Comment: Regulation has a public relations problem. So does asbestos, but I am glad someone made a rule about it. According to the Minister of Regulation, regulators are ‘twisted spaghetti’ that ‘cost money’, ‘suck up people’s time’ and even force us to ‘give up completely’.
Framing regulation only in terms of the cost of compliance is not new. Compliance costs are visible and painful for business while the benefits are usually diffuse accruing to workers, consumers, communities, the economy or the environment.
Yet no good business leader would only look at one side of the ledger. While the cost argument suits the current government’s agenda, it does not capture the benefits of well-designed regulation.
Don’t get me wrong, I hate red tape and bureaucratic dead weight as much as anyone.
But research released by BERL and Still Minding the Gap shows that, should the government introduce compulsory pay gap reporting for businesses, not only would the compliance costs be minimal, the benefits will far exceed any costs.
Overseas experience shows that compelling businesses to report their gender pay gaps should reduce gaps by 20-40 percent. In New Zealand, as in-firm wage differences drive pay gaps, we can expect similar results.
The Minister for Women cites the ‘increased costs associated with a regulatory regime’ as the reason her government has not followed the EU, Australia and half the OCED in requiring it. There’s that old cost of compliance chestnut again; a focus on costs while ignoring the $7.8b per year benefit to women and their families of addressing the gender pay gap.
Over 300 NZ businesses were surveyed by BERL about the compliance costs and benefits of analysing and reporting their pay gaps. For most, the compliance costs totalled less than 10 hours of staff time and 80 percent of businesses reported no external costs.
Here is what those hours bought. For nearly half of those surveyed, the return on staff time was increased employee retention and improved staff morale. For over 30 percent, reporting their pay gaps made it easier to attract new talent and increased productivity.
Want to stay across stories like this? Start your day with Newsroom’s top stories and analysis in your inbox.
Twelve percent could link pay gap reporting with a positive impact on their business brand and reputation, with some reporting increased sales as a direct result.
Staggeringly, the research also showed a 25 percent reduction in New Zealand’s gender pay gap could unlock over $18.2 billion in increased productivity and retention, matching the entire GDP contribution of New Zealand’s tourism sector.
It would also provide a much needed boost in tax take of $630 million per annum. Given the government is currently hunting $223-337 million in regulatory savings over the next 10 years, pay gap reporting could deliver that in a mere six months.
Win-win-win policies are rare diamonds. The BERL research clearly demonstrates pay gap reporting is a gem. However, for it to land, the Government and its Red Tape Tipline need to start taking a balanced view of regulation and stop treating compliance like a four-letter word.