Paying women less won’t grow the economy

This week the National Party and its coalition partner Act, pushed through amendments to the Equal Pay Act under urgency. Those amendments will change fundamentally the way in which the New Zealand government addresses matters of pay equity.

This legislation will make it more difficult for women to demonstrate historical and ongoing inequity in pay. Overwhelming evidence demonstrates conclusively extensive and pervasive inequity in pay between women and men across just about all sectors of our national economy (an 8.2 percent difference on average as of June 2024, according to Stats NZ). We have known this fact for decades.

Thus, when Brooke van Velden, the Minister for Workplace Relations, says she believes in pay equity between men and women, it is hard to believe. It is also hard to believe her when she says that the new regime, which this legislation brings into place, will deliver a more transparent system of claiming pay equity – one that will generate greater confidence in that system.

Were the laws ‘muddied’ and ‘unclear’, as she claims? At best, the minister’s remarks suggest an imperfect understanding of equal pay vs pay equity. On the face of it, her suggestion that you cannot compare claims across different industries and different labour markets makes apparent sense. Certainly, I hope she would agree that gender discrimination exists when men and women receive unequal pay for the same work in the same industry. The remedy for such discrimination is equal pay for the same work.

The matter of pay equity is different. Pay inequity exists within industries in which different groups of workers receive different rates of pay for different work with comparable skills. Such pay inequity happens when labour markets are segmented according to, say, gender.

The remedy for such inequity is adjudication as to those jobs’ comparableness. If comparable, the adjudication should result in equitable rates of pay. The same holds for different industries across the economy, industries which may feature mostly men workers on the one hand, and women workers on the other.

Historically, such different industries have compensated men workers well in advance of women workers for different jobs. But jobs in such apparently different industries are comparable – even if those jobs are in, say, fisheries, or, say, nursing. The remedy is adjudication as to the comparableness of the skills of those different jobs in those different industries. If those jobs require comparable skills, they must be compensated equitably. Such a process of adjudication can be complex and time-consuming, but it is necessary to achieve pay equity across the economy.

All that said, the minister’s line of explanation takes a hit in the face of her party’s reaction to the legislation. How can we can we accept it at face value when Act is celebrating her “single-handed” saving of the Budget? She herself says, “The changes I am proposing will significantly reduce costs to the Crown.” Does it come down to an expedient avenue to a balanced Budget? And why the passing of the legislation under urgency? What was the urgency? Was it simply to save the Budget? Or was it cover for something else?

National positions itself as a party committed to strengthening New Zealand’s economy. Is compensating women less than men for the same and/or comparable work a way to strengthen our economy? If that’s the way the party sees it, it is a short-sighted and morally corrupt path to a stronger economy. Such a path points in the direction of a low-wage economy. Is that what the Government wants?

This legislation will perpetuate pay inequity, which will weaken our economy and harm our society. Underpaying half the workforce results in growing economic inequality. If that is not perceived as a problem in principle, it is a problem in terms of the economy’s and our society’s overall health.

Less pay in the hands of women workers means less aggregate purchasing power and less demand for goods and services, which results in an under-performing economy. Also, pay inequity results in attenuated savings on the part of women, especially savings for retirement. Moreover, pay inequity affects entire families – and I am talking about all families, including those with two working heads of household. Pay inequity for women deepens poverty, and poverty is expensive in a host of ways for our nation in the present and into the future.

As a proud New Zealand citizen and the father of a daughter recently graduated from university, I am deeply concerned for her future and the future of our nation.