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Pay Equity Legislation: Iceland Leads the Way

Posted by: on 3 August 2018 in HR, Human Capital Management, Payroll

Iceland commemorated International Women’s Day in 2017 by enacting pay equity legislation. The move follows an October 2015 protest when thousands of women left their workplace at 2:38 PM, a time that symbolised the size of the pay gap, reports The Atlantic. While private sector wages are notoriously hard to mandate, Fortune reports that Icelandic organisations with at least 25 employees are now required to certify their compliance with wage equity, regardless of employee “gender, ethnicity, sexuality, or nationality.”

Iceland’s unprecedented move revitalised excitement and even propelled the global wage equity movement spearheaded by UN Women. Are other governments around the world working to equalise the playing field? More importantly, is there change ahead that will impose requirements on employers to provide equal pay for equal work and publicly report their efforts?

Global Trends in Wage Equity

According to the World Economic Forum, the top five countries worldwide have gaps of 80 per cent or less, with only New Zealand and the Philippines making the top 20. While there’s been equal pay legislation in many countries for decades, there’s still work to be done.

In New Zealand, a joint working group (union) brokered a government deal allowing professionals in social work, education, behavioural and communication-based professions to approach their employers about a pay equity raise. Workers who are able to demonstrate an equity claim are entitled to an increase, according to the New Zealand Herald.

Australia has given female professional cricket teams a serious raise and removed outdated policies that discriminated against pregnancy, according to Employee Benefits. As stated in research published by the Human Capital Leadership Group, the Philippines is the only country in Asia (with the exception of Australia and New Zealand) that ranks in the top 10 nations in the world for gender parity.

Is There Pay Equity Legislation That Works?

While today’s female talent is more qualified than ever before, they’re fighting against cultural biases, family responsibilities and a host of other issues to reach the C-suite. While there’s responsibility on the organisation and the government to equalise the playing field, there’s hope for legislation that could make a real impact.

Here are three things HR leaders can do:

1. Institute Pay Transparency

Some public firms are required to treat salary data as public. When employees aren’t forbidden to discuss salaries, organisations are held accountable. Researchers Michelle Brown and Leanne Griffin from the University of Melbourne in Australia pointed out that the pay gap in public firms in Australia was smaller in the public sector (12.2 per cent), where pay is largely set through collective agreements, as opposed to the private sector (21.3 per cent) where there is a greater tendency towards individual deals.

In addition, Willis Towers Watson found that only 62% employees across the Asia Pacific have clarity on how their base pay is determined.  This is exacerbated further by 52% of employees understanding how their pay compares with others in their organisation.

2. Make it a Business Priority

A study by in India found that 69 per cent of respondents felt that leadership needed to make gender parity a priority, with only 10% of respondents reporting that their organisation had a robust gender diversity program.  According to McKinsey, advancing women’s equality could add $12 trillion US to the global GDP by 2025.  

3. Require Accountability

HR departments should work toward a system where transparency and accountability is the norm.  According to research from the ADP Research Institute, transparency in pay practices is key to attracting and retaining employees who share this value.

While there’s hope that other legislative bodies will be stirred after Iceland and demand wage transparency, HR leaders would be wise to get ahead of the curve and create a workplace that’s committed to equal pay.

Original post by ADP Spark

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TAGS: pay equity pay transparency wage equity

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