Icelandic Companies Required By Law to Show They Pay Men, Women Fairly

From today’s National Public Radio:

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.

Proposals Aim To Combat Discrimination Based On Salary History

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.)

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.

Read the complete article here.