Editorial: Pay equity plan a nonsense

In the dying days of the last Government, the Labour Party liked to pass off renewed interest in pay equity as Laila Harre's final fling as Women's Affairs Minister. If only it were so. Ruth Dyson had no sooner sat down in the vanquished Alliance MP's ministerial seat than she was espousing similar, ill-judged sentiments. The fact, she said, that New Zealand still had a large number of women-dominated occupations where comparable pay was lower than male-dominated occupations was "not acceptable in society".

Pay equity - equal pay for work of equal value - is firmly back on the Government's agenda as one of Ms Dyson's priorities. If the business world is worried that an exercise in folly is gaining traction, it has grounds enough.

A Ministry of Women's Affairs discussion document was Ms Harre's parting shot. Now it is to be complemented by a Labour Department review of the Equal Pay Act. This, however, is not about women receiving the same pay as men for the same work in the same office. There can be no argument there. What the department is considering is allowing employees to make gender-based equal pay claims based on comparisons with people who do the same work in different organisations.

It is a concept fraught with difficulty. Anne Knowles, the executive director of Business New Zealand, summed up the problem succinctly. "It means if you are a chef and you happen to be a woman, and you decide there's another chef in a restaurant down the road being paid more, you can lodge a claim for a higher amount of pay." Yet that claim would not take account of different menus or different types of customers - or any other differences between the two businesses.

Most significantly, it would pay no heed to the comparative size of the two enterprises and their ability to pay. That is not even a gender issue. Those working for small enterprises simply do not earn as much as those doing similar jobs in large businesses. Individual employers know how much they are able to pay, and strike agreements with their staff accordingly. If waiting staff at Joe's roadside cafe had to be paid as much as waiting staff at a five-star hotel in central Auckland, the smaller business would very soon have to cut back its staff or close. The very idea makes a nonsense of enterprise bargaining.

If the Government frets that society undervalues the work women do, the answer certainly does not lie in restoring a system of fixed relative wage rates. Women earn 84 per cent of men's average hourly rate because female-dominated occupations - clerical work, for example - are oversupplied with labour. Rates of pay are, first and foremost, a symptom of supply and demand. The answer to the wage discrepancy lies in women diversifying, with the aid of education, into a wider, and better paid, range of careers. That process is, of course, taking care of itself.

Even if self-evident progress in that direction is not sufficient to deter the Government, it will soon recognise the inherent difficulties of implementing pay equity. Most logically, it would entail national or multi-enterprise awards in some shape or form. Yet in reassembling the Employment Contracts Act, the Government saw no reason to tamper with the essence of enterprise bargaining. That was tacit recognition of its merit.

It cannot now contemplate a change of heart for what is an utterly flawed concept. Expecting an employer to have to pay more than an agreed sum simply because another business is paying more for similar work makes no sense. The Government need waste no further time on it.