The gender pay gap is a high-level indicator of the difference between women's and men’s earnings. It compares the hourly earnings of women and men in full- and part-time work. It refers to an organisation-wide, industry-wide, or economy-wide gender pay issue.
The gender pay gap in Aotearoa New Zealand has reduced steadily from 16.3% in 1998 but has fluctuated over the past decade. It is currently 8.6%.
Median hourly earnings for women rose by $2.15 (to $30.15), while earnings for men increased by $2.15 (to $33.00). In 2023, European women had median hourly earnings of $31.50. By comparison, wāhine Māori earned $28.29, Pacific women earned $28.00, and Asian women earned $29.00.
What causes the gender pay gap?
The causes of the gender pay gap are complex. In the past, a substantial proportion of the gender pay gap was due to factors such as differences in education, the occupations and industries that men and women worked in, or the fact that women were more likely to work part-time. We now know these factors only explain around 20% of the current gender pay gap.
The majority (80%) of the gender pay gap is now driven by what the research calls ‘unexplained’ factors. These are the harder to measure factors, like conscious and unconscious bias and differences in men’s and women’s choices and behaviours.
Behaviour, attitudes, and biases
Behaviour, attitudes, and biases are interrelated. There are still deeply held societal attitudes and beliefs about the types of work that are appropriate for men and women, the relative importance of occupations where men or women dominate, and the allocation of unpaid work, like caring for children and housework. These attitudes affect not only the choices men and women make around paid and unpaid work, but also the behaviours of others toward men and women who make choices that are not consistent with these traditional beliefs.
Bias occurs when we automatically, and often unconsciously, use shortcuts and stereotypes that distort, generalise, ignore, or emphasise information, and is sometimes described as ‘fast thinking’. The advantages of fast thinking are speed and efficiency. The disadvantage is that we do not take all the relevant information into account when making a judgement or decision, which can lead to poor-quality decisions.
Bias makes it difficult for women to adapt and succeed in workplaces and by its nature it is difficult to detect, both by those who benefit and those who are disadvantaged. It influences small day-to-day behaviours (like who is called on to offer an opinion or undertake challenging tasks, and whose contributions are positively acknowledged in meetings), as well as decisions on hiring, promotions and setting salaries. While discrimination is against the law, bias can affect decisions people make in ways that they’re not aware of.
Occupational segregation refers to the clustering of men and women workers in particular occupations. Occupational segregation can widen the gender pay gap, as women-dominated occupations tend to be lower paid than those dominated by men and there is a higher proportion of men in senior positions.
Unpaid and caring work
Women and men have different patterns of participation in the paid workforce, principally because women spend a greater proportion of their time on unpaid and caring work than men. When women return to the paid workforce from career breaks, they often have trouble getting their careers back on track.
Although unpaid work makes an important contribution to the economy and plays a pivotal role in society and to individuals and communities, it is not visible, widely understood, or recognised, as ‘real’ work. All of this has a significant impact on women’s lifetime earnings and financial security and contributes to the gender pay gap widening.
Reducing the gender pay gap
Given the range of causes, the solution to the gender pay gap is complex and requires sustained action over time from a range of participants, including workers, employers, careers advisers, business leaders, employee groups and government, and a change in societal attitudes and beliefs about women and men, and work.
We have developed the What’s My Gender Pay Gap? tool that you can use to find out what the gender pay gap is across a range of sectors, and find out what employers and you as an individual can do to help close these gaps.
You can also find out what the government is doing to close the gender pay gap. This includes work underway by Te Kawa Mataaho Public Service Commission to reduce the gender pay gap and address pay equity through tools such as Kia Toipoto, an action plan to help close gender and ethnic pay gaps in the Public Service, and Te Orowaru, a pay equity work assessment tool that helps recognise the value of cultural skills in work.