What is Pay and Employment Equity?
Pay and employment equity exists when employees’ pay and work experiences are not affected by their gender. Pay and employment equity is about ensuring that pay, conditions, access to the full range of jobs at all levels, and experiences in the workplace, are not affected by gender.
What is employment equity?
Employment equity is about fairness at work. It means women have the same opportunity as men to participate fully in employment.
Almost half the women workers in New Zealand are in occupations that are more than 80% female, and the female-dominated occupations tend to be lower paid. Women are still under-represented in higher-level jobs.
In June 2009, the Statistics New Zealand’s Quarterly Employment Survey reported 53% of employed women were employed part-time, compared with 18% of employed men. Women make up 72.3% of all part-time workers.
What is pay equity?
Pay equity means gender doesn’t affect what people are paid. It means women receive the same pay as men for doing the same work, and for doing work that is different, but of equal value. The value of work is assessed in terms of skills, knowledge, responsibility, effort, and working conditions. Other considerations in setting remuneration can include market factors, productivity and performance.
In June 2009, women earned 81% of men’s average weekly earnings, and 87.8% of men’s average hourly earnings, according to Statistics New Zealand.
What is the gender pay gap?
In June 2009 New Zealand women’s average hourly earnings were 87.8% of men’s earnings. The Statistics New Zealand Quarterly Employment Survey shows that the gap between the average weekly earnings of women working full-time, and men working full-time, fell from 26% to 19% between 1984 and 2009.
Factors that contribute to the gender pay gap are: the jobs women do; the value put on women’s jobs; and work arrangements and caring responsibilities.
The jobs women do
Women are often clustered in a narrow range of occupations. While there are some notable exceptions in New Zealand today, women are more likely to be found at the bottom or middle of an organisation and find it difficult to move up into higher-level positions.
The value put on women’s jobs
The skills and knowledge that women bring to the work in female-dominated occupations may not be recognised and therefore not valued appropriately in comparison to other jobs.
Work arrangements and caring responsibilities
More women than men combine primary care giving with part-time work. This limits women’s access to better paying jobs and positions, since part-time work is more readily available in lower-paid occupations and positions.
For many women, the key to better pay is in having access to better jobs – a wider range of jobs and higher-level jobs. Tackling employment equity in areas like recruitment and promotion, flexible work arrangements, and leave for caring responsibilities is critical to sustained progress on the gender pay gap. Improving gender equity in workplace culture makes it less likely women will have to leave jobs because they are unfairly treated, with all the disadvantages that brings for lifetime employment opportunities and earnings.
How does New Zealand compare internationally?
While the size of the gender pay gap varies, the fact that men earn higher hourly rates of pay than women is an international issue [external link]. For example in the European Union member states, women’s gross hourly earnings are on average 17.4% less than men’s, with the gender gap ranging from 4.4% to 30.3%.
Compared to other Organisation for Economic Cooperation and Development (OECD) countries, New Zealand has a relatively high level of concentration of women workers in female-dominated occupations, with 47% of women working in occupations where 80% or more of employees are women.
Why pay and employment equity matters for women
Pay and employment equity brings greater economic independence for women and is good for the economy. Women who have greater economic independence have a real say in the choices they can make in their lives.
Pay and employment equity can reduce reliance on income support, and improve lifetime earnings and retirement incomes. It improves women’s capacity to contribute to retirement incomes and to tax, and their ability to pay off student loans earlier. It can enable women and men to make choices about their commitments to paid work and other responsibilities without gender pre-determining their choices.
Better pay and conditions can improve the incentives to enter and remain in paid work. Increasing the labour force participation of women helps meet shortages of labour and skills and contributes to economic growth. Improved workforce participation of women generates a better level of return on the significant increase in investment in women’s education. More workforce experience improves women’s prospects of getting higher-level jobs, where they are still under-represented.
Why pay and employment equity matters for employers
Pay and employment equity benefits employers because employees who are valued are more committed to the organisation, work harder, show more initiative and are more productive. Pay and employment equity assists with staff retention as employees who are valued and respected are less likely to leave. Each time an employee leaves, the employer incurs turnover costs, often up to three times the employee’s pay. This cost is multiplied by the number of employees who leave an organisation because they can’t get flexible hours, are treated disrespectfully or believe their pay or the recruitment practices are unfair.
Implementing pay and employment equity across an organisation helps increase the diversity of the workforce at all levels. Employers gain a wider range of applicants, styles, backgrounds, knowledge and experience, and the organisation benefits from a wider range of approaches and can respond to a wider range of clients.
What is the law on pay and employment equity?
The Equal Pay Act 1972 requires that men and women doing work requiring the same, or substantially similar, skill, effort, responsibility and working conditions are paid the same. In predominantly female work, women are paid what men would be for work requiring the same or substantially similar skills, responsibility, effort and working conditions.
The Human Rights Act and the Employment Relations Act prohibit sex discrimination in employment. The State Sector Act and the Crown Entities Act include requirements for public sector employers to be “good employers”, including meeting equal employment opportunity requirements.
How does pay and employment equity affect productivity and economic development?
Employers and employees value fair pay and equal opportunities. When people go into the jobs they are best suited to, and are fairly treated and rewarded for their productivity without gender playing a part, the labour market functions better.
When rates for female-dominated jobs are too low, it’s hard to attract and retain people who would be suited to them, want to do them and want to stay in them.
Pay and employment equity improves the supply and the skill level of labour. Having broader recruitment pools and employment practices unaffected by gender can upgrade workforce quality and productivity and help employers attract and retain the people their organisation needs. Inflexible work arrangements can mean that people cannot work the hours they prefer.
How can employers assess gender equity issues in the workplace?
The Department of Labour has developed a Pay and Equity Review Process and toolkit.
The three stages of the review include:
- gathering staff, HR and payroll data and analysing it using the department’s excel based tool
- Investigating issues raised by the data analysis with a review committee ideally comprising a partnership of employer and employee representatives
- Implementing actions recommended by the committee including job evaluation, remuneration process reviews, or similar.
What is job evaluation?
Job evaluation is a systematic analytic process to establish the ‘size’ of a job relative to others. Job size reflects measuring the level of job factors particular jobs require. Typical factors in assessing job size include skills and knowledge, responsibility, demands and effort and working conditions.
Although job evaluation schemes do not determine rates of pay, they are used in remuneration to provide a clear and fair measure of relative value or ‘size’ of jobs within and across organisations.
Job evaluation has been found on occasion to be affected by gender bias that is often unintentional. Research and cases around the world have found that gender bias can occur in any stage of the process involved in describing, analysing and evaluating jobs.
Why focus on gender rather than all employment equity matters?
There is a clear history of women’s opportunities and pay being specifically set according to gender. For example, until the Equal Pay Act 1972 it was lawful for separate rates of pay to be set for men and women, and women were excluded from certain types of work. While the introduction of equal pay and anti-discrimination legislation led to improvements in women’s pay rates and access to jobs, current data shows that women’s earnings are still less than men’s and that women are in different types and levels of jobs.
Both men’s and women’s experiences of employment can be affected by gender. While women’s earnings may be lower, men may be allowed less employment flexibility and expected to work longer hours. The opportunities and treatment of men and women workers are closely interrelated. Men and women cannot make the choices they want about how they share paid and unpaid work while gender affects employment. Pay and employment equity cannot be achieved for women or men unless the ways gender is affecting employment are identified and addressed.
What is the Government’s policy on pay and employment equity?
Government’s overarching policy for employment and workplace relations is based on demonstrating good faith, natural justice, human rights, good employer practice and meeting all statutory requirements. Government policy supports continuing implementation of pay and employment equity response plans, excluding pay investigations of female-dominated occupations, and recognises the obligations of public sector chief executives to ensure they continue to address and respond to any identified gender inequities as part of good management practice and being a good employer. Government encourages voluntary participation of public and private sector organizations in pay and employment equity projects.
The Department of Labour will continue to provide to both public and private sector organisations the pay and employment equity tools and resources including the review tools and the Equitable Job Evaluation System.