Iceland puts liable companies to pay gender equal wages


REYKJAVIK: In a world first, Iceland has introduced a new law requiring employers to prove they are paying men and women the same wage for doing the same work, or face fines.

As of next January, companies in Iceland must prove, with proper documentation carried out regularly, that they are paying gender equal wages.

The country’s biggest bank Landsbankinn, nationalised in 2008 during the country’s financial collapse, has already begun complying with the law.

Elisabet Bjornsdottir, 34, who works in the bank’s treasury department, says she’s never experienced any discrimination vis-a-vis her male counterparts, in a country that is already among the world’s best performers in terms of gender equality.

But “that’s one of the fundamental reasons why we need this law because it’s not something that you can easily feel or see. You can maybe have a feeling … but it’s really hard to prove,” she said.

While Iceland has had a law mandating equal pay for men and women since 1961, the new law puts the onus on the employer.

It’s no longer up to an employee to prove that they are being discriminated against, but rather, the employer must prove – in the event of a wage gap – that gender has nothing to do with it.

Concretely, employers will have to evaluate, at regular intervals, the requirements for a job position and each employee’s ability to fulfill them. The process must be documented, taking into account objective criteria, and carried out transparently.

The employee’s seniority, education or training, experience, and the added value he or she brings to the job are among the factors assessed.

If the company is in line with the law, a professional certifier (such as private consultancies) will issue the company a certificate valid for three years.

Hefty fines, public shaming

Landsbankinn will spend 120,000 euros ($150,000) to bring itself into compliance. The bank’s human resources chief is in favour of the new legislation.

“If it were not written in the law, I think that in 10 years’ time we would still be doing the same things we are doing today, and the gap would not be closed. So I think it’s a good step towards closing the gap,” said Baldur Jonsson.

For the past nine years, Iceland has led the World Economic Forum’s ranking of the most egalitarian countries.

And yet, even here, the overall wage gap between men and women remains significant, at 16.1 per cent, according to national statistics. That puts Iceland in line with the European average, according to Eurostat’s figures.

Around 1,180 companies and 147,000 employees are affected by the reform in Iceland, a country of 347,000 people.

Employers found to be in violation of the law will be reported to Iceland’s Gender Equality Agency, and face fines of up to 400 euros per day. The information will also be made public, in the name of transparency.

Small companies have until December 31, 2021, to comply with the law.

But all government ministries, public administrations, and companies with more than 250 employees have to comply by December 31, 2018.

Others trying too

At a time when equality between the sexes is dominating the public debate, Iceland’s initiative often elicits wide-eyed wonder abroad – through several other European countries are taking similar, albeit less ambitious, steps.

Britain last year ordered firms of over 250 employees to publish details of their gender pay gap, with sanctions an option if companies refuse to comply.

And Germany recently introduced a new law that gives an employee the right to know how their salary compares with that of colleagues of the opposite sex doing similar work.

But in Iceland, the new law has been met with some scepticism – with opponents arguing that gender-based wage discrimination has been illegal since 1961.

Thorsteinn Viglundsson, a former social affairs minister who initiated the new legislation, told AFP the old law just wasn’t working.

“Sometimes it takes a legal initiative to really push through (a change) if you want to make reforms in this area,” he said.

The anti-establishment Pirate Party has hailed the aim of the law but considers the method costly and complicated.

“To me, this doesn’t fix the problem,” said Pirate MP Bjorn Gunnarsson who voted against it.

Paradoxically, he noted, companies will now have very specific criteria to make it possible to justify wage gaps.

Brynhildur Omarsdottir, the head of the Icelandic Association for Women’s Rights, acknowledged that while the new law “doesn’t solve the whole problem (of gender inequality), it solves a part of the problem – a very crucial part.”