New research on pay rates reveals ethnic bias

by | Jul 19, 2022 | News

How equitable is your workplace pay range? Latest research from AUT shows a significant pay gap for Pacifika men and women. 

New research examining the factors that contribute to Pacific, Māori, and ethnic pay gaps in Aotearoa New Zealand has been launched by the Human Rights Commission’s Pacific Pay Gap Inquiry. The report ‘Empirical analysis of Pacific, Māori, and ethnic pay gaps in New Zealand’, is the first in a series of published by the Inquiry, and was a research project from The New Zealand Work Research Institute (NZWRI).

The Auckland University of Technology research, released by the Human Rights Commission, analyses the job characteristics, education levels, number of household dependents, and regions where people lived. But it showed that after taking these factors into account, three-quarters of the pay gap couldn’t be explained.

Pre-pandemic ethnic disparities between NZ European and Pacific are prevalent in terms of job-entry wages after a period of non-employment (known as “wage scarring”) and limited wage progression for those who are employed. The pandemic amplified ethnic disparities for Pacific Peoples particularly among Pacific women, those under 30, and those living in Auckland.

Young Pacific people living in Auckland during 2021 most acutely felt the impact of COVID-19 on their labour market outcomes. Estimated ethnic labour market disparities were greater in 2021 than in 2020.

Pacific workers tend to work in industries hit the hardest in terms of lower wage growth during COVID-19 – specifically, manufacturing and construction for Pacific men, and manufacturing, healthcare, and social assistance for Pacific women.

NZWRI director, AUT Professor Gail Pacheco, says that pre-pandemic disparities in the Pacific labour market are persistent, and they were felt most keenly by specific Pacific groups during COVID-19. “While the NZ labour market was generally robust during the pandemic, it seems that not everyone managed to benefit from it.”

Professor Pacheco says the report shows change is needed at a systemic level. “COVID-19 has amplified the prevalence of ethnic disparities in the workforce, but it did not create those disparities in the first place. Therefore, policy needs to not only tackle recent COVID-related disruptions to the workforce but be long-term focused on addressing the entrenched disparities evident before the pandemic hit,” says Professor Pacheco.

“This research provides further evidence about what we’ve long suspected – the bulk of the Pacific Pay Gap can’t be explained and is at least partly due to invisible barriers like racism, unconscious bias and workplace discriminatory practices,” said Saunoamaali’i Karanina Sumeo, Equal Employment Opportunities Commissioner. “These human rights violations are holding back Pacific workers from realising their full potential in the workplace.”

Infographic: Why do Pacific People Earn Less? Credit: pacificpaygap.hrc.co.nz

 

The apparent bias against Pacifika people comes as no surprise to pay campaigners, MindTheGap.NZ. The shocking pay gap for Pacifika people needs urgently addressing by both the Government and New Zealand businesses, according to the advocacy group.

Founders of the MindTheGap campaign say new data just released shows much of the pay gap for Pacifika men and women is likely due to racism or unconscious bias by employers comes as no surprise.

MindTheGap co-founder Jo Cribb says many New Zealand businesses would be unaware that they are demonstrating bias in their workforce, and the best way to do that is to measure pay gaps. “While the average pay gap sits at around nine percent, for Pacifika women the pay gap is as high as 27% compared to Pakeha males”, says Cribb. “We welcome the measurement of this data as it shines a light on incredible bias in the New Zealand workforce which is the first step to closing this gap.”

 

MindTheGap is asking the Government to make pay gap reporting for businesses with over 50 staff compulsory. It has launched a petition for New Zealanders to support this.

“Requiring big employers to report pay gaps can help reduce child poverty and help end discrimination that impacts on the aspirations of Māori, of Pasifika; of other ethnic groups.” Mind the Gap says International evidence shows that when we know what the pay gaps are, we can get to work on closing them. Fixing gender and ethnic pay gaps can also help business retain staff who might otherwise look to leave New Zealand in search of higher pay.

Researchers examined a variety of labour market indicators:

  • Job entry and benefit dependence: including the probability of entering employment; the wage level when starting employment; and the likelihood of receiving benefits
  • Job and wage mobility: includes wage progression of those that remain employed
  • Job separation: including the probability of exiting employment, and the likelihood of receiving benefits if exited employment.

Kirsty Flannagan, General Manager Economic Strategy, who oversees Langa Le Vā Pacific Policy Team at MBIE, who commissioned and funded the report, acknowledged the report’s findings. Flannagan says, “Pacific people in Aotearoa have long experienced disparity in the labour market. This research indicates the positive impact of the Government’s wage subsidy for Pacific people during COVID but also highlights the work that needs to continue to address labour market inequities and continue to grow Aotearoa New Zealand for all”.

 

L-R: LINDA TRAN, ALEX PLUM, PROFESSOR GAIL PACHECO. Credit AUT

AUT New Zealand Work Research Institute

The New Zealand Work Research Institute (NZWRI) provides multidisciplinary, inquiry-driven research with social impact.

NZWRI provides high-quality research across a broad multidisciplinary programme concerned with people and work. Director of NZWRI is Professor Gail Pacheco, who is supported by Professor Jarrod Haar (Associate Director, Human Resource Management), Lisa Meehan (Associate Director, Economics and Research) and leaders of our specialist research groups. Links to the seven groups are below and provide details of current key projects and members within each group. Our research groups enable research experts to provide research (at both the national and international level) that ticks the boxes for both academic rigour, as well as being relevant to policy makers in business, government, and the community in general – see our latest annual report .

Learn more about NZWRI

 

Photo by Austin Distel on Unsplash

 

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