Pay transparency can help reduce gender and ethnic pay gaps and address inequities in the workplace. Implementing pay transparency is a key action under Te Mahere Whai Mahi Wāhine Women’s Employment Action Plan.
The gender pay gap in Aotearoa New Zealand has fluctuated over the past decade and is currently sitting at 8.6%.
Women, Māori, Pacific people, and people from other ethnic communities are more likely to experience pay gaps, and higher rates of unemployment and underemployment, when compared to European men.
Introducing a pay gap reporting system
Work has been underway to introduce a mandatory pay gap reporting system that would be a step towards pay transparency. This system proposes that organisations with over 250 employees will be required to report their gender pay gaps, then over time extending to organisations with over 100 employees.
Pay gap reporting has been underway in the public sector for several years, first through the Gender Pay Action Plan and currently through the implementation of Kia Toipoto — Public Service Pay Gaps Action Plan.
Employers and employees generally treat pay as private and confidential information that is not easily accessible to other employees or external employers. This can contribute to discriminatory pay and employment practices, inequity in the workplace, and increased gender and ethnic pay gaps.
One way that these factors can be addressed is through pay transparency. Pay transparency is a range of actions to make pay information more visible inside and outside an organisation. Actions can include disclosing pay bands and organisations identifying and reporting on their gender and ethnic pay gaps.
Benefits of pay transparency:
- Potential discriminatory pay practices and pay gaps between gender and ethnicities can be seen and addressed directly.
- Employers can proactively investigate, report on, and address gender and ethnic pay gaps in their organisation and at a wider-industry and/or system level.
- Employees are empowered to make more informed decisions on their employment and negotiate their pay.
- People are matched to jobs that best suit their skills and experience.
- Morale and motivation within an organisation can improve.
- Clear explanation of pay scales are developed.
- Employers are incentivised to address employment inequities and make the changes to their policies and practices needed to keep inequities from reoccurring.
The National Advisory Council on the Employment of Women (NACEW) are the national advisory group on pay transparency and has provided expertise and engaged with the business sector to help inform this work.
We have conducted research into how pay transparency works internationally. Country Case Studies on Pay Transparency (2022) looks at Australia, Denmark, France, Germany, Iceland, and the United Kingdom. The research shows that most jurisdictions similar to New Zealand have addressed pay transparency and pay equity in some form with the overall aim of closing the gender pay gap and combatting workplace gender inequity.