Iceland Makes Equal-Pay History

Advocates of equal pay are celebrating a big win in Iceland, but when will the U.S. follow suit?
By: | January 8, 2018 • 4 min read

Iceland, long considered to be the global leader on gender equality in the workforce, recently took another step forward to close the gender wage gap.

Legislation went into effect Jan. 1 that adds some needed teeth to the Nordic country’s decades-old equal-pay law. The new measure requires that companies with at least 25 employees undergo a certification process to demonstrate that they pay men and women equally. Businesses that fail to earn the certification, approved by an independent auditor, are subject to fines.

Advertisement




While a handful of countries have taken steps to address the wage gap, Iceland’s new enforcement procedure has set a global precedent, according to NPR. Iceland adopted an equal-pay law in 1961 but, as that original measure was written, the onus to prove pay discrimination was placed on the individual worker; the recent update pivots that responsibility to the employer, which is required to prove it does not discriminate.

Advertisement




This approach was largely informed by the Iceland Equal Pay Standard, a pilot program launched in 2013 that brought together representatives of public and private entities to study and address potential roadblocks to equal pay. Such forward-thinking initiatives are among the factors that have earned Iceland the top spot on the World Economic Forum’s gender-equality index for nine years running.

Despite Iceland’s efforts, women in the country still typically earn about 16-percent less than men, according to a recent report from Statistics Iceland. Researchers partially attribute that number to sociological factors that steer women and men into different industries; the most commonly reported occupation for women is teaching, and for men is business. Even when men and women are in similarly situated jobs, however, women still earn about 8-percent less than their male counterparts, a number Iceland hopes to eliminate by 2022.

Still, Iceland’s workforce is thought to be far more progressive on equal pay than that of the U.S., which recently ranked 28th on the WEF report that Iceland topped. Though statistics vary widely on the domestic wage gap, many equal-pay advocates cite a 20-percent gap between salaries for men and women.

Equal pay for equal work has been mandated in the U.S. since the adoption of the 1963 Equal Pay Act, yet many women’s-rights advocates have cited loopholes in the law, such as lack of enforcement and exceptions for merit- and seniority-based decision-making. In 2009, President Obama’s first legislative action was signing into law the Lily Ledbetter Fair Pay Act, which eases restrictions on the statute of limitations for reporting gender-based wage discrimination.

Moving forward, another avenue is the Paycheck Fairness Act, which would beef up the Equal Pay Act with more reporting standards, as well as incorporate more stringent anti-retaliation policies. The measure has been introduced every Congressional session since 1997, but has failed to advance.

Advertisement




Iceland’s victory should serve as a call to action for the global workforce, according to Halla Tómasdóttir, executive chair of financial-services firm Audur Capital and a former presidential candidate in Iceland. In an interview with Forbes this week, she cited research that the global GDP could increase by as much as $28 trillion if the international gender wage gap was closed.

“Any leader who wants their company or country to remain competitive should be putting gender equality at the top of her or his agenda,” Tómasdóttir said.

Advancing similar legislation here in the U.S., however, could be quite a feat.

A state-by-state approach could create a confusing patchwork of laws, and national momentum for a federal law might be hampered by concerns about cost, says Thomas Lewis, a labor and employment attorney based in the Princeton office of Stevens & Lee.

Advertisement




“I think the certification process could be difficult because of extra costs involved and the potential for extra burden on companies,” Lewis notes. “But if a company is not treating employees fairly or equally, employees do have the right to bring a lawsuit to eradicate that discrimination.”

On that front, Lewis says that the U.S. is ahead of some other countries, as employees have a right to bring a private discrimination lawsuit, with the potential for recouping counsel fees as well as damages.

Lewis adds that any equal-pay measures should not only seek to eradicate gender-based discrimination, but disparities based on other factors as well.

“Certainly, equal pay is appropriate and companies should be striving for equal pay, not only as it applies to men and women but also to members of minority groups, young people and old people, people of different colors, religions, ethnic backgrounds,” he says. “Pay should be based upon the experience of the person and the job they’re doing, not any other factor.”

Jennifer Colletta is managing editor at HRE. She earned bachelor's and master's degrees in writing from La Salle University in Philadelphia and spent 10 years as a newspaper reporter and editor before joining HRE. She can be reached at [email protected]

More from HRE