October 12, 2016 11:00am by David Farrar

The gender pay gap

Minister for Women Louise Upston says she’s disappointed to see an increase in the gender pay gap.

The New Zealand Income Survey released today by Statistics New Zealand shows the gender pay gap is now 12 percent, up from 11.8 per cent in 2015.

“While it’s been encouraging to see a downwards trend in Gender Pay Gap figures over the past 17 years, this year’s result is disappointing.”

It would be good for there to be no gender pay gap, but we also need to compare apples with apples. What I think should be the focus is on people doing the same job getting the same pay. For example a female lawyer specialising in torts with five years experience should get paid the same as a male lawyer specialising in torts with five years experience. This doesn’t happen, and it would be good to have men and women paid the same for doing the same job.

But let us be careful about what we decry. Just as you could reduce income inequality by cutting the pay of the poorest by 10% (so long the the pay of the richest dropped by 12%), what does this increase from 11.8% to 12.0% gap mean?

In fact hourly earnings for women increased 3.6%. This is a good thing with inflation at just 0.4%.

Sure hourly earnings for men increased a smidgen more at 3.9%, but what would you rather have?

A – median earnings for women increase 1.5% and men increase 1.2% (closing gender gap)
B – median earnings for women increase 3.6% and men increase 3.9% (increasing gender gap)

Of course you might prefer an outcome of say 3.9% for women and 3.6% for men, but the point I am making is that the gender gap is not as important (to those on struggling incomes) as whether or not your income is rising in real terms. They’ve both important, but not equally important. Having men get a smaller increase than women, doesn’t help pay the bills.

Incidentally the gender gap of 12% is slightly lower than the 12.5% it was under Labour in 2008.