Update: Gender equality

Regulatory developments promoting gender balance

Christina Yap
People & Organisation, PwC Zurich

Johannes Smits
People & Organisation, PwC Geneva

2019 marks a turning point for companies in Switzerland to take gender equality seriously. The Swiss government is focusing its efforts on driving sustainable change through revised gender pay legislation and gender quotas for boards. These initiatives stem from the Swiss Federal Council’s intention to implement Sustainable Development Goal #5: “Achieve gender equality” as part of its commitment to the 2030 Agenda.

Board quotas

In June this year, the Swiss parliament approved the introduction of quotas in listed companies, requiring a minimum number of women to be on boards within the next 5-10 years:

Position Min % women Period (years)
Executive board 20 10
Board of directors 30 5

The implementation date is not known yet, since a referendum could take place if 50,000 valid signatures are collected. Currently, there are no sanctions for failure to comply. Rather, a “comply or explain” approach requires non-compliant companies to explain how they plan to meet the quotas.

According to “The CS Gender 3000: Women in Senior Management” report published by Credit Suisse (2014), greater diversity in boards and management is linked to higher returns on equity (ROE), higher premium price to book value (P/BV) and higher dividend payouts over time. Empirical evidence simply shows that having diversity on boards is good for business.

However, care needs to be taken to ensure that companies do not fall into the trap of “tokenism”, i.e. of appointing women merely to tick the box. Rather, they should see this as an opportunity to refine their management structures and build a sustainable talent pipeline with appropriate workplace structures and policies. To do this, employers will need to start adapting their mindsets and any unconscious bias to achieve change. Companies need to become more open to consider – and promote – female candidates with relevant transferable skills and competencies, beyond the few who have prior board experience.

Mandatory wage analysis

This August, the Federal Council announced amendments to reinforce equal pay laws. The new rules apply to organisations with 100 employees or more.

Employers’ triple obligations are shown in the timeline below.

Timeline showing employers’ triple obligations under the revised laws
Timeline showing employers’ triple obligations under the revised laws

* Based on salary reference month between July 2020 and June 2021.            

Employers are required to conduct an internal salary analysis every four years, from 1 July 2020 to 1 July 2032. This becomes a one-off exercise if the first analysis does not reveal any unexplainable gaps between males and females.

The government accepts the use of the LOGIB tool to conduct the analysis. Other scientific methods can be used if they are legally compliant.

Again, whilst there are no sanctions for non-compliance, companies risk attracting adverse publicity for failing to do so. Those which are insufficiently prepared for the new disclosure requirements will have to provide an explanation.

Employers wanting to maximise the chances of reducing pay disparities are advised to conduct an analysis now to identify any cases that need addressing before the disclosure requirements kick in next July. This will give them time to consider how to handle any unexplainable gaps as well as plan and budget for improvements ahead of the annual compensation cycle.

Paving the way for gender equality

Not only are unconscious bias, unequal pay and ineffective workplace structures and policies key blocks to gender parity. They prevent companies from getting ahead of the fierce competition to recruit current – and future – talent.

Inclusion & Diversity (I&D) initiatives can do much to help shift the status quo to drive meaningful changes in attitude, behaviour and action. Companies (such as PwC) are jumping on the “EQUAL-SALARY certified” bandwagon to receive external endorsement of their commitment to equal pay and opportunities. In addition to the enhanced brand publicity that comes with receiving an “EQUAL-SALARY” award, companies will gain valuable insights into how to plan and prioritise key areas for continuous improvement.

In a nutshell

Given the pace of change, employers can no longer afford to ignore the call for gender equality. Companies need to start taking action now. Get in touch with us if you are interested in discussing how we can help you plan for the changes.

 

Contact us

Christina Yap

Senior Manager, People and Organisation, PwC Switzerland

Tel: +41 58 792 90 29

Johannes (Joop) Smits

Director, People and Organisation, PwC Switzerland

Tel: +41 58 792 91 64