Matrix > Toolkit: Pay and Conditions > Horizontal Pay Gaps, Equal Pay and Pay Equity

Horizontal Pay Gaps, Equal Pay and Pay Equity

Different terms and concepts that aim to ensure fairness for workers in different ways can be confusing because they are interrelated. MindTheGap has an easy 101 explainer of the differences between equal pay, pay parity, pay equity, and pay gaps. Here on this page, we briefly explain horizontal pay gaps, equal pay and pay equity, which are particularly relevant to individual employers seeking to fix their Māori and Pasifika pay gaps. Click here for Doing Data Right, the Toolkit’s landing page for all data advice.

Contents

  1. Horizontal pay gaps >

  2. Equal pay >

  3. Pay equity and recognising undervalued skills >

Horizontal pay gaps

When we described our formulae for ethnic pay gaps, we took the entire workforce into account in one calculation. Calculating horizontal pay gaps is when Māori and Pasifika pay gaps are calculated for each pay band or job size in the organisation. These pay gaps can reflect:

  • Different pay for the same specific job (a lack of equal pay, see below).

  • Māori and Pasifika concentrated at lower parts of individual pay bands.

Click here for an example of band-by-band breakdown of Pasifika pay gaps in AT's Pasifika Strategy (page 5). This example shows that vertical segregation at AT (Pasifika clustering in low-paid bands) is the biggest problem, rather than Pasifika pay gaps within pay bands.

Equal pay

Ensuring equal pay means reporting or auditing pay rates to ensure that Māori and Pasifika people are not being paid less than Europeans with the same qualifications, experience and roles. To discriminate on the basis of ethnicity (consciously or unconsciously) is currently unlawful, but is a phenomenon that the Pacific Pay Gap Inquiry (New Zealand Human Rights Commission, 2022), other Pasifika-led research, and the Public Service Commission have revealed is all too common for Māori and Pasifika workers, and has long been agreed disproportionately affects women.

Equal pay for Māori and Pasifika can be reviewed regularly using internal ethnic, pay and occupation data. Instead of using general ‘job level’ or ‘job size’ as per horizontal pay gap calculations above, we calculate a pay gap for each specific job title, assuming big enough samples.

GEM recommends that all large businesses in the private sector who had been preparing or considering Equal Pay Act gender pay gap reporting as per government proposals in 2023, report their gender pay gaps and horizontal/equal pay data using combined ethnic and gender pay gaps as the gold standard. 

Pay equity and recognising undervalued skills

Recognising and fairly compensating hidden and undervalued skills and experience can happen through revising recruitment and promotion processes.

Additionally, a pay equity audit is a way of investigating and recognising the undervalued skills inherent in particular jobs (rather than people), which has usually focused on undervalued jobs dominated by women. It breaks down jobs into what skills are required, so that different jobs with similar levels of skill, responsibility, effort, and value can be paid the same rate. The Public Service Commission has a clear toolkit called Te Orowaru that can guide employers through this process, including a standalone factor that assesses skills and knowledge in te ao Māori.