Achieving equal pay: What’s the deal?


Getting to 100%. Four experts recently came together to talk about where we are at and where we might go next.

Super delegate - illustration by Jem Yoshioka

Super delegate - illustration by Jem Yoshioka

Story by Shelly Biswell

In May, Victoria University of Wellington’s Centre for Labour, Employment and Work held a seminar on Achieving Pay Equity – What needs to happen? The well-attended event included presentations by PSA national secretary Erin Polaczuk; feminist economist Prue Hyman; EY partner Susan Doughty; and Australian Catholic University adjunct professor Lisa Heap. In this article we give an overview of some of the issues discussed.

HAVEN’T WE BEEN HERE BEFORE?

Erin Polaczuk kicked off the seminar by discussing the long and ongoing struggle for equal pay for work of equal value.

“It’s heartening to know that the issue was raised at the first PSA conference in 1914, when it was agreed: ‘That female employees of equal competence with male employees shall receive equal treatment as to pay and privileges’.”

She noted that what’s less heartening is that over 100 years on we still haven’t reached that aim.

“But there has been concerted effort along this journey that should be noted. From the forming of the first PSA women’s subcommittee in 1943, to the United Nations’ declaration that equal pay is a human right – there was some headway made in the first half of the last century,” she said.

In 1956 there was a watershed moment when PSA women organised and won an equal pay test case with the Evening Post declaring “Equal Pay for Women and Injustice for Men”.

“Fortunately the Evening Post’s perspective was quickly losing favour, with both National and Labour including equal pay as part of their platforms. Still, it wasn’t until 1959 Cabinet finally agreed to establish an Equal Pay Implementation Committee and it took another two years for the Government Service Equal Pay Act to come into force,” she said.

When the Equal Pay Act 1972 was passed it extended coverage to the private sector.

“Some might have thought the battle had been won and indeed some big shifts occurred immediately following its passage, but over 40 years on the Act seems both arcane and not fit for purpose for ensuring equal pay for work of equal value,” she said.

In 1983, New Zealand ratified the International Labour Organization Remuneration Convention 100. In 1986 we followed that up by signing up to the UN Convention on the Elimination of Discrimination Against Women. It was also a period when there were robust discussions about what it meant to be a good employer which led to the establishment of the Equal Employment Opportunities Unit in the State Services Commission.

Then in the late 1980s the report Towards Employment Equity became the basis for the short-lived Employment Equity Act 1990 that addressed equal employment opportunity and pay equity. The Act was repealed within a few months after a change in government.

Erin noted that since that time there have been reviews, campaigns, reports and more reviews but in 2015 we find that we have not come much closer to completely closing the persistent gap.

As she wrote in a recent Dominion Post opinion piece: The State Services Commission put out its annual survey of the public service, and it shows the gender pay gap up to June 2014 was 14.1 per cent. Adjusted for occupation, age and seniority the gap is 5.3 per cent. Even at the lower figure, that’s a significant percentage of salary public service women lose over the years.

“Is it our time?” Erin asked. “The case of Kristine Bartlett and the Service and Food Workers Union v Terranova Homes and Care Ltd could be a paradigm shift in terms of equal pay for work of equal value.

“As history has shown us, however, legislation and the law alone aren’t enough to make change. That’s why the PSA launched our Worth 100% campaign with the goal of eliminating the gap by 2020. PSA and other union members – both women and men – have fought this inequality for over 100 years. I believe it is our time and that we can mobilise the resources and the will to make it happen,” she said.

AN ECONOMIC PERSPECTIVE

Postal service workers in 1948

Postal service workers in 1948

Feminist economist and past associate professor Prue Hyman said while the gender pay gap has narrowed, there are still significant differences in the earning levels of men and women in the New Zealand labour market.  

“The extent, if any, to which remaining differences amount to discrimination is controversial, however. Interpretations vary along many dimensions, including politics,” she said.

“The gap is often expressed as a single measure for the sake of simplicity.

The reality is whether you look at hourly, weekly or annual earnings, for example, or only those working in full-time employment [part-time employees make significantly less], can change how the numbers look. To make it more challenging to assess, there are different sources of data.”

For this presentation and a recent Policy Quarterly article (February 2015), Prue discussed the New Zealand Income Survey to show that in the June quarter of 2014 women wage and salary earners’ hourly rate averaged $24.70, 86.1 per cent of the $28.70 mean for men.

“That 13.9 per cent gap was greater than the 12.7 per cent gap a year earlier, but factoring in margins of error it’s important to look more at long-term trends rather than year-to-year fluctuations. What we are seeing in the longer term is that the gap seems to be hovering at 13 to 15 per cent. In fact, the only time when real progress was made in reducing the gap was the five-year period after the 1972 Equal Pay Act came into force. During that period the gap closed by about 5 per cent.”  

Prue said that to close the gender gap will take a concerted effort on many fronts. “Discrimination does not need to be deliberate to exist. There are still systems, policies and behaviours in place that act as barriers,” she said.

“There are a number of good initiatives, such as getting more women in the board room or ensuring women are well represented in management, and I certainly welcome those initiatives. My interest and concern, however, lies in the growing disparity in the labour market among women and men on the basis of other factors, particularly ethnicity, age and disability. Māori and Pasifika men and women both earn considerably less on average than their Pākehā counterparts.”

While tertiary education rates and self-determination are increasing for Māori and Pasifika, it will take time before that’s reflected in earnings.

“And as we have seen for women, who now score above men on a number of education measures, education is not the only indicator to ensure equal pay for work of equal value,” she said.

As Prue wrote in Policy Quarterly, “the general economic and social situation and policy climate has more impact on the position of disadvantaged groups than specific interventions to assist these groups. For example, the globalisation and deregulation policies of the 1980s and beyond, including labour market power being shifted from unions towards employers, helped increase both inequalities within countries and outsourcing to the cheapest labour countries. Those most adversely affected were lower-earning employees, with women and ethnic minorities over-represented.”

Prue said that’s why the Living Wage work being done is so crucial to address gender, ethnicity, age and disability disparities.

WHY DO WE HAVE A PAY GAP?

Susan Doughty, EY partner – human capital, then discussed some of the myths about why we have a pay gap.

“Apparently it’s all about choice,” she said. “What girls choose to learn about at school. What women choose to study in tertiary education. What roles they take at work. Whether they have children and how much time they take off.

“My contention would be these are not ‘choices’ in the traditional sense, but instead complex decisions that are based on what options and support are made available through school and into the workplace, societal expectations, as well as personal abilities and strengths.”

She also explained that based on the research conducted by the Workplace Gender Equality Agency there are three ways to look at the gender pay gap within an organisation:

• like for like – where there are pay gaps between women and men undertaking work of equal or comparable value
• bi-level – where there are pay gaps between women and men at the same organisational level
• organisation-wide – where there is a difference between the average remuneration of women and the average remuneration of men across the whole organisation.

At all three levels, she said there can be unconscious and conscious bias. “Bias can be built into performance management or performance ratings, for example, at the like-for-like level.

At the bi-level those cumulative effects start to add up and affect the whole organisation.

“At the organisation-wide level, there may be biases in career movement, for example, with fewer flexible work options for women who are often in primary caregiver roles in their personal lives. It all adds up.”

Her advice to change organisations includes analysing and then setting a baseline for where an organisation sits in terms of equal pay for work of equal value – and look across all three levels (like for like, bi-level and organisation-wide).

“Use data to drive strategy,” she says. “With that information, develop a proactive strategy and ensure the leadership is actively and consistently engaged in meeting targets to narrow the gap. Key to all of this is education and training.”

Visit www.victoria.ac.nz/som/clew/seminars-workshops to see PowerPoint presentations from the seminar.

Even female executives aren’t immune

As Susan Doughty pointed out, even women at the top of corporate hierarchies aren’t immune to the pay gap:

• Female executives receive less incentive pay or stock overall than men.
• Men benefit more when company stock increases than women do.
• Women’s earnings are more exposed to decline in a company’s market value than men.

She says those differences can be explained through the theory of “Managerial Power” that holds that executive pay is not efficient and is controlled by “entrenched male managers who hold boards captive, influence board hiring, and are able to set the terms of their own pay”.

In comparison, top female executives are usually younger and less tenured than their male counterparts, and they often have weaker networks which may limit their ability to control their own compensation.