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Even after 50 years of The Equal Pay Act, most haven’t a clue what pay equity really means

What is it?

The Equal Pay Act of 1972 is supposed to prohibit discrimination in pay based on sex. Pay equity is a key aspect of the Act, but few people in New Zealand truly understand what the term actually means and assume it is simply about receiving the same pay for the same work. Indeed, that is a requirement of NZ law and has been for decades. But the term actually refers to men and women doing different work, with one job that is deemed to be worth a calculated ratio of the other, and therefore it is considered to be discriminatory if the pay is not in the same ratio.

In order to determine whether discrimination is occurring, criteria within the legislation is applied that measures “the extent to which the work or class of work calls for the same, or substantially similar, degrees of skill, effort, and responsibility; and the extent to which the conditions under which the work is to be performed are the same or substantially similar.” 

For instance, a nurse’s job (mostly women) is compared to a police officer’s job (mostly men) or a primary school teacher’s aid (mostly women) to a prison guard (mostly men) and so forth. Then it is determined if the work done primarily by women is paid less than the calculated ratio of the comparative men’s group says it should be. The complete subjectivity of the calculation is controversial and, in the hands of someone amenable to the possibility, could easily determine that a group of men is underpaid. However, the Act is not interested in that situation and does not allow for the pay of the men to increase.

While the Act has its champions, what might seem conceptually sensible and based on “fairness” may cause negative unintended consequences. For instance, increases in pay for women may generate a response in the marketplace, such as increased work loads.

The Government recently invoked the legislation in increasing the pay of social workers who are predominantly women. 

Some of the problems with measurement

Supporters of pay equity argue that a lifetime of choices influenced by social and economic forces steer women into lower paying occupations. However, the data on such an assertion is extremely difficult to verify due to the complexities and subjectiveness of factors that feed into a person’s decisions over the course of an entire life.

Stats NZ data from 2021 reports women are being paid about 9% less than men. The gap reportedly increases to 14% for Māori women, 20% for Pasifika women and 12% for Asian women, when measured against all men. Yet other studies have found some groups of NZ men (say Pacifika and Māori) are paid less than some groups of NZ women (say Pākehā).

MindTheGapNZ, a group dedicated to eliminating perceived gender pay gaps, report the differences to be even greater while the Organisation for Economic Co-operation and Development (OECD) says New Zealand is one of the best performing countries in closing the alleged gender pay gap. Their data suggests the pay gap is about half of what the Government has stated. 

Conversely, is there a correlation between the gender pay gap narrowing and the rise in the number of stay-at-home dads? Filipino women, for example, make up the majority of that nation’s overseas workers and generate one of the highest levels of remittance in the world. Consequently, many men stay home with their children. The Philippines, incidentally, has one of the smallest gender pay gaps in the world (ahead of New Zealand).

Many women leave the workforce to raise families and this can result in lower pay when they rejoin. But it may be argued the so-called ‘motherhood penalty’ is better described as the ‘stay-at-home parent penalty’. And it is only a penalty for those who want to call it one. Others might use the word ‘choice’ or even ‘privilege’.

Perhaps as a result of prioritising life/work balance, studies have shown many women seek flexibility. It’s also been argued that women prefer industries where their skills are less likely to become dated as high-end careers may be more difficult to exit and reenter after an extended period of time. Also, women may tend to value proximity to home, working fewer hours and so on. In the end, generalising ignores many real world choices.

As an aside, in the week the Equal Pay Act has turned 50, the Beehive has achieved gender parity with 60 male to 60 female MP’s, including the Prime Minister.  

Ultimately, what drives the gap in pay between some men and women in different sectors is a source of controversy. While many point to sexism and discrimination, others say the evidence is lacking, question the assumption that different jobs can be fairly equated, or point to other hard to prove reasons like women being less likely to ask for pay raises. The Act is about the ratio of the pay (easy to measure) matching the ratio of the work (not easy to measure). It is surprising that most misunderstand the basic meaning of pay equity, as defined in the Act, assuming it to be far easier to measure and far less subjective than it really is.

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