Iceland Makes Companies Prove They’re Not Paying Women Less

Posted January 3, 2018 5:28 p.m. EST

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 proposed last March and passed in June, took effect 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 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 $12,000, compared with $21,000 for men. In Iceland, women earned 14 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.

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 overall 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 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.

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.”