A major turning point in the global fight for gender pay parity was marked on January 1, 2018 when a new Icelandic law on pay certification came into force. This landmark piece of legislation will make Iceland the first country in the world to truly enforce equal pay between women and men.
The law requires companies with 25 or more employees to obtain certification on the basis of an equal pay standard to prove that they offer equal pay for work of equal value, regardless of gender. Amongst other things, the equal pay standard (adopted by tripartite consensus) assesses a company’s pay policies and classification of jobs according to equal value and wage analysis on the basis of the classification.
In cases where a workplace has not acquired certification, unions and employers’ organizations can report it to the Centre for Gender Equality. The Centre can then impose on the workplace a formal demand to rectify the situation, failing which it can levy fines of up to 50,000 Icelandic krona ($488) a day. This legal power to sanction firms is a real game-changer.
In many parts of the world, the principle of equal pay is well-defined in national constitutions, labor and anti-discrimination laws, and in collective agreements. Yet one of the most persistent barriers to women’s economic empowerment and inclusive growth remains unequal pay. One of the causes of this is the construction and implementation of equal pay laws. For example, many legal systems depend on individual women to enforce equality by bringing court claims. Although unions often fund these cases, the individual nature of equal pay litigation still poses a major problem, especially for women workers in unorganized sectors.
The Icelandic law is so radical precisely because it collectivizes the responsibility of ensuring gender pay parity.
The truth is Iceland has always been at the forefront of the fight for equality. For the past nine years, it has placed at the top in the World Economic Forum’s Global Gender Gap Report, which measures differences between women and men in health, economics, politics, and education. However, Icelanders are not happy that their gender pay gap adjusted for working hours (the measure of the difference between men’s and women’s average earnings across an organization or the labor market expressed as a percentage of men’s earnings) remained at 14 percent, albeit well below the OECD average. While there are many causes of the gender pay gap, including occupational segregation and unequal caring responsibilities, paying women less than men also contributes to it. This is one of the main reasons why Iceland took the bold step of instituting equal pay certification.