Pay Equity Around the World: What Can We Learn from Other Countries?

Pay equity isn’t a new concept but progress has been slow. In the US, women are still earning 83 cents for every dollar a man earns. South Korea has a shocking 31% pay disparity between men and women. In Great Britain, the ethnicity pay gap is 5.7% while the disability pay gap is between 10-20%.

It isn’t all gloom and doom, however. Some countries have made strides in closing their pay gaps. Different countries are approaching this complex task in their own unique ways. Some have implemented laws that guarantee equal pay for equal work, while others have introduced internal initiatives to rectify pay parity.

As Brian Herbert said, “The capacity to learn is a gift; The ability to learn is a skill; The willingness to learn is a choice.” We have a lot we can learn from other countries if only we’re willing to take inspiration and make changes ourselves.

Countries To Take Pay Equity Lessons From

Some countries have made particularly notable progress around pay equity. They have chosen to prioritize these issues in their labor markets – and it’s benefiting them. For example, the Nordic countries, including Iceland, Norway, Finland, and Sweden, have some of the highest workforce participation rates for women in the world. As a result, according to an OECD report, their GDP per capita has increased by 10-20% over the past 50 years.

Iceland

Iceland is the world leader in pay equity. They ranked first in the 2022 Global Gender Gap Report. In 2018, Iceland became the first country to pass a law requiring companies to prove that they pay equally for comparable work, regardless of gender, sexuality, or ethnicity. Companies that cannot demonstrate pay equity face fines.

That makes Iceland the first country to make the gender pay gap illegal. “Iceland has made it a criminal offense for employers not to take action on unequal pay. They’ve effectively made it like a health and safety violation,” says Daphne Romney QC.

Norway

Ranking third on the Global Gender Gap Report, Norway is another country to look up to. They introduced a policy for paid mandatory parental leave. Beyond the first six weeks, which are allocated to the birth mother, both parents receive up to 59 weeks of full or partial pay. There is no mandatory parental leave in the US.

When you share the responsibility of parenthood, you give women the opportunity to be more active in the workforce. Christa Clapp, a mother from Norway, spoke with The Washington Post saying, “As social acceptance of paternal leave is growing, the job market is also viewing mothers and fathers more equally.”

Denmark

Pay data reporting is a requirement in Denmark. In Denmark, employers must conduct gender audits to examine the effectiveness of their efforts. If employers fail to come up with action plans in response to any issues they uncover, they will be fined.

The Equal Pay Act of 2014 states that businesses with more than 10 employees in Denmark must comply with gender audits of their workforce. Additionally, countries like Austria and Belgium require businesses to post their pay data publicly, incentivizing employers to address pay equity.

But What About Other Pay Gaps?

When researching the efforts of other countries, it was repeatedly obvious that while we’re discussing the gender pay gap, we’re not doing much regarding ethnicity, disabilities, and other negatively affected groups.

In the UK, there is no requirement around ethnic pay gap reporting, but some companies do so voluntarily. In 2017, Baroness Ruby McGregor-Smith published a government-commissioned review into the progression of ethnic minority groups in the UK labor market. She recommended Government to introduce mandator ethnicity pay gap reporting, but it was rejected.

The American Institutes for Research (AIR) found that people with disabilities earn 37% less on average than those without. The wage gap was even more significant for those with master’s degrees. Why are we not talking about this more? The United Nations said it themselves, “Data on persons with disabilities are hard to come by in almost every country. Specific data on their employment situation are even harder to find.”

Call to Action

Everyone deserves to work in equitable conditions. Nobody should be disadvantaged because of their gender, ethnicity, or disability status. While we’re (arguably) doing a lot around gender pay gaps, we must extend our focus.

A handful of countries require organizations to track and disclose pay gaps, but is this effective? The Equal Pay Act was established in 1963. We’ve had 60 years to rectify the gender pay gap issue and we still haven’t.

We need more data, but it can’t just reveal the gaps. There needs to be more understanding of the causes of these discrepancies. Why are there fewer opportunities for disabled persons and those of different ethnic backgrounds? Then we can propose solutions.

The Equality and Human Rights Commission in the UK calls for the Government to “monitor the effectiveness of mandatory gender pay gap reporting on closing gender pay gaps and consult with employers on the most effective way of extending the reporting requirement to ethnicity and disability pay gaps.” This is a step in the right direction, but it only scratches the surface.

Pay Equity Food for Thought

The labor shortage persists, affecting many different industries and contributing to inflation. One solution is fairly incorporating all people into the workforce.

Human migration is diversifying populations all over the world. Generations of ethnic diversity can be found in New York, London, and Singapore. We miss out on great talent when we don’t offer equal opportunities for everyone.

Furthermore, as we shift towards hybrid and remote work, we can accommodate for people with disabilities more. We can welcome those that traditionally struggled to integrate into the working community. Talent pools can expand even further.

Diversifying how we work, hire, and pay and eliminating the pay equity issues is beneficial for employers and employees. It’s time we alter our mindsets and start providing everyone the opportunity to contribute to our economy and receive pay equity in return.