How Iceland is addressing the gender wage gap


By Marina DaRocha

Claire Rahija expects she’ll one day have children.

But when she does, the 21-year-old worries what that will mean for her career.

“It sucks because I wonder if that will impact the success I have at work,” said Rahija, a fourth-year criminology student at Wilfrid Laurier University.

And her worries may be valid.

A 2021 Statistics Canada study found that women aged 25 to 54 still made 11 per cent less per hour than their male counterparts. The study also found that Filipino women and Black women had larger pay gaps of 26 per cent and 16 per cent, respectively. Even in jobs where both genders have the same education and training, women still make less according to the Ontario government’s pay equity office’s website.

The gender wage gap disproportionately affects women, said Tammy Schirle, an economics professor at Wilfrid Laurier University.

Schirle was one of the researchers on a study released by the independent non-profit C.D. Howe Institute that found caring for children puts a gap on a mother’s resume, giving male job seekers that have been continuously working an advantage. As a result, some women struggle to find jobs when their kids get older. That’s why some women might choose their careers over having children or at least consider putting them off.

Iceland’s solution

One country has seemed to figure it out though. In 2017, Iceland passed a law requiring companies with more than 25 employees to pay women and men equally to do the same job. 

Employers need equal pay labels to inform job seekers that all genders would be paid the same wage for the same task. The World Economic Forum’s 2021 Global Gender Gap Report rated Iceland the best place for women to live. Canada didn’t make the top 10. 

“Having some accountability there seems to matter, at least a little bit, in nudging some employers in the right direction,” said Schirle.

Under the new law in Iceland, employers who don’t pay their employees working in the same job the same wage, are first warned to fix the pay difference, and fined if they don’t comply.

“I would’ve just assumed that was something here,” said Rahija. “I think it’s going to be tough [entering the workforce] because I’m almost embarrassed to admit it, but I’m not really educated on my employee rights.” 

Under Iceland law, companies must pay employees in jobs that require a similar amount of work the same wages regardless of gender, or face daily fines. All companies with more than 25 employees must apply for an equal pay certificate or equal pay confirmation. Equal pay confirmations require the company to submit documents showing the government its current equal pay systems. An equal pay certificate is a more rigorous process that requires employers to submit documents showing their employees are equally paid, which the government then audits.

Companies can use the certificates to attract new talent.

But companies that don’t meet the pay equity standards are given a date to comply and could face fines of nearly $500 (CAD) a day if they don’t.

The law in Iceland is not the only cause of their declining wage gap, although it has been steadily decreasing since 2008, according to Statistics Iceland.

Iceland has also taken steps to help women in the workforce as well, said Sigríður Hrund Pétursdóttir, the chairwoman of the FKA (Association of Women in Business).

Pétursdóttir said that subsidized daycare is available in Iceland, which helps mothers go back to work or school after having a baby. She also said that Iceland has equal maternal and paternal leave, where each parent can take up to six months off. 

“The longer you stay taking care of your kid, the less chance there is of you moving up the corporate ladder,” says Pétursdóttir.

The FKA has a project called equality scale where they award businesses that promote equality based on the diversity of management teams and board roles. Businesses can use the award to make their business look more appealing to job seekers and business partners. Pétursdóttir said the government has supported it for four or five years.

“We are lucky in Iceland to have a government that supports equality in full force and uses diverse methods to get there,” said Pétursdóttir.

One year after pay equity laws were made mandatory for large companies, Iceland’s pay gap decreased, according to Statistics Iceland. In 2010 the adjusted pay gap sat at six per cent and almost a decade later in 2019 was at four per cent, meaning a woman in Iceland would make .96 cents for every dollar a man makes.

Pay equity in Canada

In Canada, pay equity legislation is generally left to each province and territory to decide.

Ontario has pay equity legislation although it’s not like Iceland’s. The Pay Equity Office of Ontario website says some provinces like Ontario have provincial laws where employers can deem some jobs women or men-dominated. This means that men could be paid more than women for doing a similar job, provided that their field is dominated by men. Some provinces like Alberta don’t have any gender-based pay discrimination laws provincially.

“Labour standards are largely provincial and that’s been the challenge. You have one jurisdiction taking a step forward and another one behind,” said Katherine Scott, a senior economist at the Canadian Centre for Policy Alternatives. 

The federal government’s current legislation states that employers can’t discriminate against employees based on gender. But the federal government’s system is also complaint based. 

Schirle said people who find out they aren’t being paid equal wages for equal work struggle to do anything about it. To do something they’d have to take legal action and many don’t have enough money to consider that option.

Scott said the federal government “set the bar” when their new pay equity legislation was passed. The legislation covers private and public sector federally regulated employees. The legislation states that it should be the job of a federally regulated employer with 10 or more employees to ensure that those in female-dominated and male-dominated job classes need to be paid the same for doing similar work. But the law only applies to federally regulated workers.

“If labour standards are improved for the federally regulated workers the hope is that pressure builds for provinces to come on board,” said Scott.

One of the reasons private-sector employers get away with paying different groups of workers different salaries is because salaries are considered private information, said Scott. So, to combat this, some countries require large companies to have pay transparency, where employers must state how much different jobs pay. Belgium, for example, has pay transparency laws alongside one of the lowest pay gaps in the European Union at 5.3 per cent.