Exploring the ethnic pay gap further Two recent quantitative studies have explored the ethnic pay gaps in Aotearoa New Zealand in further depth – one by the Treasury26 in 2018 and the other commissioned for this Inquiry by the New Zealand Work Research Institute27 in 2022. These studies controlled for individual-level characteristics (such as age and location), education level and job-related factors (such as industry, occupation and contract type) to try and account for the factors that explain the gaps. The Treasury study found that educational level and occupation contributed the most to explaining pay gaps between Pacific peoples and Pākehā. These findings were updated with 2021 data by the New Zealand Work Research Institute. For Pacific peoples, they found that job-related characteristics explained just under half of the pay gap compared to Europeans. Educational attainment was also a significant contribution to explaining the ethnic pay gap, especially between Pacific and European women. It is important to note that educational attainment may become even more of a factor contributing to the ethnic pay gap for Pacific peoples in the future.28 The recent Inquiry into School Attendance presented to Parliament reveals that Pacific school students’ regular school attendance has been on a downward trend since 2015. COVID-19 interrupted this trend briefly, with Pacific students attending school at a slightly higher rate in 2020. However, in 2021, the rates of attendance for Pacific students declined again.29 Regular school attendance is foundational to student achievement, and if this troubling trend continues, it can be expected to adversely affect the Pacific Pay Gap. Additionally, the New Zealand Work Research Institute found that Pacific peoples were 32 disproportionately located in Auckland where wages are higher.30 The authors noted that, if the Pacific population were more dispersed across the country, the ethnic gap between Pacific peoples and Europeans would increase. These authors found that a substantial portion of the pay gaps experienced by Pacific peoples was not explained by observable characteristics such as educational attainment and job-related characteristics. This unexplained portion was likely to be attributable to a range of reasons, including missing data, differences in preferences in the nonwage components of the job, unconscious bias and discrimination. Further, discrimination (both structural and interpersonal) and unconscious bias will also affect what is considered the explained portion of pay gaps, as well as the parts that are not explained. Treasury have previously commented on this second issue: This means that the ‘explained’ component of the wage gap is not free from the effects of discrimination, and discrimination, if it exists, is likely to be contributing to both the ‘explained’ and ‘unexplained’ portions of the earnings gap.31 Education provides a good example of where the pay gap may be impacted by both explained and unexplained factors. While education level is used to help explain part of the pay gap, discrimination may well have played a role in the level of education a person attains. An example of this is in low expectations of teachers shaping educational achievement for Pacific students. There is a significant body of research that shows the impact of structural discrimination in education, including the Commission’s overview in our report A Fair Go for All? 32 26 New Zealand Treasury. The New Zealand Pacific Economy. Wellington: New Zealand Treasury, 2018. https://www.beehive. govt.nz/sites/default/files/2018-11/NZ%20Pacific%20Economy%20Report%2013%20November%202018_0.pdf. 27 Cochrane, Bill, and Gail Pacheco. Empirical Analysis of Pacific, Māori and Ethnic Pay Gaps in New Zealand. Auckland: New Zealand Work Research Institute, 2022. https://secureservercdn.net/45.40.152.202/76v.71b.myftpupload.com/wp-content/ uploads/2022/07/PPG-Inquiry-Empirical-analysis-of-Pacific-Maori-and-ethnic-pay-gaps-in-New-Zealand.pdf. 28 Education and Workforce Committee. Inquiry into School Attendance: Report of the Education and Workforce Committee. 2022. https://www.parliament.nz/resource/en-NZ/SCR_121164/92dac6fd9a9ea51f7aff84e523dfaaeefd6ca168. 29 Education and Workforce Committee, Inquiry into School Attendance, 12. 30 Cochrane and Pacheco, Empirical Analysis of Pacific, Māori and Ethnic Pay Gaps in New Zealand, 9. 31 New Zealand Treasury. Statistical Analysis of Ethnic Wage Gaps in New Zealand. Wellington: New Zealand Treasury, 2018, 16. https://www.treasury.govt.nz/sites/default/files/2018-08/ap18-03.pdf. 32 New Zealand Human Rights Commission. A Fair Go for All? Rite Tahi Tātou Katoa? Addressing Structural Discrimination in Public Services. Auckland: New Zealand Human Rights Commission, 2013. https://www.hrc.co.nz/files/2914/2409/4608/HRCStructural-Report_final_webV1.pdf.