New Zealand, the New Champion of Equal Pay

For decades, the topic has bubbled up, but the gender pay gap between male and female employees remains stubbornly entrenched. There is often talk yet little action, critics say. 

But if action is what this issue needs, then spin the globe and find that of all places, tiny New Zealand has become the latest bellwether for change in this long, bitter issue. It’s here that Jacinda Ardern, less than one month after becoming the world’s youngest female prime minister at age 37, has put her nation on the pay gap map by pledging equity for women in the public sector within four years. As Ardern told Bloomberg, “If New Zealand is seen as a champion of issues around gender pay gap and pay equity, I would be proud of that.”

Certainly, no one country can change the world, especially an island outpost not quite 5 million strong. But with newly proposed pay equity legislation and a will-not-rest campaign, Ardern is spawning attention that may resonate elsewhere. “It’s going to be a wake-up call, not only in New Zealand but also Australia,” says Katie Lahey, executive chairman of Australasia for Korn Ferry. 

“This is becoming a hotter issue globally,” adds Tom McMullen, Korn Ferry’s senior client partner and leader in the North America Total Rewards group. “The gender pay gap is a convergence of socioeconomic and political issues that make this almost a perfect storm.”

Some progress is being made in Australia, where the gender pay gap averages more than 15%, but in the public sector is significantly lower at 10.8%, compared to 19.3% in the private sector. “The public sector employment strategy in Australia is a more pro-female strategy,” Lahey explains. “In government, there are more women in leadership positions and on government boards.” She also says the private sector is catching up, with large companies there conducting audits to understand where gaps exist. 

Experts say such audits are crucial to identifying the extent of the problem. The average pay gap between men and women is thought to be about 20% in the US. On an “equal pay for equal work” basis—the apples-to-apples comparison used in much legislation—research has found the gap may narrow to single digits in many countries. But a gap still exists.

Cracking the code on how to close the gap requires a shift in thinking, and in establishing equal hiring rates for women and men, especially in once-male-dominated industries. A first job can also be the root of the gender pay gap. “Women often take what they’re offered while men are apt to negotiate,” Lahey says. “The difference may be small, but it can start there.”

Another driver is staff distribution, the proportion of men and women going into various jobs. Promotion rates for women and men, performance ratings, and compensation plan design and management can all be contributing factors—as can unconscious bias influences. 

And perhaps the biggest factor, says McMullen, is perception of the top. “How do leaders and employees feel about pay equity?” At least in one corner of the world, that viewpoint is now loud and clear.