The national gender pay gap for Aotearoa New Zealand has dropped to a record low since records began in 1998 – it’s now at 5.2%, down from 8.2% just a year ago. Kate Clark and Joanna Collinge look at what’s needed to ensure this is a turning point, and not just a temporary dip.
The announcement this week that our national gender pay gap has declined by three full percentage points to 5.2% is a moment worth celebrating and for pausing for reflection. There has been significant commentary about whether this is a function of current economic conditions or whether it’s proof of sustained effort. Regardless, Stats NZ also reported that this year’s result is “the first statistically significant annual decline noted since 2017”.
For us and our work at MartinJenkins, this is also a moment for staying vigilant. As the economy begins to move again, so too will wages. And history tells us that without deliberate action, the gender pay gap can widen just as quickly as it narrows. If we want this progress to stick, we need to be ready – with leadership and actions that embed equity into our workplaces. We also need coordinated action across sectors, industries, and organisations of all sizes.
Despite decades of progress for women in education, workforce participation, and legal reform, the gap between what men and women earn has proven stubborn. In 2002, the gap sat at 12.3%. By 2018, it had dropped to 9.2%, but with Māori and Pacific women continuing to face gaps as high as 22%.
Fast-forward to 2025, and while awareness and action have increased, the challenge remains: how to ensure this new record low is not just a dip, but rather a turning point.
Why the gap persists – and how it accumulates
Traditional drivers such as different levels of education and part-time working now explain only 20% of the gap. The remaining 80%, labelled “unexplained” by the literature, include harder-to-measure factors inside and outside the workplace – ranging from occupational and vertical segregation in the workforce (gendered roles), to community attitudes and expectations around women as caregivers, and various forms of bias and discrimination.
The pay gap is not the result of a single event – it’s the cumulative impact of lower earnings, interrupted work patterns, caregiving responsibilities, and systemic bias. But there is one common denominator: not valuing women.
And the consequences of this gap compound over time across a woman’s life, culminating in a significant retirement savings gap. Men’s KiwiSaver balances are, on average, 25% higher than women’s.
Closing the gender pay gap isn’t just a women’s issue – it’s a business imperative, a social equity challenge, and a national opportunity
The gender pay gap doesn’t just impact women – women’s lower financial health affects families and communities in a myriad of ways and puts pressure on health and social services.
Take housing tenure – women are less likely to own investment property and more likely to live in lower-value homes. Older women are also increasingly represented in poverty and homelessness statistics, and the current Accommodation Supplement thresholds exclude many with modest KiwiSaver balances.
There’s also evidence that paying women fairly is good for business. Companies in the top quartile for gender equity are 38% more likely to have higher-than-average market share, and they’re 15% more likely to financially outperform their industry. More widely, 90% of CEOs who have led strategies to promote diversity and inclusion report that this makes them better at attracting talent.
The links in the chain are obvious: value women, pay them fairly, and the results will follow. We also know that women are more inclined to spend discretionary income on their children and families. This has a positive impact on our economy and society, which is also good for business.
There’s growing awareness – but uneven action
The Ministry for Women's recently released “Gender pay gap perceptions and practices report 2025” provides a comprehensive snapshot of how organisations are responding. Based on responses from 438 organisations across the public, private, and not-for-profit sectors, the report reveals a landscape of growing awareness, but uneven action.
The report shows that while most organisations collect gender data, only 67% use it to analyse pay gaps. Even fewer – just 18% – have developed an action plan, and only 9% report having addressed the gap. Monitoring is limited: only 40% track the effectiveness of their strategies, and just 12% have a dedicated working group or committee.
The public sector is leading the way, with 83% of organisations knowing how to calculate the gender pay gap. But in the private sector – where most New Zealanders work – only 64% know how to calculate it, and just 31% have taken steps to analyse or address it.
Closing the pay gap means putting knowledge into action
The gender pay gap won’t close simply through knowing it exists. Through our work, we’ve also seen that there’s often been more data collection and analysis than effective action. We’ve seen organisations taking meaningful steps to identify their gender pay gap, and more organisations are now publishing their gaps, but too many fail to turn knowledge into action.
A gender pay gap review of your organisation can study a spreadsheet, but unless the drivers of the pay gap are tackled, you won’t be able to close the gap. We suggest a review across five key areas – remuneration, leadership representation, progression, flexibility, and culture – with the aim of embedding equity into all those key dimensions and practices for your organisation.
Research shows that transparency and accountability are critical for taking action and delivering results, and we’d encourage you to ensure your review has a high profile in your organisation.
One organisation we talked to asked itself tough questions, brought in independent advisers, and involved its staff throughout. The result? The organisation identified and corrected a wage premium discrepancy, and it introduced a formal flexible working policy. That kind of proactive, inclusive approach is what’s needed to make real progress.
It's really about attracting and keeping the best people
If you’re a business leader wanting to analyse and address your gender pay gap, what’s really in question is whether your firm is attractive to current and potential employees.
So rather than focussing narrowly on pay, we’d recommend expanding the scope and thinking more broadly about how you can attract and retain the best people. And we do mean “people”, as men also benefit from a business that values its people and recognises they have a life outside work.
It’s clear is that no business can afford to ignore a pay gap in their organisation. A gender pay gap review can serve as a useful catalyst, prompting the firm to look at itself and think about whether it’s doing all it can to attract the best people.
The ethnic pay gap requires absolute focus
While our gender pay gap has narrowed, ethnic pay gaps continue to be significant and aren’t being adequately addressed. Pākehā-European New Zealanders continue to earn more than any other ethnic group. The next stage of the country’s equity challenge must be to highlight and address these disparities.
According to the Ministry for Women’s “Gender pay gap perceptions and practices report 2025”, ethnicity data is being collected by a majority of organisations – 56% overall, and 77% in the public sector. Yet only 16% of organisations have used this data to analyse their ethnicity pay gap. This is a missed opportunity to address intersectional inequities, particularly for Māori, Pacific, and migrant communities.
Once the data is in hand, the next step is understanding it. Where are the gaps? Who’s affected? What roles, levels, or functions are driving the disparity?
And finally, there’s a need for action. As with the gender gap, closing ethnic pay gaps requires a targeted strategy, a commitment from the leadership, and accountability. The Ministry for Women is progressing work on an ethnic pay gap toolkit, which will provide valuable guidance for organisations tackling this issue.
The latest record low is a milestone – not a finish line
The journey toward pay equity is far from over. The latest drop in the gender pay gap is a milestone, not a finish line, with a marked gap still to be closed. Our next frontier is the ethnic pay gap, and the necessary first steps are clear: collect the data, look at it honestly – and then act.
