Establishing fair and equitable reward and employment practices and support agencies to close pay gaps

• Work to close pay gaps, under a maturing Kia Toipoto programme, is showing results with substantial decreases in the overall Public Service gender and Māori pay gaps and reductions in the Pacific and MELAA pay gaps over the last five years.
• Organisations are connecting with each other to share data and resources to strengthen their work to close pay gaps.
• There is a clear focus, across the Public Service, on removing bias from recruitment and career progression processes.
• Some organisations require all recruitment panel members to have completed unconscious bias training before they can participate in recruitment processes.
• Employee-led Networks continue to be a valuable resource for agencies to develop, test and implement initiatives and policies, gather feedback, and improve policies and practices.
• Pay equity is a key lever for reducing gender and ethnic pay gaps. Six pay equity claims were settled in 2023 reaching over 175,000 employees.

All agencies and around 80 percent of Crown entities are publishing annual Kia Toipoto Pay Gap Action Plans that report on the actions they have taken, the progress they have made in the previous year, and their plans for the next year. Overall, the 2023 Kia Toipoto Action Plans published by agencies and Crown entities demonstrate ongoing commitment and progress, and the increasing maturity of the Kia Toipoto programme.

Highlights from the action plans published in 2023 include:

• Agencies/entities have closed pay gaps between people doing roles that are the same or similar (like-for-like pay gaps). Agencies are now monitoring their like-for-like gaps to ensure these stay closed.
• Agencies/entities are applying the detailed guidance released by Te Whakapiri (Kia Toipoto working group) to systematically review their remuneration, recruitment, progression breaks and leave policies and remove bias from formal pay and employment decisions.
• Consultation and engagement with diverse employees is an area of increasing strength, both for Kia Toipoto and more widely.
• There is increasing capability around collecting, analysing and sharing pay and employment data to identify and address inequities. There is more use of ethnic data, including aggregating groups (such as European / non-European) to provide pay gap and representation indicators. Agencies comment on the quality and availability of their data and are working to improve it where possible.
• Actions on gender equity are well-embedded, and actions on equitable pay, especially starting salaries, and flexible work are becoming embedded as part of business as usual.
• Agencies are increasingly considering pay gaps and inequities beyond gender.
• Regular reporting to leadership on progress against pay gap actions is common.
• Agencies are increasingly making connections between their pay gaps work and wider diversity and inclusion work programmes, especially strengthening cultural competence.

The work agencies are undertaking to close pay gaps, under Kia Toipoto, is showing results:

• The Public Service gender pay gap has dropped to 7.1 percent in 2023 from 12.2 percent in 2018. Two pay equity settlements in 2018 made a substantial contribution to the gender pay gap drop between 2018 and 2019. By comparison, the national gender pay gap dropped by just 1.0 percentage point between 2018 and 2023.
• The Māori pay gap also continues to decrease. It was 5.4 percent in 2023 down from 11.2 percent in 2018. The Public Service Māori pay gap is now the lowest it has ever been.
• The Pacific pay gap has fallen to 16.6 percent from 21.6 percent in 2018 and is now the lowest it has been since data reporting began in 2001. However, it remains higher than for other groups and the rate of decrease needs to accelerate.
• The difference between the average salary of MELAA public servants and other public servants is decreasing.[1]

In 2023, the Commission met with and shared its work programmes with Iceland, Indonesia, Singapore, Canada, and the Australian Public Service. Its work has been used as a case study in the OECD report: Reporting Gender Pay Gaps in OECD Countries. The Commission also presented at international conferences including the Equal Pay International Coalition.

Pay Equity

Pay equity intersects with the public service-wide diversity, equity and inclusion work programme, and is a key lever for reducing gender and ethnic pay gaps in the public service.

The Pay Equity Taskforce was established within the Commission in 2018. The Taskforce was set up to advise the Commissioner on pay equity and provide system oversight and advice to Ministers. Since the Equal Pay Act was amended in 2020, a growing volume of pay equity claims (including multi-employer and multi-union claims) have been raised in the public and publicly funded sectors.

Currently, fifteen pay equity claims have settled in total since 2017, twelve of which were settled since the Equal Pay amendments came into force in 2020. There are currently 26 live pay equity claims, 42 percent of which are in the publicly funded sector.

Overall progress to date has been that:

• 175,804 people have had their pay corrected
• 207,884 people are covered by a current pay equity claim, and
• the average pay correction across all settlements has been 30 percent.

In recent years, the pay equity system has developed significantly with claims processes becoming more streamlined and effective.

This is demonstrated by the fact that six pay equity claims were settled in 2023, including two in schools and four in Health New Zealand - Te Whatu Ora. Long-term claims, including many raised pre-Equal Pay Act amendments, are now resolved and newer claims are moving at a more efficient pace.

There is an emerging evidence base that measures the economic and socio-economic impacts of settlements for employees and employers. Recent research commissioned by the Commission looked at the experience of employees and employers before and after the pay equity settlement for social workers in Non-government Organisations in October 2022.

The results of this research demonstrate the positive, measurable impacts of the settlement pay correction and improvements in progression and professional development pathways for predominantly women employees, their families, and communities. The results also highlighted the positive impact on employers and their ability to deliver adequate and properly targeted outcomes to the communities they are funded to provide for. Key highlights from the research include:

• a 52 percent decrease in employees who skipped a meal as they could not afford it
• an increase from one to five employers reporting it was now ‘easy’ to employ staff with suitable experience and remunerate those staff at a fair rate as well as retain experienced employees
• a 37 percent decrease in employees who required other sources of income and support (e.g. Working for Families tax credits), and
• 40 percent of employees reporting they could save more in their KiwiSaver