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Iceland intent on eliminating the gender pay gap

How can the differences in pay between women and men be eliminated? Icelandic trade unions, employers´ confederation and government officials have developed an Equal pay management system, called “The Equal Pay Standard” that will help employers prevent salary discrimination and enable them to become certified. The country’s new gender equality minister wants to make the standard mandatory for all major employers.

Part 3: The labour market

The pay gap between men and women is a problem that all Nordic countries are struggling with. Despite several initiatives in the area, limited progress has been made in recent years. Now Iceland wants to lead the way. The country adopted an equal-pay-for-equal-work law for the labour market in the early 1960s. It was determined that the gender pay gap should be eliminated by 1967 at the latest. This goal was never achieved, however, as today the gap is a full 15 per cent. Yet the problem is far from forgotten.

 Maríanna Traustadóttir, from the Icelandic Confederation of Labour.

In the fall of 2008 the Ministry of Welfare, together with ASI – the Icelandic Confederation of Labour and SA – Business Iceland, began the work of developing the Equal Pay Standard. Icelandic Standards agreed to supervise the project. It was decided to use the international standard similar to the ISO standard for environmental management systems as a model. Maríanna Traustadóttir from the Icelandic Confederation of Labour has been involved in the work from the start.

‘The creation of the Equal-Pay Standard was a long process. We met at least 100 times over a period of four years. We both considered the nature of the Icelandic labour market and developed guidelines for the valuation of work. What’s unique with the standard is that all labour market parties have agreed on all decisions made,’ she says.

Salary must be based on the position

In 2012 the Standard was ready, but did it work? An Action Group on Equal Pay was appointed in December 2012 by the government and Social Partners to work on gender equality and to conduct a pilot project to implement the Equal Pay Standard. In brief, the equal-pay standard described the process that companies and public institutions can follow in order to ensure equal pay within the workplace. In order to achieve this, the employer must determine which work tasks each position entails and then assign a value. The salary must be decided based on the position and not the person carrying out the work. The idea is that this will eliminate salary discrimination.
‘The standard makes employers pay a fixed salary for a certain type of work. However, there is some room for an upward adjustment for example if a worker adds extra value to the work, but such exceptions must be decided in accordance with the standard and justified in writing,’ says Maríanna Traustadóttir.

She points out that the standard makes the setting of salaries more clear and transparent, which benefits both the employers and the employee. Several private and public Icelandic employers have participated in the pilot project supervised by the Action Group on Equal Pay. The participants stress that the implementation is a big commitment that must be supported at the highest level of management.

‘Yet everybody also thinks it’s well worth the work. They feel that the whole workplace benefits from a fair and transparent salary system. Several employers also describe how they had to adjust some salaries that they realised were discriminatory,’ says Maríanna Traustadóttir.

 The infrastructure is in place

Iceland’s new minister of social affairs and equality Þorsteinn Víglundsson wants to require all Icelandic employers with more than 25 employees to implement the standard. The infrastructure is already in place. The employer organisations give courses on how to use the standard and in 2015 the University of Iceland offered a special course on equal-pay certification.

Guðbjörg Andrea Jónsdóttir is a researcher and director at the University of Iceland’s Social Science Research Institute. She does not think the standard will eliminate the entire gender pay gap in Iceland but is confident it will increase the awareness of the reasons for it.
‘During the implementation process, the awareness is raised about how differently women’s and men’s work is valued among both employers and employees. This may be the most important step to get the debate going and close the gender pay gap,’ she says.

So what are the main reasons behind the salary differences between women and men in the Nordic countries? International comparisons show that the Nordic countries place far from the top when it comes to gender-equal salaries. For example, the data for Italy and Luxembourg look much better. Anita Nyberg, gender scholar and professor at Stockholm University in Sweden, says that the statistics have to do with women’s employment rate. Countries in which fewer women work outside the home have smaller gender pay gaps.

 Anita Nyberg, gender scholar and professor at Stockholm University.

‘The reason is that the women who work in those countries are well-educated,’ she says and compares with for example Sweden, where many women have low-paying jobs in the public sector.

According to Anita Nyberg, the salary differences are generally growing in Sweden, regardless of gender. This affects women as a group, since they are at the bottom of the scale. At the same time, women are more likely than men to pursue post-secondary education, which makes the development multifaceted.
‘The primary reason for the pay gap is that women and men tend to have different occupations. Right now, we’re witnessing a change in this regard, though. Jobs that used to be male dominated, such as psychologists, have been taken over by women,’ says Anita Nyberg.

The level of motivation is missing

The gender pay gap will not disappear without sufficient motivation among policymakers and employers. At present, this level of motivation is missing in several Nordic countries, says Paula Määttä, Finnish researcher and expert on equal pay.

‘The pay gap is a serious violation of human rights. I’d like to say it is one of the most serious violations, since it affects half of all people in the Nordic region.
She continues by saying that Finland’s political focus is on economic growth rather than discriminatory structures and practices of the labour markets. This affects the country’s priorities.

‘Dealing with the salary differences also has to do with money. Right now, there is no willingness in Finland to significantly increase the salaries in sectors dominated by women in order to narrow the pay gap,’ she says.

 Paula Määttä, Finnish researcher and expert on equal pay.

According to Paula Määttä, one reason behind the slow progress is that people in Finland, as in other Nordic countries, are so used to the structures they can’t see the discrimination. The setting of salaries is not openly discussed in the workplaces. When the negotiations take place behind closed doors, the differences are destined to be maintained, says Paula Määttä.
‘In order to achieve equal pay, it is important that salaries and how they are set are discussed in the public debate. Then employees will be able to understand why they are paid a certain salary and compare it with how much other people make,’ says Paula Määttä.

It has not yet been decided exactly when Iceland’s gender equality minister will mandate the equal-pay certification. Maríanna Traustadóttir from the Icelandic Confederation of Labour hopes that the solution will spread to other Nordic countries.
‘The standard is international. It is developed so that it can be used outside the Icelandic context. However, it does need to be adapted to each country’s specific labour market and labour laws,’ she says.

Updated 23 January 2020