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Gender pay gap progress halted; equality two centuries off

For the past 11 years the World Economic Forum, or WEF, has published its Global Gender Gap Report [1], which benchmarks 144 countries on their progress toward gender parity across four thematic dimensions: economic participation and opportunity, educational attainment, health and survival, and political empowerment. The 2017 edition, published in November, also analyzes the dynamics of gender gaps across industry talent pools and occupations.

Unfortunately, the headline news from the newest report was that 10 years of progress in gender parity came to an abrupt halt in 2017. The economic gap is widening and based on current trends, women will have to wait 217 years to gain equality, in terms of pay, with men.

But pay parity would benefit society as a whole. According to the WEF, recent estimates suggest that economic gender parity could add an additional $250 billion to the GDP of the United Kingdom, $1.75 trillion to that of the United States, $550 billion to Japan’s, $320 billion to France’s and $310 billion to the GDP of Germany.

Which is why a number of jurisdictions are taking steps to speed up the process of parity.

United States. Since Massachusetts passed a law in 2016 preventing employers from asking job applicants about their salary history in the interview process, seven other states and cities have passed similar legislation including California, Delaware, Oregon, New York City, Philadelphia, and San Francisco. The motivation behind these laws is to close the gender pay gap between men and women.

Although the laws vary, each prohibits an employer from inquiring about an applicant’s current or prior earnings or benefits. Asking about past salaries can perpetuate unequal pay levels rather than allow applicants to seek pay based on their qualifications and earnings potential, according to New York City officials, when the law was passed in 2017.

United Kingdom. Last year, the UK government introduced the Equality Act 2010 (Gender Pay Gap Information) Regulations 2017 to force large businesses to publish information about their employees’ pay. By April 4, 2018, and annually thereafter, employers with 250 or more employees will have to report the difference between the average earnings of men and women, expressed relative to men’s earnings. For example, “women earn 15% less than men per hour.”

The regulations use a wide definition of employee, which includes self-employed workers if they must personally perform work for the employer and the data are available, for example, where a project initiation document exists or a schedule of fees is in place. Agency workers are also covered but it is the responsibility of the agency employer to report in relation to their pay.

Germany. Instead of a public naming and shaming, the German government introduced new rights for employees in 2017 in the Act on Advancing the Transparency of Remuneration Between Women and Men. The act’s three main elements: a right for all employees to be paid without discrimination on grounds of sex; a right to obtain information about the average remuneration received by other comparable employees in organizations that regularly employ more than 200 workers; and reporting requirements for large companies that regularly employ more than 500 employees.

Disadvantaged employees may bring a claim, and if successful, employers will be obliged to make retroactive payments for the previous three years.

Iceland. While the UK and Germany have taken a soft approach to the issue, Iceland has become the first country in the world to make it illegal to pay women less than men. Amendments to the Gender Equality Act 10/2008 came into effect on Jan. 1.

The legislation requires firms employing at least 250 workers on an annual basis to obtain certification of their equal pay system by the end of 2018. The certification process will be phased in for all employers with 25 or more employees by 2021.

Where a business either has not acquired equal pay certification or has failed to renew it by the deadline, it may be reported to the Centre for Gender Equality. The agency can impose on the workplace a formal demand to rectify the situation by a certain deadline. Measures may include the provision of information and release of materials, or the drawing up of a scheduled plan of action to meet the requirements of the Equal Pay Standard. If the workplace fails to act on instructions of this type, the Centre for Gender Equality is authorized to impose per diem fines.

Conclusion

The inequality between men and women is a global issue. Though the causes may be complex, the WEF believes “ensuring the full development and appropriate deployment of half of the world’s total talent pool has a vast bearing on the growth, competitiveness and future-readiness of economies and businesses worldwide.” It is therefore likely that we will see further measures of this type across all regions of the world.

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