Companies In Iceland Now Required To Demonstrate They Pay Men, Women Fairly

Enlarge this image toggle caption Frank Augstein/AP Frank Augstein/AP

Starting this week, companies in Iceland are required to demonstrate that they pay male and female employees fairly — without gender discrimination. Failing to do so can result in daily fines.

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.

Iceland has the best track record on gender equality in the world, according to the World Economic Forum. But the country still had a persistent pay gap just over 16 percent as of last year. The gap exists across all occupational groups. According to the Nordic Labour Journal, figures from 2010 showed about 8 percent of that year's gap remained "unexplained" after factoring in possible justifications.

Iceland's new law applies to companies with 25 employees or more. Every three years, the companies will need to confirm that they are paying men and women equally for jobs of equal value. If they aren't certified, a daily fine will stack up.

Nordic Information on Gender explains how the process works:

"[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."

Those equal-pay standards have been suggested to companies since 2012, but this is the first time they will be mandatory.

The focus of the law is specifically on gender equity. However, as Iceland's welfare office notes, the standard "can be used to prevent and eradicate all sorts of discrimination." Functionally, the law will also block pay discrimination on "race, religion, disability, occupational disability, age and sexual orientation grounds," the BBC noted last year.

The new law was passed — perhaps not coincidentally — a year after female candidates won nearly half the seats in Iceland's parliament.

As NPR's Bill Chappell reports, the country is a leader on gender issues:</s>REYKJAVIK, Iceland — Iceland this week began putting in place a new law that requires companies and government agencies to prove they are paying men and women equally, positioning the country at the forefront of global efforts to minimize gender inequality.

The Equal Pay Standard, which was part of broader legislation that was proposed last March and passed in June, took effect on Monday. It says that companies with 25 full-time employees or more must analyze their salary structures every three years to ensure that men and women are being paid the same amount for doing the same jobs. Then they must report back to the government for certification or face penalties that include fines.

While Iceland has had equal pay laws in place since 1961, the new standard is seen as the first time that the small and prosperous nation of about 340,000 has put in place specific steps to try to force companies to eliminate pay gaps.

“Of course it has always been illegal to unequally pay men and women,” Frida Ros Valdimarsdottir, the chairwoman of the Icelandic Women’s Rights Association, said in an interview on Wednesday. “But this is a legally binding tool kit.”</s>Iceland this week began putting in place a new law that requires companies and government agencies to prove they are paying men and women equally.

The Equal Pay Standard took effect Monday. It says that companies with 25 full-time employees or more must analyse their salary structures every three years to ensure that men and women are being paid the same amount for doing the same jobs. Then they must report back to the government for certification or face penalties that include fines.

While Iceland has had equal pay laws in place since 1961, the new standard is seen as the first time the nation of about 340,000 has put in place specific steps to force companies to eliminate pay gaps.

“Of course it has always been illegal to unequally pay men and women,” Frida Ros Valdimarsdottir, the chairwoman of the Icelandic Women’s Rights Association, said in an interview Wednesday. “But this is a legally binding tool kit.”

In 2017, for the ninth year in a row, Iceland had the best overall score on the World Economic Forum’s Global Gender Gap Report, which measures the size of the differences between men and women in health, economics, politics and education in 144 countries.

For wage equality, Iceland ranked fifth in the report, which said that globally, the average pay for women in 2017 was €10,000, compared with €17,500 for men. In Iceland, women earned 14 to 20 per cent less than men, according to government figures for 2015.

Men are offered parental leave equal to women. Icelandic law since 2013 requires private companies with more than 50 employees to have at least 40 percent women, or men, on their executive board.

But gender pay gap issues have stubbornly persisted, breaking into full view with public protests in October 2016, when women left their jobs at 2.38 pm, before the official end of the workday, but at the time that many calculated they stopped being paid for equal work.

“We have come a long way and we are in the forefront of gender equality in the world,” said Ms Valdimarsdottir. “But we are so far from having equality in Iceland.” While Icelanders have generally celebrated the new law, one survey shows a difference between income brackets and professions. Forty-two percent of executives and senior officials oppose the law, while overall just 21 percent of Icelanders are against it, according to a survey conducted by Market and Media Research, an Icelandic company.

Thorgerdur Einarsdottir, a professor of gender studies at the University of Iceland, said the equal pay law was useful but was “no magic wand.” “A law implementing a standardized job evaluation is not a solid fix to a problem this ambiguous,” she said. “The deeply rooted stereotypes that favor men and women for certain jobs and professions are the fundamental problem.”</s>A new law in Iceland is requiring companies to prove that their pay practices don’t discriminate against women.

The law was passed with a large majority by parliament in June and took effect at the New Year. It seeks to erase a persistent gap between men and women’s pay despite years of equality legislation dating back to 1961.

Companies with more than 25 workers will have to obtain a certification from an accredited auditor that they are basing pay differences on legitimate factors such as education, skills and performance.

Big companies with more than 250 employees have until the end of the year to get the certification, while the smallest have until the end of 2021.</s>For wage equality, Iceland ranked fifth in the report, which said that globally, the average pay for women in 2017 was $12,000, compared with $21,000 for men. In Iceland, women earned 14 percent to 20 percent less than men, according to government figures for 2015.

In 2016, women accounted for 48 percent of the elected representatives in Iceland’s Parliament — although that proportion declined to 38 percent in the subsequent election. Men are offered parental leave equal to women, and women have risen through the ranks of government. Icelandic law since 2013 requires private companies with more than 50 employees to have at least 40 percent women — or men — on their executive board.

But gender pay gap issues have stubbornly persisted, breaking into full view with public protests in October 2016, when women left their jobs at 2:38 p.m., before the official end of the workday, but at the time that many calculated they stopped being paid for equal work.

Ms. Valdimarsdottir, an organizer of the demonstrations in 2016, said inequality still persisted in other areas of Icelandic society, such as wealth distribution and representation in the arts and literature, as well as in the upper echelons of business.

“We have come a long way and we are in the forefront of gender equality in the world,” she said. “But we are so far from having equality in Iceland.”

While Icelanders have generally celebrated the new law, one survey shows a difference between income brackets and professions. Forty-two percent of executives and senior officials oppose the law, while over all just 21 percent of Icelanders are against it, according to a survey conducted by Market and Media Research, an Icelandic company.

The law, experts say, will bring to light inequality that has until now surfaced only coincidentally, sometimes with unexpected consequences.

In 2013, Jofridur Hanna Sigfusdottir, a payroll clerk at a municipality office in Kopavogur in southwestern Iceland, filed a complaint to the government’s Complaints Committee on equal rights arguing that a male counterpart was a pay grade higher.

After the committee ruled in her favor, the municipality lowered the man’s wages to Ms. Sigfusdottir’s level.

“I went home crying,” she said in an interview. “I would have never gone forward with the case knowing it would only lead to my colleague receiving less.”

Halldor Benjamin Thorbergsson, manager of the Confederation of Icelandic Employers, a business association, who is one of the law’s critics, said the initiative created complications and additional expenses for all but big businesses.

“The law mandates smaller companies to collect records that are technically difficult to obtain,” he said.

While equal pay audits should be encouraged, he added, it should be left to businesses to decide whether to institute such measures.

Mr. Thorbergsson said he could not predict how broadly the law would affect employees in different industries. “I hope there will be change,” he said, adding that the law tackled more than gender-based pay gaps. “The law is about equal pay for equal work, between everyone.”

Thorgerdur Einarsdottir, a professor of gender studies at the University of Iceland, said the equal pay law was useful but was “no magic wand.”

“A law implementing a standardized job evaluation is not a solid fix to a problem this ambiguous,” she said. “The deeply rooted stereotypes that favor men and women for certain jobs and professions are the fundamental problem.”</s>A new law in Iceland is requiring all companies to prove that their wage practices don't discriminate against women, in what is thought to be a global first in the effort to reduce gender pay gaps.

The law, which was passed with a large majority by parliament in June, took effect at the New Year. It seeks to erase a current pay gap between men and women of about 5.7 percent that can't be explained by differing work hours, experience or education levels, as measured by Statistics Iceland.

While other countries, and the U.S. state of Minnesota, have equal-salary certificate policies, Iceland is believed to be the first to make it mandatory for both private and public firms.

FILE - This is a Thursday, Oct. 27, 2016 file photo of people looking at the Icelandic parliament the Althing in Reykjavik. Icelandic companies are getting ready to comply with a new law requiring them to prove their pay practices don't discriminate against women. The law was passed with a large majority by parliament in June 2017 and took effect at the New Year. (AP Photo/Frank Augstein, File)

The North Atlantic island nation, which has a population of about 330,000, wants to eradicate the gender pay gap by 2022. The country has a female prime minister, Katrin Jakobsdottir, and ranks first on the World Economic Forum's global gender equality index.

Companies with more than 25 workers will have to obtain an "equal pay certification" from an accredited auditor showing that they are basing pay differences on legitimate factors such as education, skills and performance. Big companies with more than 250 employees have until the end of the year to get the certification, while the smallest have until the end of 2021. The certification must be renewed every three years.

Employers' associations came out against the law, saying that it imposed costly compliance burdens and involved too much government interference in the labor market. Some academic economists also were skeptical of the certification requirement, arguing that the gap resulted from non-gender related factors that would be apparent if the statistical measures were perfect.

While the law might help eliminate the unexplained pay gap, it likely won't address the larger, explainable pay difference of 22 percent between the sexes that is based on different work volumes, according to a report by Stefan Olafsson of the University of Iceland for the European Social Policy Network. The network provides independent policy analysis to the European Commission.

"That is still a gendered pay difference rooted in the fact that women take greater responsibility for care tasks within the household, while men spend more time in paid work," Olafsson wrote.

"Still, one may assume that the certification requirement will forward the ethos of gender and other equality issues in Icelandic society, both directly and indirectly," he wrote.</s>Iceland began the new year by becoming the first country in the world to mandate that all its companies must pay men and women equally. Following years of passing legislation promoting equal pay, employers that fail to ensure pay parity will now be subject to fines, thanks to a law passed last spring that went into effect Monday.

"We have had legislation saying that pay should be equal for men and women for decades now but we still have a pay gap," Dagny Osk Aradottir Pind of the Icelandic Women's Rights Association told Al Jazeera. "We have managed to raise awareness, and we have managed to get to the point that people realize that the legislation we have had in place is not working, and we need to do something more."

Under the new law, companies that employ more than 25 people will have to prove to the government that they're paying men and women equally. Officials hope the move will help Iceland to completely close its gender wage gap by 2020.

Iceland has long been admired by progressives as a model of gender equality, filling nearly 50 percent of its parliament seats with women. Supporters of the new law say it couldn't have been put into action without the strong presence of female lawmakers.

For the past nine years, the small island country has been the world's highest-ranking nation in terms of gender equality according to the World Economic Forum's (WEF) Global Gender Gap Report. Iceland has managed to close its gender gap by about 10 percent since the report was first compiled in 2006, according to the WEF's markers which include political empowerment, economic opportunity, and education access as well as compensation.

As Iceland makes strides in its gender equality goals, the United States' gender wage gap has been narrowing slowly, with women earning 83 percent of men's salaries. The U.S. ranks at number 49 on the WEF's list; less than 20 percent of members of Congress are women.

According to the American Association of University Women, at the wage gap's current rate of narrowing, American women would have to wait until 2119 to be paid equally to their male counterparts. The Trump administration has shown little interest in improving the gap, with the president suspending an Obama-era rule which required employers to provide the government with pay equity data.

Supporters congratulated Iceland on its new system while lamenting the United States' failure to take similar steps.

"We must follow the example of our brothers and sisters in Iceland and demand equal pay for equal work now, regardless of gender, ethnicity, sexuality or nationality," said Sen. Bernie Sanders (I-Vt.) on his Facebook page.</s>Iceland has become the first country in the world to mandate that women receive the same pay as their male colleagues for doing the same work.

The new law makes it illegal for employers to pay male workers more, and requires companies of 25 staff or more to prove they are paying men and women equally.

READ MORE: Iceland to become first country to make companies prove they offer equal pay

The bill was tabled and passed last spring, but only took effect on New Year’s Day.

Under the new rules, companies and government agencies employing at least 25 people will have to obtain government certification of their equal-pay policies.

Companies will face fines if they can’t prove that men and women are receiving the same salary for the same job.

READ MORE: What’s the best (and worst) city to be a woman in Canada?

The new legislation was supported by Iceland’s centre-right government, as well as the opposition, in a parliament where nearly 50 per cent of all members are women.

The North Atlantic island nation, which has a population of about 330,000, wants to eradicate the gender pay gap by 2022.

In October, thousands of Icelandic women left work at 2:38 p.m., and demonstrated outside parliament to protest the gender pay gap.

Women’s rights groups calculate that after that time each day, women are working for free.

For nearly a decade, the World Economic Forum (WEF) has ranked Iceland as the most gender-equal country in the world, followed by Norway, Finland, Rwanda and Sweden.</s>A new law in Iceland is requiring all companies to prove that their wage practices don't discriminate against women, in what is thought to be a global first in the effort to reduce gender pay gaps.

The law, which was passed with a large majority by parliament in June, took effect at the New Year. It seeks to erase a current pay gap between men and women of about 5.7 per cent that can't be explained by differing work hours, experience or education levels, as measured by Statistics Iceland.

While other countries, and the U.S. state of Minnesota, have equal-salary certificate policies, Iceland is believed to be the first to make it mandatory for both private and public firms.

The North Atlantic island nation, which has a population of about 330,000, wants to eradicate the gender pay gap by 2022. The country has a female prime minister, Katrin Jakobsdottir, and ranks first on the World Economic Forum's global gender equality index.

Companies with more than 25 workers will have to obtain an "equal pay certification" from an accredited auditor showing that they are basing pay differences on legitimate factors such as education, skills and performance. Big companies with more than 250 employees have until the end of the year to get the certification, while the smallest have until the end of 2021. The certification must be renewed every three years.

Employers' associations came out against the law, saying that it imposed costly compliance burdens and involved too much government interference in the labour market. Some academic economists also were skeptical of the certification requirement, arguing that the gap resulted from non-gender related factors that would be apparent if the statistical measures were perfect</s>Iceland now has a law that makes it illegal to pay men more than women for the same job. That noise you hear? That’s women all over the world cheering because finally this is happening somewhere.

The legislation went into effect Monday, the first of the new year. Companies in Iceland that employ 25 or more people will now have to submit payment information to the government to have their pay equity certified as fair, which means there’s no way around this law. Companies that don’t comply will have to pay fines.

“The legislation is basically a mechanism that companies and organizations … evaluate every job that’s being done, and then they get a certification after they confirm the process if they are paying men and women equally,” Dagny Osk Aradottir Pind, a board member of the Icelandic Women’s Rights Association, told Al Jazeera. “It’s a mechanism to ensure women and men are being paid equally. We have had legislation saying that pay should be equal for men and women for decades now but we still have a pay gap.”

Many other countries also have legislation that says pay should be equal for men and women doing the same job, but Iceland is now the only country in the world that requires companies to prove that they’re following the rules. The U.S. has had an Equal Pay Act in place since 1963, but it puts the burden of proof on the woman who is receiving unfair pay; first she has to find out that she’s making less than a man in her position, and then she has to sue her company if she wants it to face any repercussions.

Iceland already leads the world in pay equity between men and women, according to the World Economic Forum’s Global Gender Gap Report, and this move will likely only give the North Atlantic island nation an even bigger lead over the rest of the world when it comes to treating men and women equally at work. Iceland has been at the top of the list for the last nine years. By contrast, in the 2017 report, the U.S. came in 49th, behind countries like Nicaragua, Mozambique, South Africa, Cuba and Colombia. The U.K. is 15th, and Canada is 16th.

Needless to say, there’s still a lot of work to be done. But if Iceland can do it, other countries can follow suit, and it’s far past time for women to be guaranteed equal pay for equal work.

Click here to LIKE River 105 on Facebook
A new Icelandic law goes into effect which requires government agencies and companies with more than 24 full-time employees to prove they are paying men and women equally, as required by existing legislation.