Gender pay equality – the new social and business trend?

Johannes (Joop) Smits Director, People and Organisation, PwC Switzerland 30 May 2018

217 years - That’s how long the World Economic Forum estimates it will take to close the global gender gap («The Global Gender Gap Report 2017»). Shareholders are beginning to ask questions at AGMs about a company’s stance on gender pay. With the gender pay gap being under greater scrutiny than ever before, this begs the question: «What are governments doing about it?»

PwC is proud to launch the Global Gender Pay Compass, an interactive tool providing an overview of the regulatory status and trends on gender pay in 69 countries around the world on this important topic.

Most countries we surveyed already have some form of anti-discrimination or equality law in place, notably based on ‘equal pay for equal work’ or ‘equal pay for work of equal value’ principles. An increasing number of countries have already introduced additional legislation to bring further gender pay equity into the workplace (e.g. Iceland, UK, Germany, Peru and the United Arab Emirates) or are planning to do so (Argentina, France, Japan and Switzerland).

An important observation is that a precise definition of the gender pay gap is often missing or simplified by comparing average pay of women and men (e.g. UK). The latter highlights the fact that women are generally underrepresented in (better-paid) senior and management positions (i.e. the gender balance issue), but does not address whether women are getting paid equal to men for the same role and responsibilities.

Our research revealed five key emerging measures being used or proposed by governments to promote gender pay equality:

5 key emerging measures

1. External certification

Iceland sets the gold standard, obliging companies with over 25 employees to obtain a certificate of equal pay every three years, based on an external independent assessment.

The Dutch government is considering following Iceland’s lead in requiring external certification.

2. Reporting requirements

 

Pay transparency is the buzzword. Gender pay reporting requirements came into force in Germany and the UK last year. Significant pay gaps disclosed since then have provoked much public reaction, spurring company CEOs to prioritise addressing the issue.

The Irish government is now looking to follow the UK’s approach to reporting on gender pay differences.

3. Penalties for non-compliance

 

A number of countries have underpinned their gender equality laws with financial penalties for non-compliance (e.g. Cyprus, Kosovo, Morocco, Serbia, Spain). In the Dutch government’s proposals for external certification, fines for non-compliance could be significant.
4. Employer action plan We see a growing trend in some countries giving the employer the opportunity to draw up an action plan (Belgium, Germany, Ontario in Canada, Serbia, Spain, Sweden) or code of conduct (Argentina) to address the gender pay issue internally.
5. Other measures to regulate pay equity At the same time, governments are also open to a range of creative measures to promote pay equity, from prohibiting discrimination through nationally applicable collective bargaining agreement (Belgium), prohibiting discussions about new joiners’ salary history (US state of Massachussetts), considering making it easier for employees to bring an equal pay claim (New Zealand), or following the lead of other countries (e.g. Ireland, Netherlands).

Overall, we are witnessing the start of an era of change and greater willingness to address gender pay inequity at a more meaningful level. The heightened focus on gender pay promises to bring impactful change to close the gap and we may not have to wait 200+ years for this to happen.

What does this mean for your organisation?

Whether or not your organisation is – or may – be impacted by regulatory changes, the question of «Are you paying your male and female employees equally?» is likely to be a future recurring question. Further, if you operate in multiple territories, you may face additional complexities of compliance with different regulations.

You can proactively address the gender pay gap now as a matter of good corporate governance, enhance your employer brand, public perception and ultimately, your bottom line.

Summary
  • A precise definition of the gender pay gap is often missing or simplified by comparing average pay of women and men.
  • PwC's Global Gender Pay Compass provides an overview of the regulatory status and trends on gender pay in 69 countries around the world on this important topic.
  • Our research revealed five key emerging measures being used or proposed by governments to promote gender pay equality.

 

Contact

Johannes (Joop) Smits

Director, People and Organisation, Geneva, PwC Switzerland

+41 58 792 91 64

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