Call for all Kiwis to play a role in supporting firms promoting equal pay for equal work.

People should consider buying goods and services from companies actively promoting pay equity, a leading economics expert has suggested.

Dr Ryan Greenaway-McGrevy, senior lecturer in economics at the University of Auckland, says such a move would be one way "all of us can play a role" in helping to bring about fairness in the workplace.

"If you do care about fair pay," he says, "then consider buying goods and services from firms that publicly commit to policies promoting equal pay for equal work."

Greenaway-McGrevy, who is also director of the Centre for Applied Research in Economics at the university, says he believes the issue is ripe for an "ethical consumerism" push similar to consumer campaigns around environmental and working conditions issues.

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"There have always been consumer concerns around child and 'sweat shop' labour in the manufacture of products made overseas," he says. "It is possible people will adopt the same attitude towards companies who don't promote pay equity in New Zealand."

Greenaway-McGrevy also believes there is a simple way employers can show they promote fair pay: Let staff know what their colleagues are being paid.

"If everyone knows what their peers are getting paid, it is much harder for undervalued employees to remain under paid," he says.

His comments come at a time when the issue of pay equality - particularly as it relates to the gender pay gap - is coming under closer scrutiny than ever before.

Some progress is being made: In New Zealand, infrastructure consultancy WSP Opus recently closed a 7.5 per cent pay gap for people in similar roles within the company after it discovered 60 employees – 55 women and five men – were underpaid.

And new figures from Statistics NZ show that although women are still paid less for an hour's work, on average, than men, the gender pay gap is closing and was sitting at 9.2 per cent in the June quarter, the second smallest gap recorded in around 20 years.

But Greenaway-McGrevy says while equal pay for equal work is something most would agree is fair, there is evidence it is not happening.

He says research conducted by economists at Motu, a leading New Zealand economic research institute, concludes a significant proportion of the gender pay gap is due to discrimination in the workplace (the Motu study was released last year and found on average women are paid only 84 cents for every $1 paid to men).

"This research show that while there are other factors at play that affect the average wage of men and women, discrimination still accounts for a lot of the wage gap," he says.
Motivated by similar concerns, legislation was recently passed in Ontario, Canada which from January 2019 will require all job listings publicly advertised to include a salary rate or range.

But Greenaway-McGrevy thinks it makes sense for businesses to voluntarily disclose salaries in order to increase profit.

"Companies will definitely not profit by underpaying their top performers. The workforce is now incredibly mobile and gone are the days when people wanted a job for life.

"If you are not paying your top performers what they are worth they will eventually look for an employer that does recognise and reward their talent," he says.

But he admits adopting pay transparency will take some adjustment.

"It will make management's job more difficult because telling someone why they are being paid less than their colleagues can be a hard conversation to have," he says. "But the flipside is that it is terribly short-sighted to underpay your most hard-working employees – and to overpay people who shirk. The underpaid will eventually find out they have been ripped off.

Ryan Greenaway-McGrevy, Senior Lecturer in Economics at the University of Auckland / Supplied.
Ryan Greenaway-McGrevy, Senior Lecturer in Economics at the University of Auckland / Supplied.

"Employers who voluntarily chose to disclose salaries would be sending a clear message that they reward effort and talent, and that they care about equity in the workplace.

"This, in turn, will help them attract the most productive workers and discourage those who just want to put in the minimum possible effort - a win/win."

Greenaway-McGrevy says it is not just women who are potentially under-valued at work.

"Many of us find negotiating salaries difficult," he says. "It is hard to know what you should be getting paid and how to ask for more.

"It is perfectly understandable why so many people choose not to be aggressive in negotiations. This is your future employer, after all, and you hope to have a constructive working relationship. While agreeableness is a good quality in a potential colleague, it often doesn't serve people well in negotiations over pay.

"But disclosing a salary band would help people to appropriately value their work."