Margaret Wilson Address: PSA Pay Equity Seminar

Thank you for inviting me here today. The topic of pay equity is a subject close to my heart and I am delighted to have the opportunity to talk to you about it.

In New Zealand, women currently earn 84.3 per cent of the average hourly earnings of males. At first glance the continued existence of a gender pay gap appears contradictory in a progressive country which has blazed trails for women around the world in suffrage, politics, the arts, the law, commerce and the social spheres.

Pay equity is an important issue with ramifications for the participation of women in society and their ability to satisfy their material needs. While statistics tell us the trends in the gender pay gap, they cannot tell us what it means for women. Lower incomes over a lifetime create barriers to women achieving their economic aspirations and continue to represent systemic discrimination.

The Government has already started to think about possible policy initiatives to achieve pay equity in New Zealand. In its 2002 election policy the Labour Government stated it would develop a programme to promote equal pay for work of equal value and introduce measures to address the gap between male and female wage rates.

Several initiatives to advance our thinking on pay equity have recently been put in place. For example, the Ministry of Women's Affairs released the public Discussion Document "Next Steps Towards Pay Equity' in July. The release of the discussion document and the consequent engagement with the public has already resulted in constructive insights and ideas which will contribute to the development of policies to reduce the gender pay gap in New Zealand and to which the PSA will have an important contribution to make.

In addition to the release of the Ministry of Women's Affairs discussion document, the Department of Labour is currently researching pay equity policies in overseas countries to inform policy development on options to reduce the gender pay gap.

The research has uncovered varied initiatives to address pay equity. While these policies are specific to these countries and their employment relations frameworks, they do provide us with insights into how we could address pay equity in New Zealand.

Yet, unravelling the gender pay gap reveals it is more than a percentage difference in female and male hourly earnings. The processes that explain the percentage are fascinating, complex and pose challenges to government, unions, employers and individuals.

Research has identified several factors that go some way to explaining the gender pay gap. Between 40 and 80 per cent of the gender pay gap can be explained by three factors:
* Education;
* Past work experience; and the
* Occupation and industry of employment.

Underlying discrimination will also have a direct effect on these factors.

The level of education a person has received when they enter the labour market can affect the level of wages they receive. It is reassuring to note research suggests that as more women acquire higher levels of qualifications, the influence of this factor on the gender pay gap decreases. This is most noteworthy among women in the 20 to 24 age group who have similar if not better levels of educational attainment than males in the same age group. That said, it is of great concern that surveys of university graduates indicate the gender pay gap between male and female graduates starts to increase over time.

A woman's past work experience is another factor that influences the gender pay gap over her working life. Women tend to have lower levels of work experience as a result of taking breaks from the labour force. While parental leave legislation enables a woman to return to the job she held before taking leave, an extended break or breaks from the labour force to parent is likely to result in the woman potentially earning less when she returns to work.

The industry or occupation women tend to work in also influences the gender pay gap. It is the case that occupations and industries which have greater proportions of women in them tend to be lower paid than those that have greater proportions of men. This is another of the causes of the gender pay gap which pay equity initiatives seek to address.

While research suggests the influence of industry or occupation is declining as female employment moves from lower paying to higher paying industries, the need for interventions to redress the continuing imbalance remains.

It is important to note also that the remaining 20 to 60 per cent of the gender pay gap, which is often described as the 'unexplained portion', cannot be explained by statistical analysis. Many commentators attribute this unexplained element to the presence of discrimination in the setting of wages.

This 'unexplained portion' of the gender pay gap reinforces the need to continue to develop our understanding of the causes of the gender pay gap and the reasons why the gap has been reducing, albeit very slowly over time.

This does not mean we should not act now to address the known factors that influence the gender pay gap. The Government has already started to act through the introduction of paid parental leave. This is intended to increase women's attachment to the labour force and minimise the income effects of time away from work due to childbirth and parenting.

Childcare initiatives have also been introduced which provide financial assistance to working low-income mothers and families to help them with childcare.

The recent amendment of the Human Rights Act resulted in the creation of an Equal Employment Opportunities Commissioner role. Professor Judith McGregor has recently been appointed to the job and part of her responsibilities will be to lead Human Rights Commission discussions about equal employment opportunities including pay equity.

Pay equity is not a new idea in New Zealand. In 1990 the Employment Equity Act was passed. It required employers to pay female employees equal pay for work of equal value. The Act was repealed after three months. At the time of its introduction the employment relations framework was an award-based system with wages set through occupational awards.

While the Employment Equity Act, unfortunately short lived, was a breakthrough, we now have a different employment relation's framework. The challenge facing government, unions, and employers is to develop pay equity initiatives that are compatible with the employment relations framework we have now.

The Employment Relations Act has as one of its primary objectives the promotion of collective bargaining. It will be important to consider the contribution this can make to enable progress to achieve pay equity objectives.
Personally, I believe the Government can play a leadership role in the achievement of pay equity by leading by example. Currently female State Sector employees earnings are 84.5 per cent of their colleagues. This is relatively similar to the gender pay gap in the overall economy. There is clearly still work that can be done before we can say the State Sector is leading by example in this area. The PSA's Partnership for Quality strategy provides a mechanism through which the Government and the PSA can work together to achieve pay equity in the employment relations framework we have now.

Research conducted by the Department of Labour has identified several approaches to achieving pay equity. While many of those approaches are country specific, they do provide some insight into how pay equity could be delivered for New Zealand women. I will describe some of themes that have emerged from the research and ask you to consider them and how they could be made to work in the current employment relations framework.

Several countries have introduced equal pay for work of equal value policies. Some countries have introduced them in the state sector only, while others have introduced them in both the private and state sectors. Typically these systems work by comparing individual jobs or a job class, within an enterprise against their male counterparts who perform the same or similar work. The jobs are assessed on the basis of skill, effort, responsibility and conditions of work using a points based system. If the jobs are found to have the same total points, but a female's job or a female job class is paid less than their male comparators, then wage adjustments are made to equalise wages.

In most countries, equal pay for work of equal value policies require a woman to prove she is not receiving equal pay for work of equal value. In other countries a pro-active system is used, whereby the onus is on the employer to demonstrate to their employees they are receiving equal pay for work of equal value. This is achieved by a legal requirement for an employer to have a pay equity plan in place and communicate the pay equity plan to their employees.

Many countries have established specialist legal institutions to monitor and enforce equal pay for work of equal value legislation, while other countries use existing employment institutions to perform this role.

Another theme that has emerged is the need to build the capacity of unions and employers to address equal pay for work of equal value policies. Equal pay for work of equal value is not a simple process. It requires the commitment of time, resources and specialised knowledge. I note the United Kingdom has allocated government funding for the building of union and employer capacity to implement equal pay for work of equal value.

These policies raise issues we will be considering. If an equal pay for work of equal value policy was introduced, to whom should it apply? Or viewed from another perspective, who needs equal pay for work of equal value most?

Should an equal pay for work of equal value policy be complaints based or pro-active? Should it be up to an employer to prove they are paying their employees fairly, or should women have to prove they are not receiving equal pay for work of equal value?

We know that assumptions about gender roles and what is a 'male' and 'female' job can influence peoples' career choices. Could equal employment opportunities initiatives be used to encourage people to consider careers they may not have considered before?

Another question that needs to be considered is whether childcare strategies could be further advanced to help women who are in employment or wish to enter employment. We all know of the research that shows childcare responsibilities create barriers to women working the jobs and hours of work they would prefer. The United Kingdom has established a childcare strategy to increase the number of quality childcare places available and reduce the cost of childcare.

These are important questions we all need to consider in how to address pay equity. I also stress we will not achieve pay equity because of one initiative. A wide range of initiatives will be needed to help us to reach that goal. The possible options I have outlined are by no means exhaustive. I would ask you to consider these possibilities and add your own ideas and insights to help us in the development of pay equity initiatives that will work now and into the future.

As I have indicated, pay equity is a challenging issue. I look forward to seeing the outcome of this conference and wish you a productive and robust discussion.

Thank you.

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