Pay gap reporting could increase average woman's pay by $35 a week, says NGO

International Women's Day on March 8 prompted more introspection over pay gaps.

Forcing employers to report on gender pay gaps could slash unexplained differences in pay by up to 40%, increasing the average woman’s weekly pay by just over $35 a week, says non-profit organisation MindTheGap.

Stats NZ estimated last year that the median average hourly pay of women was 9.1% lower than that of men, a statistic that it said was little changed over five years.

MindTheGap publishes an online register listing dozens of employers that have voluntarily agreed to publish information on pay gaps, linking to their reports.

But the organisation, which is funded by a charity established by philanthropist Anna Stuck, said a review of evidence overseas suggested mandatory reporting would be more effective.

All employers with more than 50 staff should be required to publish information on the pay gaps that exist between their employees of different genders and ethnicities, it advised on Monday.

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Such a change may already be in train.

Parliament’s Education and Workforce select committee has been investigating pay transparency and in March recommended a “comprehensive pay transparency regime” that would require action by employers above a certain size to address inequities.

Its report also concluded that voluntary compliance was less effective than regimes in which “reporting and implementation are strictly enforced”.

The select committee separately recommended that it should be compulsory for employers to publish starting salaries when advertising jobs, to help address an “information imbalance” between employers and potential employees.

A Stuff reader poll suggested that might be a particularly popular reform, with about three-quarters of respondents in favour.

The committee also recommended that the Government should consider placing restrictions on employers’ ability to demand “pay secrecy” in employment contracts through clauses that prevent employees from sharing details of their pay.

BusinessNZ has expressed reservations about a mandatory pay transparency regime, holding up MindTheGap’s existing voluntary register as an example of an alternative.

”MindTheGap is helping companies prepare information so that they can do their own reporting. I think that's a good model,” chief executive Kirk Hope said in March, responding to the select committee report.

”The compulsory models that are in place in Australia and the UK – I think it is too early to tell if they have made any meaningful difference yet,” he said.

The gender pay gap hasn’t moved much in the past five years, Stats NZ’s estimates suggest.
The gender pay gap hasn’t moved much in the past five years, Stats NZ’s estimates suggest.

MindTheGap clarified that while it operated a voluntary register, it did nevertheless believe mandatory reporting was justified.

Its new research is based on a review of overseas literature from countries including Canada, Norway, Denmark, Britain and France where various different pay transparency regimes are in place.

“The requirement to publicly report pay gaps has been in place for several years in some countries.

“Accordingly, there is a small but growing body of research that has sought to understand the impact of such laws on the behaviours of employees and employers and any changes in wages,” it said.

That research suggested mandatory reporting reduced gender pay gaps by between 20% and 40%, particularly benefitting women on lower incomes, it said.

That was the reduction in the gender pay gap that one research paper estimated had occurred at universities in Canada, following law changes.

A British study estimated mandatory reporting for employers with more than 250 staff had reduced the gender pay gap there by 19%, which equated to a 1.6 percentage point increase in women’s hourly wages relative to those of men.

“Pay gap reporting has wider behavioural impacts,” MindTheGap said.

“Women will choose to apply for jobs at low pay-gap employers. Increasingly consumers, especially women, make spending decisions based on pay-gap data reporting.”

MindTheGap estimated mandatory reporting might boost the pay of those on women’s median wage of $26.37 an hour by between $12.90 and $35.77 a week, though it acknowledged there were many unknowns.

“While it is difficult to accurately predict, it is reasonable to conclude that pay gap reporting law will reduce pay gaps, the question of by how much is still to be determined,” it said.

MindTheGap said polling it commissioned suggested 59% of women and 40% of men were concerned that people of different genders and ethnicities were paid differently.

Only just over a quarter of men and women reported being ‘very concerned’.

Still, 68% agreed large businesses should have to make their pay gaps known to job candidates and 58% believed that information should also be made available to the wider public.