Closing the gender pay gap, one country at a time

On 2017’s International Women’s Day, Iceland made waves by announcing that from January 1, 2018, it would be illegal to pay women any less than men. As the first country in the world to do so, they set a new standard for addressing the gender pay gap, with the aim of completely eradicating it by 2022.

Despite having an equal pay act in their national legislation since 1961, until very recently, there were no repercussions for Icelandic businesses who chose to pay women less. The new law means that any public or private company that employs more than 25 people needs to be independently certified as paying equal wages for work of equal value. If they can’t prove this, they will be fined daily until they do.

This initiative, coupled with the requirement that companies with over 50 employees should have boards with 40% women, has reiterated the country’s position as the best in the world for gender equality. It’s a title they’ve held for the last nine years.

What about the UK?

PwC’s 2018 Women in Work report1 also identified Iceland as the top performing Organisation for Economic Cooperation and Development (OECD) country for female economic empowerment, sitting in front of its Nordic neighbours, Sweden and Norway. The UK has dropped down one position to 15th, having been overlapped by improvements in job market conditions in other countries. While unequal pay is technically illegal in the UK, there are no repercussions for those who wish to ignore it.

London, in particular, has taken its time in attempting to close the gap, lagging behind other regions such as Wales and South West England. This is partly explained by the location of industries with higher pay gaps – for example, the financial and insurance sector (which has a large showing in the City of London) has a gap of 31%.

What is being done?

That said, small strides are being made across the UK to try and close this gap. The introduction of compulsory gender pay gap reporting means that employers with more than 250 staff are now legally required to publish the following figures on their own website and on a government website:

• Gender pay gap (mean and median averages)

• Gender bonus gap (mean and median averages)

• Proportion of men and women receiving bonuses

• Proportion of men and women in each quartile of the organisation’s pay structure

By increasing transparency, the aim is to place a spotlight on the factors that contribute to the gap and encourage businesses to take tangible action.

What can we do?

The PwC report identified three policies that would encourage the closing of the gap: increased spending on family benefits and childcare; encouraging female entrepreneurship; and improving opportunities in higher-paying, higher-skilled roles by increasing flexibility. In practical terms, this translates to initiatives such as affordable childcare, shared parental leave, the promotion of women into decision-making positions and the introduction of flexible working in senior positions. The end result could convert into a £180 billion boost to the UK’s GDP.

It’s not just companies who should be implementing these policies – the government also has a role to play. While closing the gap is already a policy focus, attention should be directed to improving the support systems for families to help women stay in or return to work. Proactive measures such as tackling workplace harassment and discrimination are also essential in making workplaces welcoming and encouraging career progression.

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1. https://www.pwc.co.uk/economic-services/WIWI/women-in-work-index-2018.pdf

Author David Morel Tiger Recruitment Team