Iceland tells companies: Close gender pay gap—or pay up

Iceland’s new law requires companies to prove they’ve closed the gender pay gap.

Now Reading:

Iceland tells companies: Close gender pay gap—or pay up

© Copyright :
REUTERS/Darren Staples
Text size Aa Aa

The long-awaited bill requiring companies to prove they're closing the gender pay gap came into effect on New Year’s Day.

Iceland has long been hailed as a champion for women’s rights and gender pay equality. The World Economic Forum has ranked Iceland the top country in gender equality since 2009, pipping its Scandinavian neighbours.

But it doesn’t mean Iceland’s perfect.

Icelandic women are paid between 14%-20% less than men, according to government statistics, and activists have long said the government has not done enough to tackle pay disparity, with women staging annual strikes as a reminder.

Gender pay equality was one of the key campaign promises made in 2016 by Iceland’s Reform Party (Viðreisn), which was part of the Independence Party’s coalition government.

The new gender pay bill requires companies—as well as government agencies—with 25 or more employees to get a certification that says the company pays equally between genders in the workplace. Each assessment is made by an independent and accredited reviewer. Should a company fall short, they face fines ranging up to 50,000 Iceland krona (€400) for each day they are not in compliance.

Thorsteinn Viglundsson, a Reform Party MP who served as the Minister of Social Affairs and Equality last year, crafted the 2017 bill that overwhelmingly passed in Parliament.

Viglundsson tells Euronews that “tangible metrics” were needed to ensure companies were complying with the law.

Gender pay law affects economy and immigration

The World Economic Forum applauded the bill and said it would boost Iceland’s economy. “This is a very practical measure by Iceland which is not only good for women in the country but is good for the country as a whole,” says Saadia Zahidi, WEF’s Head of Education, Gender and Work, to Euronews.

“By increasing momentum towards closing its workplace gender gap, Iceland’s economy is optimizing its access to local talent by ensuring both men and women are able to combine their careers with their family and social obligations,” she adds.

Viglundsson explains the bill will also have a positive impact on immigrants in Iceland. “Immigrants are frequently discriminated against,” he says, adding that the required transparency from companies means that immigrants will also benefit from the new law.

How is the law different?

Gender pay equality was legalized in Iceland more than 50 years ago, with the 1961 Equal Pay Act putting in ink legislation against gender pay discrimination. But the 2017 law requires companies with 25 employees or more to prove they are compliant. This year, in 2018, companies with 250 or more staff are required to comply by the end of the year, while smaller companies, with 25-89 staff, have until 2021 to comply.

The Icelandic Women’s Rights Association said it was "very happy" with the bill, but noted two shortcomings. Brynhildur Heiðar, executive manager of the association, told Euronews, "The law only mandates that companies undergo this certification every three years, and we wonder if it would have been more useful to require companies to undergo this certification more regularly."

Another flaw, which Viglundsson concedes, is that the law targets pay discrimination within companies—and not across sectors.

According to Heiðar, “[The bill] doesn't guarantee that a company pays good wages, only that everyone employed by the company is paid fairly and equally.”

“To completely close the gender pay gap in Iceland, we need address larger, social issues. One of the main reasons for the gender pay gap is the gender segregation of the Icelandic labor market,” she adds, referring to how some professions predominantly employ men and vice versa.

“Professions which mostly employ women, for example, daycare, tend to pay lower wages than professions which mostly employ men, for example, fishing. Also, women are more likely to work part-time or take time off work to take care of families. This both affects the income of women and their pensions.”

Critics against measures that seek to close the gender pay gap claim that many women choose sectors or jobs that are low-paying, and therefore it’s because of job selection that there is a discrepancy in wages. But Viglundsson rejects this.

“Who’s to say these jobs [like technology and science] are more valuable for society? For example, what’s more important than supplying education for children?”

“These are the part of the social norms we need to change,” he says.

‘I’m optimistic’

When the 2017 gender pay bill was passed, nearly half of the MPs elected were women. Last November’s elections saw many changes in government, including a new coalition led by the Left-Green Movement, a first for Iceland. The percentage of female MPs also took a sharp drop from 48% to 38%. However, Viglundsson isn't concerned that the shakeup in parliament will derail the bill.

The MP, now with the opposition, says, “I’m optimistic, even though there’s been a change in government, that this bill will remain a permanent measure.”

“The Icelandic population on average is pushing for gender equality and has been for some time,” he says.

“But of course, there’s quite a lot of work to be done.”