Bridging the gap in workers pay
Inequality of education, opportunity and pay is one of the great social and business challenges in New Zealand, and in the majority of countries around the world.
This week, the Institute of Directors (IoD) released its annual Directors’ Fees Report, which revealed some progress in the pay disparity between men and women who serve in the boardrooms of Kiwi companies (read more pg7).
In three years, the gender pay gap has narrowed from 21.6 per cent in 2015 to 8.8 per cent now. Still frustrating of course, but at least movement forward.
The burden on New Zealand’s directors is getting greater, but although fees may look generous, by international standards they are low says the IoD’s new chief executive Kirsten Patterson.
Yet Patterson said: ‘‘Key skills required of directors are emerging which were not there five years ago, with cyber skills being one of them - increasing the scope of the risk oversight.’’
A pipeline of good quality directors is the lifeblood of business success, but with average pay in New Zealand hovering around the $75,000 mark, it is hard to win sympathy for more money for directors, who can sometimes have four or more roles earning above that level.
It is this pay gap - between ordinary members of the workforce and board and executive management level, which puts up barriers to productive discussion about remuneration.
Researchers from Harvard University surveyed more than 55,000 workers from 40 countries about the ideal pay ratio between chief executives and unskilled workers for example, and the average response was 4.6 to 1. With heads of some NZX’s top listed companies earning in the millions, it’s easy to see the yawning gap.
It’s an issue which affects lots of other societal issues, not least housing. A high wage economy is difficult to achieve overnight, but its best chance will be in the quality of company leadership.