Gender pay gap explained: What is it and why does it still exist?

For the rest of the year, women in New Zealand are effectively working for free.

That’s because of our gender pay gap which is based on the difference in the hourly earnings of women and men.

The pay gap is 8.6 per cent and with 8.6 per cent of the year to go, women are effectively working for free until the year is over to make up for it.

Māori and Pacific women – where the difference is starker – began working for free even earlier.

What is the gender pay gap?

The gender pay gap is a way of understanding the difference in the pay earned by men and women. It has been an official statistic measured by Stats NZ since 1998.

Stats NZ calculates the gender pay gap from the median hourly pay for men and women once a year and publishes the difference as a percentage form.

In the June 2023 quarter, median hourly pay for men was $33 and for women it was $30.15. The gender pay gap was 8.6 per cent. This means that a typical female earned about 9 per cent less for an hour’s work than a typical male.

Why is there a gap in the wages women and men earn?

Across New Zealand, women are under-represented in higher-level jobs, and many are employed in industries where more than 80 per cent of the employees are women, and these jobs tend to be lower-paid.

Some of the factors behind the gender pay gap, according to Employment NZ, include the value placed on women’s jobs – the skills and knowledge women contribute in female-dominated jobs may not be valued appropriately compared to other jobs.

Meanwhile, more women combine primary caregiving with part-time work which tends to be more readily available in lower-paid positions.

Most of the gender pay gap is driven by factors that can’t be explained.

A 2017 report for the Ministry for Women, Empirical Evidence of the gender pay gap in New Zealand, said while previous studies found differences in education was a key factor behind the pay gap, more recent data from 2015 showed at almost all educational levels, females outstripped males.

AUT Business School professor Gail Pacheco, who co-authored the 2017 report, said the “unexplained factors” can include unconscious bias, discrimination and other factors not captured by the data, such as preferences for certain job aspects, like flexibility versus higher wages.

Professor Gail Pacheco, director, AUT's NZ Work Research Institute. Photo / Supplied

Pacheco said the discrepancies in pay can effect women’s Kiwisaver levels, and the amount of retirement savings they will have later in life.

“It is important to note that income inequities have consequences for not just the individual but also their families, and communities.”

Is it improving?

The gender pay gap has decreased significantly since records began in 1998 when it was 16.3 per cent, but it has remained stuck around 9 per cent since 2017. In a 2014 report, Stats NZ said the strongest decreases aligned with periods of higher growth in median hourly pay for women than for men.

Data from the OECD for 2022 showed New Zealand’s gender pay gap – which was 9.2 per cent at the time – was lower than the OECD average, but higher than many other countries.

What’s being done to address it?

In 2020, an amendment to the Equal Pay Act lowered the bar for workers wanting to make pay equity claims. Before the act was initially introduced in 1972, it was legal for employers to set different pay rates for men and women.

Advocacy organisation Mind the Gap publishes a registry of companies and reports on whether they declare gender and ethnicity pay gaps. Currently, New Zealand does not officially report the pay gap between ethnicities.

In August 2023, the previous Labour government announced a mandatory gender pay gap reporting system would be introduced for organisations with more than 100 employees.

What about Māori and Pacific women?

The official gender pay gap does not measure the difference in pay for Māori and Pacific women and Pākehā men but Pacheco says research conducted for the Human Rights Commission showed large pay gaps in general for Māori and Pacific individuals, male and female.

That research showed for every dollar earned by a typical Pākehā man:

• Pākehā women earn: $0.89
• Māori men earn: $0.86
• Māori women earn: $0.81
• Pacific men earn: $0.81
• Pacific women earn: $0.75

Jo Cribb, co-founder of Mind the Gap, said the overall pay gap figure hid disparities between ethnicities.

“What would make us world-leading is that we would not only [measure the] gender [pay gap], but we would do ethnicity as well. Because we know … the overall number just hides large disparities.”

Cribb said she admired the organisations in New Zealand that were already voluntarily reporting Māori and Pacific pay gaps.

“I just think they are world-leading. There’s only a handful [and] there’s a lot who are interested but are working out how to get the data. It’s not something they necessarily have.”

Julia Gabel is an Auckland-based reporter with a focus on data journalism. She joined the Herald in 2020.