The pay gap toolkit is a welcome first step, but doesn’t go far enough

Sunday, 17 November 2024

Jo Cribb is the founder of Mind the Gap, and former chief executive of the Ministry for Women.

OPINION: Given the week that was it’s not surprising that the minister for women’s launch of a pay gap tool went largely unnoticed.

With median hourly earnings for all women currently at $32.08 compared to $34.95 for all men; Asian women at $30.00, wāhine Māori at $29.71, and Pacific women $29.00 (as of June 2024) and a stubborn national gender pay gap stuck around 8-9%, work is needed to ensure skills and performance determine what is in our pay packets, not our gender and ethnicity.

Internationally, we are well behind. Most comparable countries, including Australia, have policies in place that even-up the pay playing field. Most common is the requirement for businesses to publicly report their pay gaps; such transparency resulted in a 19% decline in the UK’s gender pay gap. No-one wants to publish big gaps, and no-one wants to publish gaps that are getting bigger, so they fix them.

Mind the Gap, which I co-founded, launched a voluntary pay gap registry for businesses in 2022. Encouragingly, over 100 organisations signed up. They used a variety of methods for assessing their gaps and included different data in the calculations.

Some business leaders called for a standardised measurement. They wanted their reported gaps to be compared apples for apples across their sectors. The minister for women responded this week, launching a business-designed pay gap methodology and tool kit.

For data geeks, I was pleased it uses a median measure (ranking all salaries and finding the difference between the middle male/female salary) because this provides a more accurate picture of what workers in the business will be experiencing. It’s less swayed by the CE and senior teams’ salaries.

As a limitation, it’s silent on ethnic pay gaps (where the largest gaps are) and recommends only including data from those who have employment agreements, so contractors and casual workers will be excluded. These are often the most marginal workers where pay inequality abounds.

The toolkit’s advice is that employers with under 10 employees should not publicly report as there are insufficient data points for an accurate assessment and individual’s privacy can be risked. That means there are 49,000+ businesses with 10 or more employers who should report (according to Infometrics 2023 data).

The policy paper I wrote for Mind the Gap recommended businesses with over 50 employees report (7875 in 2023). Businesses of this size usually have the HR systems in place to easily generate the data required. The Aussies landed on businesses with 100+ employees.

Whether it is businesses with 10, 50, 100 or even 250 employees who should report, we now have a business-endorsed measurement tool, so the focus must be on increasing reporting rates.

Companies have had ample opportunity to voluntarily report their gaps over the last two years on the Mind the Gap registry or in their own annual reports, but thousands of business leaders have chosen not to.

I’m not sure a toolkit alone is going to get them over the line.

Not surprisingly, I’d legislate for pay gap reporting. Doing so would bring us in line with what cross-Tasman businesses have to do anyway, as well as all EU companies. I’d make it easy to report with pay gap data uploaded the same time as annual reports to the searchable companies and incorporated societies registers.

With a government hot on being fair and equal, introducing a law that helps ensure such fairness in our pay packets seems like a sensible next step.

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