Rose Khattar
Pay Transparency Tools to Close the Gender Wage Gap
Gender Equality at Work
5. Equal pay in collective bargaining
Abstract
Workers’ representatives play an important role in the design, implementation and application of pay transparency policies to promote equal pay. Collective bargaining processes can help introduce and monitor gender-neutral job classification or evaluation schemes; workers’ representatives are often integral in the analysis, dissemination, and communication of the results of employer pay gap reporting and equal pay audits; and worker representatives can also help individual workers advocate for better pay when pay inequity is discovered. Yet only a limited number of OECD countries direct or encourage social partners to discuss equal pay considerations during collective bargaining processes.
Key findings
Most OECD countries do not have regulations to ensure equal pay is discussed during collective bargaining. Many countries point to the autonomy of social partners and lack of issue awareness as barriers to enforcing equal pay discussions between social partners.
Austria, Belgium, Canada, Chile, Costa Rica, France, Germany, Spain and Sweden report that they attempt to ensure the inclusion of equal pay in collective bargaining processes in the private and/or public sector. This could include, for example, the introduction of gender-neutral job classifications or gender equality action plans within collective agreements.
In a few countries, the obligation to discuss equal pay in collective bargaining is enforceable through a “name and shame” list or financial penalties. However, in most countries social partners have autonomy to determine whether equal pay considerations are actually included in collective agreements.
The extent to which trade unions and collective bargaining can impact the gender pay gap will depend upon the prevalence of collective bargaining in a particular context (i.e. the share of workers covered by collective bargaining), what is negotiated in collective bargaining, the level of collective bargaining (such as company or sector level), the degree of co‑ordination between social partners, the way workplace democracy takes place, and the political environment for tripartite social dialogue. In countries where collective bargaining processes are common and coverage is high, social partners can play a tangible role in closing the gender pay gap.
Some OECD countries have pursued obligations or incentives that attempt to elevate the issue of equal pay as part of collective bargaining processes. This mirrors, in part, the European Commission’s 2014 Recommendation on pay transparency: “Without prejudice to the autonomy of social partners and in accordance with national law and practice, Member States should ensure that the issue of equal pay, including pay audits, is discussed at the appropriate level of collective bargaining” (European Commission (2014/124/EU), 2014[1]).
5.1. How can collective bargaining promote equal pay between women and men?
In the remit of pay transparency, unions and worker representatives play an important role in the design, implementation and application of pay transparency. Collective bargaining processes can help introduce and monitor gender-neutral job classification or evaluation schemes, which effectively assign different levels of pay to different roles or job classes and, ideally, attempt to correct for the historic undervaluation of female‑dominated jobs (Chapter 2). Collective bargaining is also integral, in many countries, in the analysis, dissemination, and communication of the results of employer pay reporting (Chapter 3) and equal pay audits (Chapter 4). Worker representatives can also help individual workers advocate for better pay when pay inequity is discovered through reporting or through the identification of a relevant pay comparator (Chapter 1).
Looking at a broader set of tools to close the gender wage gap, unions can use collective bargaining to introduce targeted raises to compensate for the concentration of women in low-paid jobs, such as the “5 Cs”: cleaning, catering, cashiering, caring and clerical work. Collective action can also help ensure gender-neutral evaluation criteria for career progression (such as specific conditions for women returning from maternity leave, to compensate for career and wage progression breaks) and can reduce the gender gap in discretionary pay. For example, a common criterion in performance‑related pay is work attendance. Given that women do more unpaid work than men, on average, and consequently spend less time in paid work, women often score more poorly on performance‑based pay measures that rely on work attendance. Collective agreements can include provisions for equality audits of this type of discretionary pay (OECD, 2020[2]).
While it is obviously difficult to measure agency and voice in cross-national perspective, it is worth raising the question of who negotiates for whom – and for what – in collective agreements. OECD research has found that women make up slightly less than half of union members, and that a smaller share of women than men are members of a union, on average across the OECD (OECD, 2019[3]). The same analysis finds no evidence cross-nationally that collective bargaining compresses the gender pay gap on average, and that the premium associated with firm-level bargaining is on average slightly larger for men than for women (OECD, 2019[3]). Governments’ mandating or incentivizing unions to ensure pay equity across genders therefore seems especially valuable.
5.2. Only nine OECD countries promote equal pay considerations in collective bargaining
Relatively few countries attempt to ensure that social partners consider the gender wage gap during collective bargaining negotiations. In total, nine of the 38 OECD countries report binding or non-binding measures that seek to ensure that equal pay is discussed during collective bargaining in the public and/or private sector.
Eight countries (Belgium, Canada, Chile, Costa Rica,1 France, Germany, Spain and Sweden) pursue this in the private sector and six countries (Austria, Canada, Chile, Costa Rica, France, Germany and Sweden) similarly do this in the public sector.
There is high variation across countries in terms of the nature of the obligation and level of collective bargaining, which can take place at national, regional, sectoral, occupational or firm level (OECD, 2019[3]) In Belgium and Germany, all levels are involved in collective bargaining on equal pay, whereas in Sweden the obligation is most often found at the company level. In France, the sector and company level are targeted by legal obligations, whereas in Chile it depends upon the terms of the collective agreement.
Belgium, France and Germany take relatively direct approaches to ensure equal pay is considered in collective agreements. Each country has measures in place to enforce this obligation. In Belgium, if a job classification is not gender neutral within a collective agreement, the agreement is included on a public “name and shame” list. In France, employers with at least 50 employees may face financial penalties if they do not uphold the law. In Germany, if a court finds that a clause in a collective agreement is discriminatory, it will declare this clause invalid.
Other countries take a less direct approach. In Sweden, Spain and Chile, ensuring equal pay is discussed during collective bargaining is not binding. Social partners retain considerable autonomy. For countries with high union coverage and a strong union role in collective agreements, such as Sweden,2 a lack of enforceability may not necessarily limit effectiveness.
Belgium, France and Germany illustrate three different ways collective agreements can work to include and advance gender equality.
5.2.1. Belgium
In Belgium, social partners play an important role in setting wages. In 2012, Belgium introduced the Equal Pay Act3 to ensure that the pay gap becomes a permanent theme in social dialogue at all levels of negotiation.
Working at the intersectoral level, the Central Economic Council issues an annual technical report that includes information on the evolution of the gender pay gap.4 This report serves the basis of negotiations for intersectoral agreements that takes place every two years. Intersectoral agreements must include measures to combat the gender pay gap, including gender-neutral job classifications (Chapter 2).
At the sectoral level, collective labour agreements also include measures to address the gender pay gap, including gender-neutral job classifications. Accordingly, existing and future sectoral job classifications must be gender neutral. The Federal Public Service Employment, Labour and Social Dialogue checks that sectoral classifications are gender neutral and does so in collaboration with experts (Chapter 2).
Considering that nearly 50% of employees in Belgium are members of a union – a relatively high coverage rate (Figure 5.1) – Belgium’s efforts to ensure equal pay considerations in collective agreements have the potential to reach a large share of dependent workers. However, the government notes that reducing administrative constraints and changing social norms could improve the effectiveness of these obligations.
5.2.2. France
In French companies with unions, worker representatives and employers engage every year5 in a negotiation on equality between women and men. This focuses in particular on measures aimed at eliminating pay gaps and improving quality of life at work.6 The agreement reached at the end of this negotiation, or, failing that, the action plan drawn up unilaterally by the employer, must contain progress objectives, actions to achieve them, and quantified indicators in three or four areas of action depending on whether the company has fewer or more than 300 employees, including remuneration. Financial penalties apply for employers with at least 50 employees. Additional negotiations on gender gaps must take place at the sectoral level.
Independent of bargaining agreements, worker representatives play an important role in France’s recently implemented equal pay auditing system, l’index de l’égalité professionnelle entre les femmes et les hommes (PEI, detailed in Chapter 4). Every year, by 1 March, companies with at least 50 employees must publish the results of their extensive gender equality audit on their website in a visible and legible manner. Employers must also communicate results to their workers’ elected social and economic committee and to the French Ministry of Labour, Employment and Inclusion.
5.2.3. Germany
Section 6 of Germany’s 2017 Transparency in Wage Structures Act7 calls upon parties to collective agreements and employees or worker representatives to collaborate in achieving the goal of equal pay for equal work or work of equal value between women and men. In Germany, those bound by collective agreements have to pay at least the wages that are laid down in the collective agreement. However, they are able to pay wages above if a higher wage is agreed in an employment contract. Further, collective bargaining parties are also bound by anti-discrimination law. If a court finds that a clause in a collective agreement is discriminatory, it will declare this clause as being invalid.
Social partners have also initiated action to further pay transparency as part of collective agreements. For example, in 2016, Nahrung-Genuss-Gaststätten (NSG), the Food, Beverages and Catering Union, started an ongoing initiative to support the equal pay principle in their collective wage agreements. NSG systematically reviewed 3 500 collective wage agreements to ensure compliance with equal pay principles and to identify any discriminatory practices.
Box 5.1. Fewer than one in five employees in the OECD belongs to a union
The extent to which collective bargaining can help to close the gender pay gap depends in part upon how many workers are covered by such agreements. Over time, there has been a considerable decline in collective bargaining coverage in most OECD countries. The share of employees covered by collective agreements in the OECD has decreased, on average, from 45% in 1985 to 32% in 2017 (OECD, 2019[3]).
This is linked in part to the observed decline in trade union membership. By 2018, 16% of employees, on average across the OECD, were union members. There are considerable differences in coverage across OECD countries, with Iceland reporting that over 90% of employees are part of a trade union, compared to at or below 10% in Estonia, Lithuania, Hungary, Colombia and Turkey (Figure 5.1). Women are slightly less likely to be part of a union than men, and women make up less than half of union membership, on average across countries – though the differences are small (OECD, 2019[3]).
Figure 5.1. Trade union density across the OECD
Note: Trade union density is defined as the share of workers who are union members. Data refer to 2020 for Canada, Iceland, Ireland, Mexico and the United States; data refer to 2019 for Lithuania, Turkey, Spain, the Netherlands, Germany, Japan, the United Kingdom, Austria, Luxembourg, Italy, Belgium, Norway, Finland, Sweden, Denmark and Estonia; data refer to 2017 for Hungary, the Slovak Republic, the Czech Republic, Korea, Latvia, Australia, Switzerland, Chile, New Zealand; data refer to 2017 for Colombia Poland, Israel; data refer to 2016 for France, Portugal, Greece; data refer to 2015 for Slovenia.
Source: OECD/AIAS ICTWSS Database: https://www.oecd.org/employment/ictwss-database.htm.
The fall in union membership and coverage has many drivers that vary by country. Nevertheless, the global decline in coverage is broadly linked to a weakening of labour relations, new forms of employment, and a move towards individual-based employment relationships (OECD, 2019[3]).
Higher trade union membership and coverage could help give individuals who have access to pay information more avenues to raise concerns. Despite unions’ decline, collective bargaining has the potential to play a valuable role in closing the gender pay gap if voices for gender equality are heard. Efforts led by trade unions are detailed in Box 5.2, and efforts by employers in Box 5.3.
The Transparency in Wage Structures Act Section 13, which focuses on individual procedures to verify equal pay, also involves works councils. Section 13 prescribes that employees working for employers bound by and applying collective wage agreements shall approach their works council when requesting their individual entitlement to disclosure. According to Section 13, “The employer shall grant the works committee access to the payroll showing employees’ gross wages and salaries and break these down. The payrolls must be broken down by gender and must contain all remuneration components, including extra benefits not contained in the collective wage agreement and such payments as are individually negotiated and disbursed.” Section 13 does not establish completely new duties, but is part of the framework of the duties of works councils according to the Works Constitution Act.
5.2.4. New and forthcoming measures
Canada’s Pay Equity Act came into force on 31 August 2021. Section 95 of the Pay Equity Act ensures that pay equity increases paid under the Act are automatically incorporated into existing collective agreements to ensure that pay equity is maintained through the collective bargaining process. This applies to both public and private federally regulated workplaces with ten or more employees.
Poland, Italy and the Netherlands may have upcoming measures depending upon whether the EU proposal for a Directive of the European Parliament and of the Council on strengthening the principle of equal pay between men and women through transparency is accepted.
5.3. Evaluating the effectiveness of equal pay considerations in collective bargaining
No country that mandates or encourages these measures reports that the introduction of equal pay principles during collective bargaining is ineffective. France and Austria report that their legal obligations are operating in a very effective manner, though France notes that they face data collection and incompleteness issues and Austria reports social norms are a continued obstacle to closing gender pay gaps. Similarly, Belgium notes that administrative constraints and social norms limit effectiveness of mandating equal pay discussions in collective agreements.
Spain and Sweden report that their measures are also working fairly effectively even though social partners are not mandated to include pay equality measures in collective agreements. Sweden reports that with high union membership a self-regulated social partnership model is effective.
5.4. Many countries report that gender pay discussions are common amongst social partners
Many countries do not explicitly promote the discussion of the gender pay gap in collective bargaining, but they either have supporting measures or report that pay equity is commonly covered in collective bargaining.
In some countries, such as the United States and Italy, the government does not play a role in mandating any specific topics for negotiation between parties. The United States, for instance, requires that parties in a voluntary recognised or National Labour Relations Board collective bargaining relationship bargain in good faith about matters pertaining to wages and other terms and conditions of employment – but these regulations do not explicitly include gender considerations. However the United States points to other mechanisms, such as the regular publication of gender-disaggregated median wages by union or non-union work status,8 as tools to help ensure that equality principles are maintained within collective agreements.
In many countries, including (but not limited to) Poland, Turkey and Ireland, collective bargaining cannot contravene existing laws, including equal pay or anti-discrimination laws.
Sometimes equal pay is prioritised by social partners without government involvement. Norway, Iceland and Japan report that many social partners themselves continue to elevate equal pay principles, gender-neutral job evaluations and pay audits without it being mandated by the government. Unions, government and the business sector may also come together in a tripartite manner to discuss equal pay principles and work to close the gender pay gap, as is reported by Austria, Colombia, Finland, and Norway.
Box 5.2. Social partners play a key role beyond mandatory laws around collective bargaining
Unions have played an important role in prioritizing and promoting gender equality in pay, and not only through collective bargaining agreements.
Legislating for equal pay
Trade unions, through dialogue and representation, have advocated for the introduction of legislation for greater pay transparency. For instance, the New Zealand Council of Trade Unions (NZCTU) played a crucial role in the consideration of the novel Equal Pay Amendment Bill (Chapter 2). They launched an open letter to the Prime Minister to take urgent action to support the new equal pay law. Similarly, in Quebec, trade unions and women’s groups have long worked together as part of the Quebec Coalition for Pay Equity to co‑ordinate and advocate for pay equity since their successful efforts to pass the 1996 Pay Equity Act.
Participating in company pay reporting processes and wage gap calculations
Unions also play an important role in helping to address the gender wage gap through their role in national pay transparency policies. When employers are obligated to report gender-disaggregated pay statistics (detailed in Chapters 3 and 4 of this report), work councils and unions very often play an essential role in communicating results to employees and in the design of follow-up action plans.
Unions also have created tools for the private and public sector to identify and analyse their gender pay gaps. In Japan, during annual wage negotiations, unions create a wage plot to understand and analyse wages by gender in an effort to continuously work to improve and reduce gender disparities. Similarly, in Sweden, the Union of Civil Servants provides methodological support to analyse salaries in the public sector in order to facilitate efforts to reduce gender pay differences.
Increasing awareness of the gender pay gap
Social partners have taken steps to increase awareness around the gender pay gap, including through public-wide communication campaigns. As COVID‑19 made visible and exacerbated existing gender inequities in the paid labour market and the provision of unpaid at-home care work, many unions across the OECD published reports, blogs and opinion pieces. This was in an effort to raise awareness and highlight how governments and employers can work to make changes. For instance, Britain’s Trade Union Congress released multiple reports, particularly noting the impact of COVID‑19 on working mothers1 and its intersection with structural racism2 in an effort to call on the government to act.
Supporting legal claims for equal pay
Unions can take action in legal proceedings on behalf of employees. This is an important role given the enormous time and energy cost that legal action requires from an individual. In Australia (see Chapter 2, Box 2.2), Sweden, and New Zealand, for instance, trade unions have pursued disputes about wage discrimination and have had matters tried by courts or relevant commissions.
1. Available at: https://www.tuc.org.uk/workingparents.
2. Available at: https://www.tuc.org.uk/research-analysis/reports/bme-women-and-work.
The remaining OECD countries that participated in the OECD GPTQ report that they do not have measures in place and do not anticipate any upcoming measures to promote equal pay discussions in collective bargaining. Issue awareness, privacy and data legislation, competing priorities, and the autonomy of social partners has prevented it from being introduced in a range of countries.
Box 5.3. Employers have taken steps to close the gender pay gap
Across the OECD, many employers in the private sector have gone beyond legal requirements to ensure pay levels and the gender pay gap within their firm are transparent. These are usually aimed at raising awareness of, and working to close, the gender pay gap.
Some employers take the lead in assessing gender pay gaps
In New Zealand there is no legal requirement obliging companies to publish their gender pay gap or conduct pay audits. Nevertheless, New Zealand reports that some private employers do so. A 2019 survey by New Zealand’s Employers and Manufacturers’ Association found that nearly half (45%) of respondents had conducted a pay audit with 11% reporting the need to make minor corrections to pay. Westpac Bank in New Zealand, too, has conducted research into and published a report on its gender pay gap.9 This report was made public and investigated whether women and men were paid the same for doing the same work, as well as issues such as horizontal and vertical segregation.
Government certification of private sector gender equality plans
Some countries have voluntary, government-led certification programmes in place that support the private sector to promote gender equality in places of work. Costa Rica’s National Women’s Institute (Instituto Nacional de las Mujeres (INAMU) offers a “gender equality seal” (Sello de Igualdad de Género) for private sector organisations that implements a well-defined and targeted gender equality strategy. The process of obtaining certification requires the commitment of senior management; the planning and implementation of the diagnosis of gender gaps, a dedicated gender equality policy and its action plan; the design of an action plan addressing staff management, holistic health, social co-responsibility for care, and the working environment; and plans for an external audit.
While private sector-initiated gender equity initiatives are welcomed, these initiatives remain voluntary and not enforceable. This makes it hard to assess how widespread such initiatives are and difficult for governments to track or measure their impact. Due to a lack of government intervention, some companies will have wage policies that are quite transparent, but some will not. The issue, then, is that this can lead to inequitable outcomes in which some employees are able to access information needed to know whether a gender pay gap exists, while others will not.
References
[1] European Commission (2014/124/EU) (2014), 2014/124/EU: Commission Recommendation of 7 March 2014 on strengthening the principle of equal pay between men and women through transparency, https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=celex%3A32014H0124 (accessed on 21 May 2021).
[2] OECD (2020), Can collective bargaining help close the gender wage gap for women in non-standard jobs?, OECD, Paris.
[3] OECD (2019), “Collective bargaining systems and workers’ voice arrangements in OECD countries”, in Negotiating Our Way Up: Collective Bargaining in a Changing World of Work, OECD Publishing, Paris, https://dx.doi.org/10.1787/a6ebacb7-en.
Annex 5.A. Policy table: Efforts to include equal pay in collective bargaining
Annex Table 5.1. Policy table: Attempts to include equal pay considerations in collective bargaining
Note: Table presents countries that, either in the private and/or public sector, require or encourage equal pay obligations in collective bargaining in the private and/or public sector. Costa Rica self-identified in GPTQ 2021 as having such a measure but did not provide policy details.
Source: OECD GPTQ 2021 (see Annex A).
Notes
← 1. Costa Rica self-identified in the OECD GPTQ (2021) as having legal obligations or other measures (such as incentives) introduced to ensure that the issue of equal pay, including pay audits, is part of the collective bargaining process in the public and private sectors, but did not provide legislative or policy details.
← 2. Sweden reports in the OECD GPTQ (2021) that about 90% of workers are protected by collective agreements and about 70% of all workers in Sweden are affiliated to a trade union.
← 4. For more information, see https://emploi.belgique.be/fr/themes/egalite-et-non-discrimination/egalite-femmes-hommes-lecart-salarial or https://werk.belgie.be/nl/themas/gelijkheid-en-non-discriminatie/gelijkheid-vrouwen-mannen-de-loonkloof.
← 5. Alternatively this can take place at least once every four years, if a collective agreement on the timing of mandatory negotiations is reached.
← 6. For more information, see https://travail-emploi.gouv.fr/dialogue-social/negociation-collective/article/la-negociation-collective-en-entreprise-en-faveur-de-l-egalite-professionnelle (in French).
← 7. Available at: https://www.gesetze-im-internet.de/englisch_entgtranspg/englisch_entgtranspg.html.
← 8. A 2020 publication of Bureau of Labour Statistics analysis of gender-disaggregated earnings by union work status is available at: https://www.bls.gov/opub/ted/2020/nonunion-workers-had-weekly-earnings-81-percent-of-union-members-in-2019.htm.