“I’m only going to buy products from a company that…has a certification saying that…I’m an equal pay company

Iceland has made it very difficult to pay women less than men. Employers in the Nordic country now have to prove that they pay men and women in the same jobs equally. If they fail to do so, they risk being fined. Discrimination based on gender is already illegal in many countries — but research shows the legislation is far from effective. Women are paid less than men in every country in the world, according to research by the World Economic Forum. Iceland is the first country to take the fight against the gender pay gap a step further, requiring companies to proactively get equal pay certification from the government. The law came into effect on Monday and applies to all companies and organizations with at least 25 full-time employees. Firms with more than 250 employees will have to get the certification by the end of this year, while smaller companies will follow in the next few years, according to their size. The possible fines are set at around $500 per day in the current legislation.

A reasonable person could be forgiven for thinking that paying men and women equally for equal work is a no-brainer. Why should gender determine a worker’s worth? If a woman can do the same job as a man and do it every bit as well, why shouldn’t she be paid what a man would earn? Then again, a reasonable person could be forgiven for their naivete and ignorance of how the world actually works.

Sure, pay discrimination based on gender is illegal in most Western countries…but cultural norms and bad habits die hard. The actions companies should be taking to ensure pay equity remain just that, the result being that very often women are paid less than men for the same work. It’s not right, and in most cases it’s illegal…but that doesn’t mean the practice isn’t widespread. One country- Iceland- is finally taking action to ensure that pay discrimination ends. To say it’s about time would be something of an understatement, don’tchathink?

The law, which was passed last year and went into effect on Monday, is believed to be the first of its kind in the world and covers both the private and public sectors.

Some headlines have claimed that the new law makes it illegal to pay men more than women. That is not exactly what happened. In Iceland — as in many countries, including the U.S. — it was already illegal to pay men and women differently on the basis of their gender. (And, to be clear, it was and is legal to pay a man more than a woman, or vice versa, provided there is a valid reason.)

As the Icelandic Women’s Rights Association notes, equal pay for equal work has been mandated by Icelandic laws since 1961.

What is remarkable about the new law in Iceland is how it enforces equal pay standards. It does not rely on an employee to prove she was discriminated against. Instead, the burden is on companies to prove that their pay practices are fair.

The policy change comes after years of discussion and pilot testing, based on frustration with the fact that several gender-equity laws were not budging the actual pay gap.

As with any legislation, laws without effective enforcement mechanisms are worthless. Sure, there have been laws on the books in many countries banning gender-based pay discrimination (in Iceland since 1961, for instance), but enforcement has been spotty…when it’s existed at all.

Iceland may have the best record in the world when it comes gender equality, but that only masks the persistent problem facing it. The land of fire and ice still faces a pay gap of about 16%, so Iceland’s parliament has mandated specific, measurable, and concrete action.

“[T]he 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 [from the Icelandic Confederation of Labour].

“She points out that the standard makes the setting of salaries more clear and transparent, which benefits both the employers and the employee.”

Perhaps when companies are confronted by the reality that they’ll be held accountable for compensation structures which treat men and women differently, that reality will change. Given that companies which employ more than 25 people will now have to demonstrate that they meet certain standards, perhaps the cost of being discriminatory will become prohibitive.

The good thing about a system for enforcing accountability is that it can be translated and be used to prevent all sorts of discrimination.

It will be interesting to see if Iceland’s new system is able to move the needle toward gender equity when it comes to compensation. If it works in a relatively small economy, it would stand to reason those lessons could be translated to larger economies in Europe and North America.

Yes, that means more government regulation…but isn’t this the sort of thing government should be doing? Isn’t one of the primaries roles of government to protect its citizens?

If Iceland is able to successfully ensure gender equity, why not here in the U.S.?

Stay tuned….

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