How Iceland Is Closing the Gender Wage Gap
Introduction
Working women are more qualified and educated than ever, and yet, in several countries, men earn more money, despite doing the same work. This form of gender discrimination is commonly known as the gender pay gap and it persists in the corporate world, among other industries, most particular the aviation industry. Part of the problem is that policy solutions, in order to abolish unequal pay, have focused on changing individual workers’ behaviour. More often than not, women are tasked with entering male-dominated professions; or female employees are anticipated to more effectively assert themselves in the workplace.
In 2018, Iceland introduced the first policy in the world that forces businesses to provide proof that they pay men and women equally for a job of equal value. Iceland’s policy of equal pay is implemented via a process evaluation tool known as the Equal Wage Management Standard. In the event that a business has the ability to prove that all the employees are paid uniformly, they obtain certification. This specific certification became a requirement at the offset of 2020. Businesses without this certification will receive a daily fine. Research shows that this new policy has increased women’s trust in their employers, as well as improve the work environment.
Main factors that enabled the Iceland system’s success
The responsibility of the employer to provide evidence
Iceland’s policy shifts the burden of proof to the employer, instead of the employee. This actively demonstrates that the employer is responsible to provide evidence that their employees are paid fairly. This is done through a two-step job evaluation process and even though it is viewed as burdensome, employers have appreciated the tremendous outcomes it resulted in. In particular, this two-step process resulted in a truthful structure that increased confidence and trust among female employees.
Required evaluation
Once the policy for equal pay in Iceland was implemented, it required employers to obtain certification from an accredited frame to evaluate whether their payment amount meets the system’s requirements. According to the Harvard Business Review, this sort of policy is only effective when strongly enforced. In the case of non-compliance, the country issues a daily fine of $500 USD.
Transparent pay systems
It is found that when accountability is increased, along with clarity in their performance award system, the differences in pay decline. This policy forces businesses to be transparent by requiring them to create a traceable pay system. Due to this, employees are now given the right to ask the employer to inform them of the wages or terms under which they are employed.
Therefore, their employers cannot force employees into some sort of wage agreement that includes a provision not to reveal their contents. These provisions are against the law, and thus, are not valid. As a result, as mentioned in the first factor, the employer is now responsible to provide proof. This forces businesses to re-think their job evaluation systems.
Effect of this policy
This new policy seems to be fairly effective as it ensures that employees are compensated equally, in spite of the fact that Iceland’s system is still relatively in its early stages. Initial signs, such as an increase in confidence and trust among female employees, suggest that it is much more effective than policies in place elsewhere. This policy has ensured that operations have run more smoothly with happier employees. Forcing employers to obtain certification overall is beginning to be a big success. With this said, however, only a few problems have been caused. For example, employers find this process very lengthy and burdenson.
Due to this policy, Iceland has become the first country in the world to pass laws that ensure women are being paid the same amount as men. Iceland has even been ranked by the World Economic Forum as the global leader in diminishing gender inequality.
Conclusion
Iceland’s new process for equal pay has positively impacted the culture among employees and proves that discrimination predominates on the occasion of determining salary. This underlines the importance of the system: a pay raise or promotion depends on pre-defined and mutually agreed on criteria as opposed to a manager’s personal preferences or mood, recognition, or an employee’s negotiation skills or vocalness in regards to accomplishments. The question that surely remains is, will Iceland’s historic gender pay policy encourage actions of the same degree to be taken by other government members of the international community?
