Alan McDonald
Auckland, May 23, 2025
There has been quite a lot of heated discussion recently about pay equity, following the Government’s decision to roll back the current settings to be more aligned with the settings of earlier legislation from 2017.
Various claims have been made about abandoning pay equity, putting in jeopardy years of work on equal pay, and even stripping back pay rates – but the reality is a bit more complex.
Unfortunately, this has been lost in the clumsy way the Government went about making the changes under urgency and the backlash to the various explanations of ministers.
The EMA played an active role in creating the original pay equity legislation of 2017. We joined BusinessNZ, trade union representatives and MBIE officials to work through the complex issues of the comparator framework and how to make a claim. In particular, we looked at how to compare skills in one sector with another, to ensure that the skillsets line-up.
We reached an agreed workable framework for the claims. As the 2017 bill progressed through the legislative process, which included consultations, submissions and select committee hearings, further adjustments were made.
That’s the right way to make changes with such complex and sensitive subject matter.
However, earlier this month, the EMA, BusinessNZ, the unions and others were taken completely by surprise when changes were announced and passed under urgency – usually, we would be at the forefront of consultation on such changes.
In our view, the Government went about this process the wrong way.
The EMA is a strong advocate for both pay equity and equal pay. And it’s important to distinguish between the two, because they’re not the same thing, even though the pay equity changes of 2017 were passed under legislation labelled ‘equal pay’.
Equal pay is ensuring that men and women are paid the same amount for the same job. If you’re a male or female lawyer, fireman or nurse, you should get paid the same. Unfortunately, this still doesn’t happen in all cases.
Nevertheless, the equal pay gap in New Zealand in 2024 was 8.2%, down from 16.8% in 1998, which is one of the smaller margins internationally (in the United States, it’s about 17%). However, that’s still not good enough.
Pay equity is designed to ensure that skills in largely female dominated workplaces, like the first pay equity agreement in the aged care sector, are rewarded at the same level as comparable skills in other sectors that may be largely dominated by men.
In theory, pay equity agreements could also apply elsewhere, which is one reason why the EMA backs Pacific Island pay equity goals.
The key attribute is female dominance in a particular sector (70% dominance in the 2017 legislation). The process entails identifying the core skills of that sector, then finding relevant similar skills in male dominated sectors against which a wage or salary comparison can be justifiably made.
Despite the 2017 agreement, the Government in 2020 made a very quick decision to loosen those frameworks, even as agreements were being negotiated.
At the time, the EMA, BusinessNZ and others raised concerns that this easing of parameters would lead to many more claims, putting pressure on the claim system and employers who could not afford them should the claims be successful.
We were also concerned that claims would be raised that weren’t necessarily driven by pay equity, but were being used to set de facto national awards, for which there are other more appropriate mechanisms available. Loosening of the parameters for the claims was also a significant issue
Our concerns were largely borne out. The fact that there were 33 pay equity claims in the pipeline, prior to the Government’s recent announcement, underlines the pressure that the system was under.
As an example, on the morning of Minister van Velden’s announcement, an EMA member emailed us about the early childhood pay equity agreement. One of the comparators involved comparing early childhood skillsets to those of lawyers. Wrangling rambunctious toddlers and teaching them is an enviable skill – but does that compare to the skills of a lawyer?
Affording many more claims is also a key issue. Most of the claims are in the public sector, but they also spill over to the private sector.
When the Government first agreed on the aged care claim, it funded the claim from 2017 to its expiry date in 2022. Many registered nurses moved from public sector facilities to those in the private sector, as both were largely Government funded at the time. However, in 2022, many nurses went back to the public sector as funding ran out for private facilities.
A similar concern has been raised by Allied Services, as much of what they do in the private sector (providing physios, lab technicians and occupational therapists) is for the government, and funded largely by government, but not funded for pay equity claims.
The recent pay equity changes do not affect current pay, nor do they affect equal pay goals.
Moving forward, all 33 claims can be lodged again if they meet the changed parameters – the existing work is not wasted. The EMA had just started work on a case for vet nurses (we represent a group of employers) and, if that claim is relodged, we’ll just pick up that work again.
We are basically back to the agreed settings of the 2017 original pay equity legislation, which is legislation we can continue to support.
Alan McDonald is Head of Advocacy at the Employers & Manufacturers Association (EMA) based in Auckland.
