Can pay transparency reduce the gender pay gap?

Thursday, 7 March 2019

Shedding light on how much people earn significantly reduces the gender pay gap, research has found.

But not for the reasons you think. 

A study into the salary transparency regulations in Denmark found a seven per cent drop in pay disparities when companies had to reveal wages by gender. 

Researchers said the drop had more to do with a reduction in pay rises for men than an increase in pay rises for women. 

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Vanisa Dhiru, president of the National Coalition of Women of New Zealand, said it was time wage transparency was introduced here.

In Do firms respond to gender pay gap transparency, researchers Morten Bennedsen, Elena Simintzi, Magararita Tsoutsoura and Daniel Wolfenzon found transparency against pay discrimination was effective in changing compensation within firms. 

Their research was based on 2006 amendments made to Denmark's Equal Pay Act.

The new rules required employers with a minimum of 35 employees and at least 10 of each gender to provide gender-segregated wage statistics.

Alternatively, businesses could produce an internal report on gender statistics. 

Researchers found pay shifted within firms rather than increasing significantly overall.

'Specifically male employees experience slower wage growth relative to female employees,' researchers said. 

Greater transparency was also accompanied by a drop in productivity, with researchers suggesting this had to do with decline in work satisfaction among those not receiving pay increases at the same level as they had previously done. 

However, with the reduction in wage bill, the increased transparency resulted in no significant effects on firm profitability, the researchers said. 

The findings matched 2018 boardroom results in New Zealand. 

According to the Institute of Directors, there was no pay gap between men and women holding the same position on the same board. 

This is in part  due to the fact that director pay is transparent, so men and women always know what their colleagues on the board are being paid.

In New Zealand, the 2018 gender pay gap sat at 9.2 per cent, down from 16.2 per cent in 1998.

Dhiru said things were not necessarily improving in the area of gender equality, despite the numbers.

'Where NZ once led in gender equality, New Zealand has now slipped to be ranked at 7th in the world, so we can't say things are improving,' Dhiru said.

'We do not have a gender balance in all areas of our society, and this does not mean we need 50% women and 50% men in all occupations, it means we need to balance the way that we value gender diversity and the different skills and experiences that people of all genders can bring to the table.'

Dhiru said transparency for wage disparities would be an important move in reducing inequality for gender, ethnicity and disability. 

'The fact that we have a persisting pay gap in New Zealand is absolutely unacceptable, and it's worse for some groups of women than others, because of racism, transphobia and other forms of oppression,' Dhiru said.

'Too often we treat pay inequality as an individual issue. We hear things like 'why don't they just ask for a raise?' but gender inequality is a society wide, structural issue it's about structural systems and social norms. Its driven by attitudes and we've seen through our Gender Attitudes Survey that some NZers still hold old-fashioned views about gender stereotypes and roles.'

Minister for Women Julie Anne Genter said the Government was delivering legislation on pay equity.

'Secrecy around pay rates has not served women in getting fair deal,' Genter said. 

She was interested in looking at how pay transparency could work in New Zealand and what impact it would have on the Gender Pay Gap, she said.

However, there were nuances to the issue. 

'Women are not all the same. We need to appreciate the differences between women and what we can do better,' Genter said.

'For example, Māori and Pasifika women continue to have the largest pay gap. Addressing the gender pay gap has to prioritise closing the ethnic pay gap.'