helped to close both gender and Māori pay gaps in the Public Service.
- This is good news. However, more work is needed to close Pacific and Asian pay gaps. Further, women continue to be paid less on average that men in every ethnic group, and pay gaps for Māori, Pacific and ethnic women are wider than they are for European women.
We know we have further work to do.
Taking action to close the Public Service pay gap
Public Service organisations are committed to Kia Toipoto — the Public Service Pay Gaps Action Plan. Kia Toipoto addresses the common barriers that drive all pay gaps and recognises that targeted action is needed to make progress. It requires Public Service organisations to meet several goals between 2022–2024 including setting up plans and targets to improve gender and ethnic representation in their workforce and leadership.
Kia Toipoto does not cover the private sector.
How the Public Service calculates the gender pay gap
Te Kawa Mataaho Public Service Commission calculates the Public Service gender pay gap differently to the way Stats NZ calculates the national gender pay gap.
We use mean pay as we think this better reflects the level of inequality. Mean pay captures the effects of pay differences in the highest and lowest paid groups, for example more women in low-paid roles and more men in high-paid roles.
Stats NZ calculates the national gender pay gap using median pay as it considers this better represents the pay that the typical employee receives.
In Aotearoa NZ the law does not allow discrimination on the basis of sex.
Pay equity is about ensuring that everyone’s work is valued based on their skills, responsibilities and experience, as well as the effort it requires. It is an important step in ensuring fairness for all workers.
The pay equity process
The Equal Pay Act 1972 makes it clear that equal pay and pay equity are legal requirements. The Act was updated in 2020 to provide a clear pay equity process to test whether female-dominated occupations are free from sex-based undervaluation.
The pay equity assessment process allows us to look beyond what task someone is doing to understand and properly value their work.
Pay equity settlements are powerful vehicles for closing gender, Māori, Pacific and ethnic pay gaps, particularly for vulnerable workforces.
Te pūtake o ngā āputa utu me te rerekē o te utuWhy pay gaps and pay inequity exist
Pay gaps affect many groups. Several factors contribute to this issue.
Bias and discrimination
Bias and discrimination are based on deeply held societal beliefs about gender, ethnicity, work and family. They underpin all the other factors in pay gaps. For instance, a New Zealand study showed that women are just as productive as men but are paid less than their male counterparts. Wāhine Māori, Pacific women and women from ethnic communities face both ethnic and gender bias and are paid less on average than men in the same ethnic group.
The value placed on jobs identified as women’s work
The skills, responsibilities, effort and working conditions required in female-dominated occupations are not recognised or valued in the same way as they are in other occupations.
Work arrangements and caring responsibilities
Women still take on most of the family caring work. More women work part-time or flexibly to balance their paid and unpaid work. Part-time work is more available in lower paid occupations and positions. As well, women are more likely than men to take parental leave, which can also reduce the rates at which they progress in their careers. Working flexibly can limit or slow down career progression.
Leadership and representation
In the Public Service, women, Māori, Pacific people and members of ethnic communities are less likely to hold leadership roles. This is partly due to the impact of part-time work and career breaks on women’s career progress. But it also reflects gender and ethnic biases about what makes a natural leader.
The jobs women, Māori and Pacific people do (occupational segregation)
In Aotearoa New Zealand, women, Māori and Pacific people are generally more likely to be employed in a narrow range of occupations and at the bottom or middle levels of an organisation. Māori and Pacific women are more concentrated in lower paid occupations than European women or Māori or Pacific men. This is occupational segregation.
NZ’s high level of occupational segregation by gender, has a significant impact on women’s pay and lifetime earnings.