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Iceland Melts Pay Gap Barriers

Iceland is giving the cold shoulder to unequal pay for men and women.

Although Iceland’s government has had equal pay laws on the books for decades, the country recognizes that a gender pay gap persists. According to Statistics Iceland, the official institute for statistics pertaining to Iceland, women still earn about 17% less than men. In the hopes of bolstering the impact of pre-existing equal pay laws, Iceland’s government recently passed legislation that helps it enforce them.

The newly passed legislation requires that businesses with more than 25 employees prove that they pay all of their employees fairly. Beginning in 2018, large businesses and government agencies will undergo gender audits. By 2022, all of these institutions must have their pay practices certified based on the legislation’s requirements.

Those with pay gaps greater than 5% must fix their practices in order to be in compliance with the standard. Thorsteinn Víglundsson, Iceland’s Minister of Social Affairs and Equality, told The New York Times, “We want to break down the last of the gender barriers in the workplace, [and] history has shown that if you want progress, you need to enforce it.”

Before passing the legislation, Iceland implemented a pilot program with the mission of identifying entrenched practices that impede the gender pay gap from closing further. The program found that a major factor that contributes to maintaining the gender pay gap is that women often have different, lower-paying jobs than men.

Similarly, some institutions found that jobs overwhelmingly held by women paid less than jobs mostly held by men. After the program highlighted these discrepancies in some companies, the businesses have been working to hire more women to positions that men typically hold and vice versa.

Additionally, discrepancies in income often exist within an occupation. One ad agency based in Reykjavik, which participated in the equal pay audit, found that women negotiated lower salaries for equal work.

Anna Kristin Kristjánsdóttir, the owner and a board member of the company, thinks this bias is unconscious. When describing how a typical interview of women went, she said, “You’d be sitting there doing the interview, and they’d ask for less. The audit showed this was a flaw in our recruitment, that we were allowing this to happen and didn’t quite realize it.”

In spite of the fairness the legislation promotes, some feel that the legislation unnecessarily puts pressure on small businesses. Halldor Thorbergsson, the director general of the Confederation of Icelandic Employers, said: “Companies should [provide equal pay] for their own benefit and the benefit of their employees, but it should not be legalized.”

However, because closing the wage gap is beneficial to businesses and because many businesses have not made independent efforts to close the gap, the government feels the proposed legislation is completely justified.

“When it comes to the workplace, men have enjoyed a certain level of privilege for a long time,” said Víglundsson. “But if you look at the vested interests for society of eliminating discrimination against women, that far outweighs any regulatory burden.”

The government’s goal is to see the gender pay gap close within the next five years. With the new law in place, that goal could become reality.

Featured Image by 托马斯 tocausan on  Flickr
Attribution-NoDerivs 2.0 Generic (CC BY-ND 2.0)

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