When conducting equal pay audits, employers are required to collect and analyse highly detailed statistical information on pay and workforce characteristics across different categories of employees and to try to establish the factors driving the gender pay gaps that have been found. For instance, gender pay differences may be assessed not only across jobs that are equal, but also across jobs considered of equal value. Often employers are required to carry out follow-up actions to address the gaps that have been found.
Reporting Gender Pay Gaps in OECD Countries
4. Equal pay audits: A more intensive pay transparency tool
Abstract
Key findings
Equal pay audit regimes, which primarily target the private sector in ten OECD countries, impose more comprehensive requirements than simple pay reporting. These audits typically involve analysing the gender composition across employee categories or positions, evaluating the job classification systems in use (if any), and collecting detailed information on gender-based pay differentials for various positions. It is common for audits to require subsequent measures to address identified gaps, i.e. follow-up action. Equal pay audits are comparable to what is now called “joint pay assessments” in EU legislation.
Among these countries with equal pay audit systems, most mandate the analysis of equal pay for work of equal value during the auditing process. Approximately half explicitly require the use of gender-neutral job classification systems or regulate the assessment of potential gender discriminatory factors.
Follow-up action can be required from all relevant employers regardless of the audit results, or specifically from those employers where analysis reveals gender-based remuneration differences. These follow-ups are sometimes referred to as gender equality “action plans”. They typically involve an initial assessment of the situation (essentially what is required as part of pay gap reporting), a justification of any differences found, and/or a discussions and implementation of active measures to address disparities.
Policy takeaway: Governments should strongly consider implementing equal pay auditing processes in tandem with pay gap reporting. Equal pay audits delve deeper into the gaps, attempting to identify the underlying causes, and recommending targeted action to try to address inequalities.
4.1. What are equal pay audits?
Straightforward, headline statistics can be a simple and catchy tool for comparing employers’ performance on equal pay. However, it is equally important to understand the process of producing gender-disaggregated pay statistics. Depending on the statistical tools used, gender pay gap estimates can sometimes obscure actual pay differences (see Box 4.5). Gender pay gaps can also be influenced by what different components go into these estimates. Ideally, the self-reflection required by employers to fix their own wage inequalities would be encouraged by pay reporting regimes (Cowper-Coles et al., 2021[1]). Yet the simple act of reporting pay gaps often does not go far enough in closing them.
In this way, equal pay audits are a valuable pay transparency tool that goes beyond mere pay reporting (defined in Box 4.1). They offer a means to analyse broader gender inequalities within a firm and attempt to explain their underlying causes. Typically, equal pay audits involve analysing the representation of women and men in different positions, assessing the job evaluation and classification system used, and gathering detailed information on pay and gender pay differentials. An effective pay audit should not only analyse any identified gender pay gaps but also strive to understand the reasons behind these gaps, facilitating the development of targeted actions for achieving equal pay.
Nearly half of the OECD countries with private sector pay reporting rules in place have embedded reporting within equal pay auditing processes (Canada, Finland, France, Iceland, Ireland, Norway, Portugal, Spain, Sweden, and Switzerland). The specific processes required by each country are summarised in Table 4.1, with further details provided in the subsections that follow.
In general, countries with pay auditing systems tend to have more comprehensive monitoring methods to ensure compliance, often involving dedicated government entities such as the labour inspectorate, gender equality agency, or ombudsman (as discussed in Chapter 6). Some countries also involve independent bodies in equal pay audits. For instance, certified auditors conduct external inspection of the systems in Iceland and Switzerland.1 In other countries, regulation mandates that the analysis should be done in co‑operation with employees and their representatives (Finland, Norway, and Sweden).
Equal pay audits are often designed with diverse follow-up mechanisms (as detailed in Subsection 4.2.1 and Table 4.2). Some mechanisms are automatically triggered irrespective of gender gap outcomes, while others are activated specifically in cases where gender inequalities are observed.
Occasionally, audits are used as voluntary alternatives to pay reporting (as seen in Denmark), as penalties for non-compliance or breaches of equal pay provisions (as in Italy and the United Kingdom) or are not applied broadly (see Box 4.4). Additionally, in certain countries non-pay reporting rules entail company auditing procedures (as explained in Box 3.8. within Chapter 3).
Box 4.1. Key terms and definitions in this chapter
Equal pay for work of equal value implies that women and men should get equal pay if they do identical or similar jobs, and that they should also earn equal pay if they do completely different work that can be shown to be of equal value when based on “objective” criteria. These objective criteria tend to encompass job-related characteristics such as skills, effort, levels of responsibility, working conditions and qualifications. Many countries have attempted to clarify the use of the concept of “work of equal value” in national legislation.
An equal pay audit is a process conducted by an employer or external auditor that should include an analysis of the proportion of women and men in different positions, an analysis of the job evaluation and classification system used, and detailed information on pay and pay differentials on the basis of gender. An equal pay audit is more intensive than simple pay reporting. A pay audit should make an effort to analyse any gender pay gaps found, should attempt to identify the reasons behind these gaps, and could be used to help develop targeted actions on equal pay.
Horizontal segregation refers to the concentration of women and men in different sectors and occupations. For example, women are typically overrepresented in childcare and men are typically overrepresented in engineering.
Job classifications are related to job evaluation processes and commonly entail human resource personnel and/or social partners ranking each job within an organisation against objective criteria that relates to the required skills, effort, responsibilities, working conditions, education, and difficulty of a role, amongst other observable characteristics. Related to this, gender-neutral job classification systems refer to job classification systems that account for the gender predominance of a given job class and categorise work based on the same objective criteria for men and women (see Chapter 3).
The OECD Gender Pay Transparency Questionnaire 2022 (OECD GPTQ 2022, Annex 1) is the reference questionnaire for the policies presented and discussed in this report.
Pay reporting refers to policies mandating that employers regularly report (including to employees, workers’ representatives, social partners, a government body, and/or the public) gender pay gap statistics. Such statistics typically include the average or median remuneration of men and women at the company or workplace level but are often more detailed and include breakdowns by groupings such as job category.
Pay transparency is an umbrella term referring to policy measures that attempt to share pay information in an effort to address gender pay gaps. Such measures may include mandating pay reporting, equal pay auditing, job classification systems, and publishing pay information in job vacancies.
Vertical segregation refers to the concentration of women and men at different levels of an organisational hierarchy, e.g. at different grades, levels of responsibility or positions.
Table 4.1. Required content in equal pay audits
Summary of OECD countries’ requirements for equal pay audits in countries with mandatory auditing in the private sector and/or public sector, 2022.
Country |
Who is responsible and for what? |
What kind of analysis is included? |
(Y/N) Analysis of… |
||||
---|---|---|---|---|---|---|---|
Gender pay gaps for equal work |
Gender pay gaps for work of equal value |
Gender-neutral job classification systems |
(In)direct discriminatory criteria |
Statistical approach |
|||
Canada1 (PEA) |
Employer, or if relevant a pay equity committee, for conducting pay reporting and analysis of gaps. |
1. Create job classes by identifying and then grouping positions together; 2. Determine which jobs class is predominantly male, predominantly female or gender neutral; 3. Determine the value of work of each predominantly female or male job class; 4. Calculate the compensation of each predominantly female or male job class; and 5. Compare the compensation between predominantly female and male job classes doing work of equal or comparable value. |
N |
Y |
Y, The PEA requires that the method used to assess the value of work of predominantly male and female job classes not discriminate on the basis of gender. |
Y, The analysis must identify any job classes as predominantly female or male if it the work done by the job class is stereotypically gendered in addition to examining the gender composition of past and present employees within that job class. Additionally, when objectively assessing the required skills, effort, responsibilities, and working conditions done in a job class to determine the value of work for that job class, the method used must not discriminate on the basis of gender by re‑inscribing gender biases in the results (e.g. assigning a lower value of work for work traditionally done by women). |
Y, The PEA requires two methods be used to compare male and female job classes: the equal average method or the equal line method. The equal average compares the average compensation of a group of male job classes with a group of female job classes of comparable value. Pay equity is achieved when the averages are equal after the increases in compensation are applies. The equal line method compares job classes using regression lines for all the male and then all the female job classes. Pay equity is achieved when the regression lines overlap after the increases in compensation are applies. |
Finland |
Employer for pay reporting and analysis of gaps. The analysis is done in co‑operation with employee representatives. |
Analysis of reasons and grounds for differences in pay between women and men, i.e. of the central pay components of which wages consist. |
Y |
Y |
Y |
N |
N |
France |
Employer is responsible for calculating the Index and analysing. |
Analysis of information required to calculate the Index. |
Y |
N, the distribution of employees by job categories is not sufficiently detailed to allow for a comparison of salaries for equal work or work of equal value. |
Y, The job classification system must be gender neutral. |
N |
Y, The French Labour Inspectorate produces statistics on the Index. The French Directorate for research, studies and statistics (DARES), periodically carry out (or have carried out) further (statistical) analysis of Index data. |
Iceland |
Employer (general staff and/or gender experts) for pay reporting and analysis. |
Analysis of all information concerning wages of employees (including additional allowances, bonuses, pension rights etc.), job classifications and wage structure, etc. |
Y |
Y |
Y, The job classification system must be gender neutral. |
N |
Y |
Ireland |
No response |
No response |
No response |
No response |
No response |
No response |
No response |
Norway |
Employer (general staff) or board for pay reporting and analysis being conducted. Analysis must be done in co‑operation with union representatives or other worker representatives. |
Create job classes consisting of employees who do equal work and work of equal value. Map gender distribution and pay differences (women’s share in kroner and percentage) among all employees – in total and at different levels/groups. Give employees the opportunity to compare their salary with the average at their level. Investigate whether there is a risk of gender discrimination or other barriers to equality by reviewing pay conditions; analyse the causes of identified risks and numbers of gender imbalance; implement measures suited to counteract discrimination and promote greater equality and evaluate the results of efforts. |
Y |
Y, When defining work of equal value, an overall assessment should be made based on the competence necessary to carry out the work in the position, responsibilities attached to the position, and working conditions and effort, and possibly other relevant factors. |
N |
Y |
N |
Portugal |
Employer for pay reporting and evaluation plan. |
Evaluation plan for pay differences between men and women, through the evaluation of job components, based on objective criteria, in order to exclude any forms of gender discrimination.2 |
Y |
Y |
Y, The job classification system must be gender neutral. |
Y |
Y |
Spain |
Employer for pay reporting and analysis. |
Description of the systems and criteria for assessing jobs, tasks, functions, professional classification/categorisation. Analysing the possible existence of gender biases and direct and indirect discrimination between women and men. Aim is to detect remuneration inequalities, indicating their possible origin. In addition, the criteria on the basis of which the different wage concepts are established must be analysed and collected in the diagnosis. To this end, the diagnosis shall refer at least to the following matters: a) Selection and recruitment process. b) Professional classification. c) Training. d) Professional promotion. e) Working conditions, including the wage audit between women and men in accordance with the provisions of Royal Decree 902/2020, of 13 October, on equal pay for women and men. f) Co-responsible exercise of personal, family and working life rights. g) Under-representation of women. h) Remuneration. i) Prevention of sexual and gender-based harassment. |
N |
Y, Not part of pay audit itself, but of the special pay report or registry which is required to companies carrying out audits. |
Y, A correct job evaluation requires that the criteria of adequacy, totality and objectivity are applied (Article 4.4 Royal Decree 902/2020 of 13 October). The evaluation of factors must be considered objectively and must be necessarily and strictly be linked to the performance of the work. (Article 8.1.a Royal Decree 902/2020 of 13 October). In addition, job classification systems established either by collective agreement or company-level agreement must ensure non-discrimination by gender, both direct and indirect (Article 22.3 Workers’ Statute). To that end, collective agreements negotiating tables must ensure that professional groups or levels respect the criteria of adequacy, totality and objectivity and equal pay for work of equal value (Article 9 Royal Decree 902/2020 of 13 October). |
Y, Apart from the job evaluation, pay audits must include the analysis of the relevance of other factors triggering pay differences, as well as possible flaws or inequalities in the designing or use of work-life balance measures or difficulties in the professional promotion (Article 8.1.a.2º Royal Decree 902/2020 of 13 October). In general, pay audits must provide for the necessary information to check compliance with the principle of equal pay and are part of a broader diagnosis in the framework of the equality plan. |
N |
Sweden |
Employer (HR staff) for pay reporting and analysis of gaps, in co‑operation with employee representatives. |
Are pay differences directly or indirectly associated with gender, in particular for: 1. women and men performing work that is to be regarded as equal, 2. groups of employees performing work that is or is generally considered to be dominated by women and groups of employees performing work that is to be regarded as of equal value to such work but is not or is not generally considered to be dominated by women, and 3. groups of employees performing work that is or is generally considered to be dominated by women and groups of employees performing work that is not or is generally not considered to be dominated by women but that gives higher pay despite the requirements of the work being regarded as lesser. |
Y |
Y |
N |
Y |
N |
Switzerland |
Employer for pay reporting and analysis. An audit on the system is carried out by certified auditors, alternatively social partners or organisations promoting gender equality. |
The law does not specify what kind of analysis shall be conducted (the law only states that the method ought to be scientific and in accordance with the law). When the analysis is conducted with the Confederation’s standard analysis tool, it consists of a regression analysis where monthly gross wages are regressed on (i) years of education, (ii) potential work experience (including its square), (iii) years of service, (iv) competence level, (v) professional status, and (vi) a gender dummy. |
Y |
Y, The analysis with Confederation’s standard analysis tool is for gender pay gaps for work of equal value because of the controls in the regression analysis (in particular the competence level and the professional status). |
Y, Logib Module 2, the standard analysis tool Logib offers an equal pay analysis for small companies (with fewer than 100 employees, there is no legal obligation), which is based on the analytical job evaluation. |
Y, The free standard analysis tool of the federal government Logib (not mandatory) offers a variety of evaluations, tables, graphics, etc. to investigate possible direct and indirect discrimination. |
Y, The equal pay analysis shall be conducted according to a scientific method and in accordance with the law (Article 13c of the Swiss Federal Act on Gender Equality). However, there is no obligation to carry out the equal pay analysis using a specific statistical method. Statistical analysis is part of the standard analysis tool of the federal government Logib. |
Note: Table summarises requirements for equal pay audits in countries with mandatory auditing in the private sector and/or public sector. Pay reporting requirements are discussed in Chapter 3, Section 3.1 and pay analysis refers to the equal pay audits discussed in Section 4.1. Please refer to Table 2.1 for information on who relevant employers are.
1. Canada’s pay reporting regulation is two‑fold, pay gap reporting under the Employment Equity Act applies to federally regulated private‑sector employers with 100 or more employees. These employers submit annual reports to the Minister of Labour by 1 June of each year. Conversely, under the Pay Equity Act, federally regulated employers in both the private (10 employees or more) and public sectors (no employee threshold) are required to submit an annual statement on their pay equity plans to the Pay Equity Commissioner.
2. The minimum requirements for this plan can be found here: https://cite.gov.pt/documents/14333/297943/CITE+-+Guia+de+avalia%C3%A7%C3%A3o+de+diferen%C3%A7as+remunerat%C3%B3rias.pdf/2a55800d-328a-465f-ad63-12853d3da9d6.
Source: OECD Gender Pay Transparency Follow-Up Questionnaire (OECD GPTQ 2022, see Annex A).
4.1.1. What do governments require in firms’ equal pay audits?
Equal pay audit requirements can vary across different countries, with varying levels of detail and stringency. Some offer relatively explicit instructions: in Spain, for example, employers are obliged to provided descriptions of job classification and assessment systems, analyse potential direct and indirect gender discrimination between women and men, and aim to detect pay differences and identify their causes. French legislation, too, is comprehensive and detailed (see Box 4.2).
In other countries, such as some of the Nordics2 (as described in Box 4.3), the guidance is relatively more general. Equal pay audits must consider and investigate several potential barriers to gender equality, addressing both direct and indirect forms of gender discrimination. While the specific statistical information required for equal pay audits may be less precisely defined, and the legislation and enforcement somewhat less stringent compared to other countries – meaning that employers have considerable freedom when conducting pay audits – regulations in these countries nevertheless demand from employers an in-depth understanding of gender differences within their organisation. For instance, in Iceland and Finland, legislations call for an analysis of “all information concerning wages” or “of reasons and grounds for gender pay differences”, respectively.
In Norway, recent legislation (Box 4.3) helps to ensure that audits involve several key steps:
1. Job classes: Employers are required to create job classes that consist of employees who perform equal work or work of equal value. This helps to ensure a fair comparison of roles and responsibilities.
2. Gender distribution and pay differences: Employers must map the gender distribution across their organisation and analyse pay differences. This analysis includes determining the share of women’s pay in kroner (currency) and as a percentage, both overall and at different levels or groups within the organisation.
3. Salary comparisons: Employees are given the opportunity to compare their own salaries with the average salary at their respective level or position. This allows for transparency and helps identify potential disparities.
4. Investigation of gender discrimination risks: Employers are required to investigate whether there are any risks of gender discrimination or other barriers to equality within their pay conditions. This involves reviewing pay structures and analysing the causes of any identified risks and gender imbalances.
5. Implementation of measures: To counteract discrimination and promote greater equality, employers are expected to implement appropriate measures based on the findings of the audit. These measures can be tailored to address specific areas of concern and improve pay equity within the organisation.
6. Evaluation of results: Employers are also mandated to evaluate the effectiveness of their efforts in promoting equality. This assessment helps determine the impact of implemented measures and provides insights for further improvement.
To ensure compliance, the onus of holding employers accountable largely rests on workers and their representatives.
In Switzerland, the law does not specify the type of analysis to be conducted. It only states that the method should be scientific and in accordance with the law. Nonetheless, when the recommended analysis tool, Logib, is used, it involves a regression analysis where monthly gross wages are regressed on years of education, potential work experience (including its square), years of service, competence level, professional status, and a gender dummy.
Box 4.2. Country highlight: France’s Professional Equality Index (L’Index de l’Égalité Professionnelle Entre les Femmes et les Hommes)
In France, L’Index de l’Égalité Professionnelle Entre les Femmes et les Hommes, or, in English, the Professional Equality Index (PEI) has been in force since 2019. This measure applies to both employers in the public and in the private sector. Every year, by 1 March, public1 and private employers with at least 50 employees (requirements differ for those employers with more than 250 employees) must report pay information by gender and carry out and submit the results of an equal pay audit.
Reporting requirements for the PEI
Reporting requirements under the PEI are clearly and comprehensively defined, relative to most other OECD countries. Employers must compute five gender gaps indicators, each with a value that can sum to a maximum score of 100:
The gender gap in mean pay by age group (under 30; 30 to 39; 40 to 49; 50 and older), and by category of equivalent occupations. The latter correspond to the hierarchical level, coefficient, or other method of rating positions obtained after consultation with the social and economic committee, or, simply, to the socio-professional categories (SPC) (workers; employees; technicians and supervisors). This indicator results in a score up to 40 points.
The gender gap in number of individuals who received a raise (excluding promotions) by SPC. The result of this indicator varies from 0 to 20 points.
The gender gap in promotion rates by SPC. The result of this indicator varies from 0 to 15 points. This requirement applies only for employers with more than 250 employees; for smaller employers it is included within the gender gap in individual raise rates.
The proportion of female workers receiving a raise in the year after returning from maternity leave. This helps to check whether employers have complied with the legal obligation to catch up on pay when a worker returns from leave. The outcome of this indicator is either 0 if no employees received the raise to which they were entitled to upon returning, or 15 points if the employer complied with its commitment for all affected employees.
The proportion of workers from the less represented gender among the ten highest paid workers. The higher the underrepresentation, the fewer points are awarded to the employer. This indicator’s output ranges from 0 to 10 points.
These calculations consider the ordinary basic or minimum wage or salary, including all other benefits paid – directly or indirectly, in cash or in kind – by the employer to the employee. Redundancy and retirement payments, bonuses linked to a particular hardship that does not concern the employee, seniority bonuses, overtime, additional hours, as well as payments made under the profit-sharing scheme are not included in the calculation.
Equal pay audits
In calculating PEI, employers are engaging in a detailed analysis of the status of gender equality in their organisations – in effect, they are conducting an equal pay audit. For instance, in calculating the first indicator, the aim is to make a salary comparison for comparable work.2
The French system is characterised by stringent follow-up mechanisms with built-in time restrictions The maximum score for the PEI is 100; employers that score below 75 points out of 100 must take “appropriate and relevant corrective measures” to increase their score to at least 75. They are granted a maximum of three years from receiving the low score to remedy the situation (see Section 4.2).
The employer is responsible for calculating the Index as well as reporting and publishing the results (with the help of a freely accessible gender pay gap calculator and an online reporting tool3). At the same time, the French Labour Inspectorate produces statistics on the Index and the French Directorate for research, studies and statistics (DARES), periodically carry out (or have carried out) further statistical analysis of Index data.
The French system also boasts a strong emphasis on enforcement with possibility of financial penalties (see Chapter 6), as well as high transparency and accountability to stakeholders (see Chapter 5).
1. Not all public employers with more than 50 employees, but only public industrial and commercial establishments and certain public administrative establishments employing at least 50 employees under private law are. Local authorities are not subject to the obligation to publish the Index. The article of the Labour Code specifying the scope of application of the provisions on the Professional Equality Index is as follows: Article L. 1111 1.
2. To note, the distribution of employees by SPC is not sufficiently detailed to allow for an accurate comparison of salaries for equal work or work of equal value.
3. See the French calculator at Index Egapro (https://egapro.travail.gouv.fr/index-egapro/) or a summary in Chapter 7. More specifically, the online tool is a tool for entering the statistics needed to calculate the Index (number of employees, average amounts, etc.), however, these statistics are calculated by the company, which must determine which employees fall within the scope of the calculation (according to their type of contract, the length of time they have been with the company, etc.), what their remuneration is, whether they have benefited from increases, promotions, etc.
Source: GPTQ 2022 and Secretariat mission with the Government of France
4.1.2. Almost all auditing countries require the analysis of equal pay for equal work or for work of equal value
Closing the gender pay gap requires not only equal pay for equal work but also equal pay for work of equal value. Evidence from several OECD countries suggests that a significant factor contributing to the gender pay gap is the undervaluation of occupations and industries where women predominantly work, even in occupations and industries that require valuable skills and may have high demand, resulting in women’s lower wages (Meyersson Milgrom, Petersen and Snartland, 2001[2]; Blau and Kahn, 2017[3]); see also Chapter 3. This can be a function of gender discrimination (Galos and Coppock, 2023[4]). Therefore, analysing wage gaps within job categories alone can only go so far in addressing the overall wage gap.
In countries with equal pay audits, most governments require the analysis of pay gaps for work of equal value (Canada, Finland, Iceland, Norway, Portugal, Spain, Sweden, and Switzerland through recommendations3). In Canada and Spain employers are required to analyse only pay differences for work of equal value. In Spain such analysis is not required as part of equal pay audit itself, but of the special pay report or registry which is required from companies carrying out audits.4 In contrast, France’s pay transparency measure focuses on pay differences for equal work.
Work of equal value and the worth of predominantly women’s and men’s jobs in Canada and Sweden
Good practice in equal pay includes assessing equal compensation for work of equal value in pay gap assessments, along with guidance on how to compute it. Canada and Sweden, for example, have specified detailed and comprehensive instructions for the analysis of work of equal value as part of their audit processes.
In Canada, under the Pay Equity Act, federally regulated employers in the private and public sectors must follow a five‑step process when conducting their equal pay audits.
1. Employers identify and group employee positions to create job classes.
2. Job classes are categorised as predominantly male, predominantly female, or gender neutral.
3. Employers assess the “true” value of work for each predominantly male or predominantly female job class based on skill, effort, responsibility, and working conditions. Importantly, the assessment method must not discriminate based on gender.
4. Actual compensation is calculated.
5. Equitable wages are achieved when female job classes within a company are compared to male job classes within the company that perform work of equal or comparable value, and compensation of the female job classes is adjusted accordingly.
In Sweden, equal pay auditing has been mandatory since 1994, though the rules have changed a few times since then (for more information see Box 4.3). Currently, all employers in both the private and public sectors are required to conduct annual equal pay audits in collaboration with employee organisations. This process, referred to as an “equal pay survey” by Sweden’s National Audit Office, requires employers to determine whether pay differences are directly or indirectly associated with gender (OECD, 2021[5]). More specifically, an assessment of pay conditions should be made comparing specific groups of employees (Chapter 3, Box 3.4).
Box 4.3. Country highlights: The Nordic approach
Finland
Since 2014, as part of its Act on Equality between Women and Men (Equality Act), Finland has required private and public sector employers with 30 or more employees to conduct “pay surveys”, i.e. equal pay audits, every two years. This auditing process is a comprehensive analysis of the wages and other employment relationship conditions, and must include an assessment of the gender equality situation in the workplace, including:
details of the employment of women and men in different jobs;
a pay survey on the whole personnel, presenting the classifications of jobs performed by women and men, the pay for those jobs, and the differences in pay;
necessary measures planned for introduction or implementation with the purpose of promoting gender equality and achieving equality in pay;
a review of the extent to which measures previously included in the gender equality plan have been implemented and of the results achieved.
In these pay surveys, employers must show that mean salaries (including basic salary and variable component such as bonuses) of men and women engaged in either the same work or work of equal value are equal. These mean values can be expressed either in EUR or as women’s mean wages as a percentage of men’s mean wages (Finnish Ministry of Social Affairs and Health, 2016[6]). Important factors when comparing jobs are quality and content of work tasks, competence, responsibility, workload and working conditions.
In case clear differences are detected, these must be explained by the employer. “In order to clarify the reasons for the differences noted, the central components of the wages are inspected. Each and every wage component, including both the job-specific wage component as well as the different bonus such as individual performance‑ or competence‑related bonuses and merit pay, must separately be of a non-discriminatory nature.” Importantly, “systematically recurring differences give grounds for further inspection of even smaller wage differentials” (Finnish Ministry of Social Affairs and Health, 2016[6]).
Pay surveys must be done in co‑operation with worker representatives and as such, they will be informed of the results. Furthermore, these results (and any updates) must be actively shared with employees. This information can be shared in different ways, e.g. on the intranet of the workplace, by posting it a noticeboard at a workplace, and/or at staff meetings. It is not mandatory for employers to share information on gender pay gaps with the general public, and very few do.
If someone believes that they have experienced discrimination, they can seek help and advice from the Ombudsman for Equality. The Ombudsman for Equality1 is responsible for ensuring that the regulations of the Act are being followed, and if they notice any violations or non-compliance, they must take steps to prevent it by offering guidance and advice. The Ombudsman for Equality was contacted a total of 900 times in the year 2020. From these 538 cases were concluded: including 223 discrimination cases,2 27 cases of supervision and promoting of gender equality plans, 68 statements issued to other authorities, 55 requests for information and enquiries concerning Equality Act (Finnish Ombudsman for Equality, n.d.[7]).
If the employer still neglects their responsibility to draft an equality plan in spite of instructions and advice, the Ombudsman can set a reasonable deadline by which the obligation must be fulfilled. If the plan is not drafted by the deadline, the Ombudsman can take the matter to the National Non-discrimination and Equality Tribunal. The Tribunal can impose an obligation on the employer to prepare an equality plan within a defined period, under threat of a fine if necessary. If the employer still neglects the equality plan, the board will enforce a fine.
Iceland
In Iceland, both public and private organisations with at least 25 employees are required to conduct an annual pay audit and obtain certification of their equal pay system and its implementation every three years. This requirement began in 2018 as part of the law on implementing an Equal Pay Standard, which is a management requirement standard aimed at preventing direct or indirect discrimination in wages. The certification process is meant to ensure that wages are based solely on relevant factors and not influenced by discriminatory practices.
As part of the certification process, companies must calculate the average pay differences between men and women in the same job as well as different jobs of equal value. Pay in this case includes data on fixed wages, fixed additional payments and all extra payments, such as bonuses and pension rights. However, it should be noted that comparing pension rights can be complex and reliable confirmations of these comparisons are not available (OECD, 2021[5]). To facilitate pay reporting, the Icelandic Government provides a job classification and pay analysing software open for all.
The pay certification analysis is done by the employer, but an external and independent certification body conducts an audit on the analysis. The results are then reported to a government equality body. An auditor’s written statement serves as the certification, which confirms that the equal pay system and its implementation meet the requirements of the Equal Pay Standard (ÍST 85:2012) as listed in Article 1c of that standard. Beyond this, results of pay analyses built on job classifications should also be introduced to employees and be accessible to them taking into an account privacy policy.
When gender gaps are detected, employers must develop an action plan where improvements are confirmed. Importantly, to implement the Equal Pay Standard or get an Equal Pay Confirmation it is mandatory for companies to have an equality plan.
The Directorate of Equality enforces the reporting rules. Companies that fail to comply with the reporting requirements may face financial penalties, but unlike some other countries, there is no legal obligation for follow-up action or discussions with employees and social partners after the pay audit.
Norway
In Norway, the Equality and Anti-Discrimination Act was recently amended, in 2020, to introduce pay transparency measures. These measures apply to all public employers and private employers with 50 or more employees. Private undertakings that usually employ between 20 and 50 persons must also comply if requested by the employees or employee representatives.
As discussed in Section 4.1.1, the reporting requirement is every two years, and employers are required to map and report ordinary remuneration by gender, including various supplements like hourly wages, piecework wages, bonuses, overtime, free telephone/car/newspaper subscriptions, and occupational pensions. This information must be further disaggregated by job level/group consisting of both equal work and work of equal value. The work must be done in co‑operation with workers’ representatives. When defining a job level/group an overall assessment should be made based on the competence necessary to carry out the work in the different positions, responsibilities attached to the positions, and working conditions and effort.
Employers are also mandated to conduct equal pay audits. This means that they must, together with the social representatives, investigate whether there is a risk of gender discrimination or other barriers to equality by reviewing pay conditions, analysing the causes of identified risks, implementing measures suited to counteract discrimination and promote greater equality, i.e. developing an action plan, and evaluating the results of efforts.
In addition to this data, non-pay information such as the gender gap in number of employees overall, by job category, by salary class, and by contract type, as well as gender gap in worked hours (in excess) and days of parental leave must also be reported.
Once completed, this annual report must be made available, either by itself or within another document, to the general public (e.g. on the website). The statement must be formulated in such a way that no personal circumstances of individual employees are revealed, and the results of the pay review must be included in the statement in anonymised form. These measures aim to address gender discrimination and promote greater pay equality in the workplace.
A party, the Ombud or other persons with legal standing may submit a case to the Equality and Discrimination Tribunal.3 The Tribunal processes the cases submitted to it and may make an administrative decision to impose a financial penalty to ensure implementation of an order issued if the deadline for complying with the order is breached. These orders and fines are relevant only for the requirement to report pay statistics by gender but not for the requirement to conduct equal pay audits.
The penalty can take the form of a lump-sum coercive fine or an accruing daily fine. Coercive fines are payable to the State and are collected by the Norwegian National Collection Agency. The coercive fine begins to run if the deadline for complying with the order is breached and shall normally run until the order has been complied with. A party may apply for review of a decision to impose a coercive fine and the Tribunal may reduce or waive an imposed coercive fine.
Sweden
Since 1994, Sweden has mandated gender pay audits as part of the Discrimination Act, but the regulations have been modified a few times since then. All employers, whether in the public or private sectors, are required to conduct a pay audit annually in collaboration with employee organisations. Employers with more than ten employees must document this process.
While it is not specified exactly which statistics need to be reported, the employer is to annually survey:
provisions and practices regarding pay and other terms of employment that are used by the employer; and
pay differences between women and men and assess whether differences are directly or indirectly associated with gender (see Section 4.1.2 above).
The assessment of work of equivalent value is based on an overall evaluation of the work’s requirements and nature, taking into account criteria such as knowledge, skills, responsibility, and effort. The employer must provide the results to the employee organisation bound by the collective agreement to facilitate active measures and they must in turn inform individual employees.
The Swedish Equality Ombudsman, an independent Swedish Government agency responsible for enforcing the reporting rules, may request information about the audit’s results. Failure to comply may result in an order to fulfil the obligation or a financial penalty. Also, a natural person who has been discriminated against can make a report to the Equality Ombudsman. The Ombudsman can investigate and take the case to court. If the Ombudsman declines to apply for a financial penalty, an employees’ organisation to which the employer is bound by a collective agreement may make the application.
The Equality Ombudsman has guidance on their website at http://e‑utbildning.do.se/lonekartlaggning/, which includes a video and an online training.
Recently, the Swedish National Audit Office evaluated Sweden’s pay auditing system and found that the surveys have had little effect on gender income differences and may place an administrative burden on employers. The NAO suggested that the government simplify reporting requirements, adapt requirements to the employer’s size, and instruct the Swedish National Mediation Office to monitor pay discrepancies between men and women employed by the same employer.
1. More information on this role available at https://tasa-arvo.fi/en/front-page
2. In 2020, discrimination cases included the following: discrimination based on pregnancy and family leaves (142), general prohibition of discrimination (80), discrimination in access to and pricing of goods and services (50), discrimination in recruitments (62), pay discrimination (29), discrimination in work supervision, working conditions etc. (16), termination of employment (7), harassment in the workplaces (10), discriminatory advertising (7), discrimination at educational institutions (14), and discrimination in labour market organisations (1). See https://tasa-arvo.fi/en/statistics for more.
3. More information on the functioning of the tribunal is found at https://lovdata.no/dokument/NLE/lov/2017-06-16-50?q=act%20relating%20equality%20ombud.
Source: OECD GPTQ 2022 (unless otherwise cited)
Gender-neutral or gender-sensitive job classification systems are required in at least six equal pay auditing regimes
To achieve equal pay for work of equal value, job classifications systems – when used – should be designed or reformed with gender sensitivity in mind. Simply targeting equal pay for equal work (i.e. the same job) may not address existing pay differences across gender-segregated sectors. Such an approach takes the form of gender-neutral or gender-sensitive job classification systems. Chapter 3, Section 3.2.2 (Occupational segregation and the risk of embedding unequal pay) discusses the role of gender-neutral or gender-sensitive job classification systems in preventing unequal pay.
Among countries that require equal pay audits, at least eight (Canada, Finland, France, Iceland, Norway, Spain, Sweden, and Portugal) include gender-neutral job classification systems as part of the audit. In Norway, the salary survey requirements based on groups doing equal work and work of equal value can be considered a gender-neutral and sensitive classification system at the enterprise level, although there is no national standard. Spanish regulation emphasise the need for “adequate, total and objective” job evaluation criteria that should “be strictly linked to the performance of the work” [Art. 8(1)a] (Ministry of the Spanish Presidency, 2020[8]). Portugal’s regulation specifies that transparent remuneration policy, should be based on evaluation of job components, based on objective criteria, common to men and women. Portuguese employers also have access to a guide for objective job evaluation.5
Canadian employers are also required to consider gender biases when identifying predominantly female job classes. The regulations require an objective method that avoids gender-based discrimination and examines the gender composition of past and present employees in the job class, assessing whether jobs are stereotypically gendered.
The EU Pay Transparency Directive6 calls for objective gender-neutral criteria for job classifications. “They shall include skills, effort, responsibility and working conditions, and, if appropriate, any other factors which are relevant to the specific job or position. They shall be applied in an objective gender-neutral manner, excluding any direct or indirect discrimination based on sex. In particular, relevant soft skills shall not be undervalued.” (Article 4[4]). In practice, however, this can be quite difficult. New Zealand offers a noteworthy example: the government is attempting to better quantify the value of soft skills and new skills through a careful evaluative process of jobs (Chapter 3, Box 3.4).
Investigating direct and indirect discrimination
Some countries require employers to analyse potential sources of direct or indirect discrimination in equal pay audits. In Norway, employers must investigate other barriers to equality by reviewing pay figures, pay conditions, and assessing the causes of identified risks. Switzerland provides the Logib analysis tool, which offers evaluations, tables, and graphics to investigate possible direct and indirect discrimination. Spanish employers must assess the relevance of other factors triggering pay differences, as well as possible flaws or inequalities in the designing or use of work-life balance measures or difficulties in the professional promotion (Ministry of the Spanish Presidency, 2020[8]).
In Iceland, companies must fulfil the requirements of the Equal Pay Certificate,7 which include creating a management structure that guarantees pay-related proceedings and decisions are based on objective analysis and without gender discrimination (Iceland's Directorate of Equality, n.d.[9]). Similar certificates have been and are being developed in Italy and Portugal (see Chapter 6).
Box 4.4. In some countries, equal pay audits are either voluntary or not applied broadly
Denmark
Denmark has implemented the Equal Pay Act to promote pay transparency. The Act applies to private and public employers with 35 or more employees, with at least 10 employees from each sex in the same work function. However, the Act does not apply to employers covered by collective agreements with equal pay obligations or to those in the agriculture, horticulture, forestry, and fishing industries. Workers must be informed through their representatives of the results of the reporting process.
The Act requires reporting yearly pay information by gender, including mean pay (basic salary and other cash or in-kind benefits), which is further disaggregated by job category. Statistics Denmark provides gender-segregated pay statistics automatically and free of charge. Within this pay gap reporting regime, equal pay audits are used as a voluntary alternative to complying with the requirement to provide salary information. Most Danish employers opt for gender-disaggregated statistics provided by Statistics Denmark and only a few of them commit to conducting every three years (Profeta, Passador and Caló, 2021[10]).
If companies opt to produce their own pay statistics and analysis, they must produce a description of conditions that are important for the remuneration of men and women at the company. This statement must cover all the company’s employees and be treated in accordance with the rules in section 4 of the Act on Information and Consultation of Employees or in the rules in a collective agreement, which replaces the Act. The statement must be prepared no later than the end of the calendar year. Based on this description they are to develop concrete action-oriented initiatives that can have a course of up to 3 years duration and ensure close follow-up during the period of the statement. The pay audits are not published. They are meant as tools for co‑operation and for the on-going dialogue on pay between management and shop stewards/employee representatives at enterprise level.
However, in the Danish approach there is no state authority overseeing compliance with the Equal Pay Act, and although regulations do provide for financial penalties there is no clear monitoring. The Danish Institute for Human Rights promotes, evaluates, and monitors gender equality initiatives and combats gender discrimination, but it does not monitor companies’ compliance with the Act. More information on the Act and related regulations can be found on the Danish Government website.1
Despite the limited enforcement oversight, the Danish system may be working in reducing gender pay gaps. Using the introduction of reporting rules as a natural experiment, research shows that gender pay gaps in the affected firms reduced by 2 percentage points as a result of the policy introduction (or 13% from prior to 2006) (Bennedsen et al., 2022[11]). This reduction came about through a suppression in the growth of male wages. On a positive note, the research also finds that firms just above the size threshold are more likely to hire female workers and to promote them than those just below the threshold (Ibid.).
Italy
In Italy the Equal Opportunities Code requires employers in the private and public sectors with 50 or more employees to report gender disaggregated pay information every two years. The Gender Equality Advisors (GEAs) at the regional level are granted oversight and are responsible for ensuring that companies report regularly on their gender pay gap.
The Gender Equality Advisors also play a crucial role in assessing the outcomes of these reports. Along with trade unions, the GEAs review the reports and identify any collective gender-based discrimination, including pay gaps. In cases where discrimination is found, the employer is asked to create a plan to eliminate it, and the trade unions are informed. If the employer’s plan is deemed satisfactory, the Advisor considers the case resolved out of court. However, if the plan is deemed inadequate, the Advisor can take legal action. As public officers, the GEAs have the authority to act before a court in such cases (OECD, 2021[5]).
United Kingdom
In the United Kingdom, where companies must publish gendered pay information publicly (see Box 3.1. Country highlight: United Kingdom in Chapter 3), equal pay audits are not applied broadly. Instead, audits act as a punishment or penalty to non-compliant companies. Since 2014 Employment Tribunals are required to order employers to conduct an equal pay audit if they are found to have breached equal pay provisions (exceptions are set out in regulation). The tribunal will determine whether or not an audit complies. If not, it will arrange a hearing to consider the issue further. If they fail to comply following a hearing the tribunal can order non-compliant employers to pay a penalty not exceeding GBP 5 000. However, because most cases in Employment Tribunals are settled (and no decision is reached) these audits are rarely carried out (OECD, 2021[5]).
Equal pay audits as part of general labour inspections
In a handful of countries, such as Costa Rica, the Czech Republic, Greece, and Türkiye, general labour inspections can also consider gender pay gaps. However, these are not carried out on a regular basis (in most cases they are conducted yearly or on a more ad hoc basis), nor do they apply to entire groups of companies.
In 2020, Costa Rica introduced Gender Perspective Guidelines to address salary gaps between men and women. Additionally, starting in January 2022, the National Labour Inspectorate implemented gender-based inspections through a Specialised Gender Inspection Unit. These inspections focus on gender salary equity and encompass various aspects such as the salary gap, salary reporting, and women’s working conditions. Previously, when labour breaches, including salary discrimination, were identified, the National Labour Inspectorate would take administrative measures and conduct a second visit. If the breaches remained unresolved, the case would be escalated to the labour tribunals of the Supreme Court.
Furthermore, in early 2023, Costa Rica undertook an initiative to enhance and update the Catalogue of Labour Breaches based on Gender. This involved incorporating new breaches and improving the legal framework to ensure better and more effective application of legislation during inspection visits.
4.1.3. Some countries mandate the use of statistical analysis as part of equal pay audits
In pay auditing schemes, employers are required to conduct detailed statistical analysis of gender pay gaps in several countries, including Canada (under the Pay Equity Act8), France, Iceland and Switzerland (under recommendations, see endnote 3). While the specific approach to statistical analysis is not specified in Iceland, more detailed instructions are provided Canadian, French, and Swiss policies.
In Canada, regulations outline two statistical methods to compare male and female job classes: the equal average method and the equal line method. The equal average method involves comparing the average compensation of a group of male job classes with a group of comparable‑value female job classes, with pay equity achieved when the averages are equal after adjusting compensation. The equal line method compares job classes using regression lines for all the male and female job classes, with pay equity achieved when the regression lines overlap after adjusting compensation.
In France, the gender pay gap calculator known as Egapro9 incorporates all the necessary calculation formulas and assesses the statistical significance of gender pay gaps.
In Switzerland the legislation mandates that the equal pay analysis be conducted “according to a scientific method and in accordance with the law” [Art. 13c] (Gender Equality Act, 2020[12]). Although the legislation does not specify which statistical method should be used, statistical analysis is part of the standard analysis tool, Logib,10 provided free of charge by the federal government.
In some countries like Australia, France, and Portugal, national statistical departments carry out further statistical analysis of the information gathered during pay reporting. However, this analysis is focuses on an aggregate level and does not consider gender pay gaps at the level of the organisation.
Box 4.5. Examining gender pay gaps using standard statistical techniques
How should pay differences be quantified? P-values are commonly used in statistical analyses of gender pay gaps because they enable an assessment of whether the difference found between two sample estimates (in this case, mean or median pay for women and men) is statistically significant. Statistical significance is based on the likelihood of obtaining a specific result, such as the null hypothesis of no gender differences in renumeration (i.e. gender pay gap equal to zero), considering information observed in a sample that should be representative of a full population. In short, a difference is statistically significant if the likelihood of observing such a difference is above a predefined threshold.
However, there are a number of factors that complicate the use of p-values. Firstly, sample sizes have a strong influence on significance testing: the larger the sample size, the more confidently researchers can reject the null hypothesis and identify the presence of a significant gap. This means that it is possible that in two organisations with the same size gender pay gap, only differing in the total number of employees, the gap is more likely to be statistically significant in the larger company. In the context of pay transparency rules, with the potential of financial penalties, this may entail large differences in consequences between large and small firms. The other side of this is the issue of falsely accusing firms of paying women less. One of the challenges in this context is the potential for statistical tests to mistakenly reject the null hypothesis when it is actually true. This means that there is a possibility of falsely identifying gender-based wage discrimination where none exists.
Secondly, p-values do not provide any indication of the magnitude or practical importance of gender pay gaps. To have a comprehensive understanding of the gender pay gap, it is essential to consider whether the observed mean difference in pay is significant or not from an economic perspective. Determining economic relevance remains a subjective decision: whether a pay difference of EUR 100 within an organisation is significant depends also on the overall pay distribution. This gap is relatively larger in a company where wages range from EUR 2 500 to EUR 3 500 per month than in one where they range from EUR 2 000 to EUR 4 000 per month. This highlights the importance of looking at the range of the salaries within an organisation.
As an alternative (or in addition) to using p-values, standardised effect sizes (e.g. the point-biserial correlation coefficient, Cohen’s D,1 and the probability of superiority) and confidence intervals might be more informative measures to assess the gender pay gap, as they provide information about the size and direction of the effect, as well as the precision of the estimates. They are called standardised measures because effect sizes are expressed in a way that also takes into account the observed variation.
Finally, alternative statistical methods, such as Bayesian statistics and machine learning algorithms, can provide more flexible and informative ways to analyse the gender pay gap. Bayesian statistics, for instance, allow for the incorporation of prior knowledge and uncertainty in the analysis, while machine learning algorithms can identify complex patterns and interactions between variables that traditional statistical methods may overlook (De Schryver and De Neve, 2019[13]). Ultimately, a multidisciplinary and holistic approach is needed to fully address the gender pay gap and promote gender equality in the workplace.
1. For an interactive visualisation of the Cohen’s D refer to Interpreting Cohen’s d | R Psychologist, https://rpsychologist.com/cohend/.
Source: (Deschryver, 2023[14]).
4.2. Follow-up mechanisms are common in countries with equal pay audits
Reporting regimes can be more effective with embedded follow-up mechanisms. To ensure successful follow-up, requirements should include mandates for action with clear deadlines and measurable objectives (OECD, 2021[5]). A survey of worker and employer representatives highlights the importance of requiring employers to take concrete action, as the majority of respondents believe that the most effective pay transparency measures are “specific policies aimed at addressing identified pay gaps” (ILO, 2022[15]).
More than half of OECD countries with pay reporting rules have some form of follow-up mechanism after reporting (see Table 4.2 for a summary). These mechanisms are most often associated with the requirement to conduct a broader equal pay audit (except for Australia, Japan, and Korea11). Some countries require follow-up action only when gender differences in pay are identified (as in Canada, Finland, Iceland, Ireland, and Portugal), while others set a threshold for gender equality below which action must be taken (as in France, Korea and Spain). In Australia, follow-up action is required from employers of a certain size. In the remaining countries, action must be taken by all employers that fall under reporting obligations.
4.2.1. Gender equality action plans are common follow-up mechanisms
Gender equality action plans are a common follow-up mechanism in nearly all countries. These plans are set up in a variety of ways across the OECD reporting countries. Typically, they entail an initial assessment of the situation (i.e. the process required in pay reporting) and a justification of any differences found or active measures to combat differences. Finally, some countries also require a review of the implementation of said measures and an analysis of their impact on gender equality within the organisation. It is beneficial when these plans for action are selected with input from employees or their representatives (Cowper-Coles et al., 2021[1]), as is the case in at least Finland, Norway, and Sweden.
Table 4.2. Follow-up mechanisms
Summary of OECD countries’ follow-up mechanisms in countries with mandatory pay gap reporting in the private sector, 2022.
Country |
Action required by follow-up mechanism |
Time restrictions and/or monitoring |
---|---|---|
Australia |
Companies with 500 or more employees must comply with “gender equality standards”. These require employers to have a policy or strategy covering each of the six gender equality indicators. If they do not meet the standards at the time of reporting to WGEA in any given year, they have two years to meet them. It may not strictly be a follow-up action but is a follow-up action of a kind. The gender equality indicators: 1) gender composition of the workforce, 2) gender composition of governing bodies, 3) equal remuneration between women and men, 4) availability and utility of employment terms, conditions and practices relating to flexible working arrangements for employees and to working arrangements supporting employees with family or caring responsibilities), 5) consultation with employees on issues concerning gender equality, and 6) sexual harassment, harassment on the ground of sex or discrimination. |
No response. |
Canada |
EEA: When underrepresentation of a designated group in an Employment Equity Occupational Group is detected, employers must review employment systems, all formal and informal policies, and practices to identify employment barriers. An employment equity plan must be developed and implemented to eliminate employment barriers and correct the underrepresentation of designated groups, which may reduce pay-gaps over time. PEA: When differences in compensation between predominantly male and female job are detected, the compensation for those in the predominantly female job class must be increased to achieve pay equity. |
EEA: Measures are to be taken in a period of 1 to 3 years with a clear timetable for the implementation. PEA: Increases in compensation are due three years after they become subject to the PEA. If they represent >1% of the employer’s annual payroll, increases can be phased out over a period of time ranging from three years for large employers (100+ employees) to five years for smaller employers (10 to 99 employees), as long as every annual increase is at least one percent of the employer’s annual payroll. If the employer fails to do this, an employee or bargaining agent may make a complaint to the Commissioner. The Commissioner may order the employer to increase compensation based on the result of an investigation or audit. |
Finland |
All employers must develop a gender equality plan, including 1) Assessing the gender equality situation in the workplace, including details of the employment of women and men in different jobs and a pay survey on the whole personnel presenting the classifications of jobs performed by women and men, the pay for those jobs and the differences in pay; 2) Measures with the purpose of promoting gender equality and achieving equality in pay; and 3) Reviewing implementation of measures previously included in the gender equality plan and results achieved. The gender equality plan must be prepared in co‑operation with representatives appointed by the employees. The representatives of the personnel must have sufficient opportunity to participate and influence the preparation of the plan. |
No. |
France |
When the overall score on the Professional Equality Index is (A) less than 75 points out of 100 or (B) less than 85 points out of 100, employers must (A) define and publishing appropriate and relevant corrective measures by agreement or, failing that, by unilateral decision (Article L. 1142‑9 of the Labour Code), and (B) set and publish improvement targets for each of the indicators (Art. L. 1142‑9‑1 of the Labour Code). |
The corrective measures and progress targets must be implemented as soon as the overall Index score falls below the set thresholds. A company with an overall Index score of less than 75 points out of 100 has three years to reach this threshold. If it fails to reach this threshold by the end of this period, it may be subject to a financial penalty amounting to 1% of its total payroll. |
Iceland |
An audit on the system is carried out by an external independent certification body. When gender gaps are detected, employers must develop an action plan where improvements are confirmed. Note: In order to implement the Equal Pay Standard or get an Equal Pay Confirmation it is mandatory to have an equality plan. |
The action plan is timed. |
Ireland |
When gender pay differentials are detected, employers must indicate in a written report: (a) the reasons for the differences relating to remuneration that are referable to gender in that relevant employer’s case (in the relevant employer’s opinion); and (b) the measures (if any) being taken, or proposed to be taken, by the relevant employer concerned to eliminate or reduce such differences in that relevant employer’s case. |
No response. |
Israel |
In cases that the EEOC addresses employer about violations, the employer must correct the violations. The EEOC can obligate employers to do wider audits, depending, among other things, on the inquiries that the EEOC receives. Additionally, the EEOC operates programs for employers which aim to enhance diverse and equality in the workplaces, including promotion of women. |
Yes. |
Japan |
Employers with 101 or more regular workers must develop an action plan with numerical targets and specific efforts after understanding their situation (including the status of the wage gap between men and women for employers with 301 or more regular workers) and challenges with regard to women’s participation and advancement. |
Action plans need to include specific target periods. |
Korea |
When employer figures are below 70% of the average for each sector relevant employers must establish an improvement plan. Implementation guidance is provided. |
If it is deemed that a business lacks willingness to improve its performance by not meeting the standards for three consecutive years, the government publicises the list of such businesses. No other penalties exist. |
Norway |
Employers must take action and implement measures suited to counteract discrimination and promote greater equality as well as evaluate the results of efforts, but are not required to have an action plan. Measures can, for instance, be implemented in connection with salary negotiations or determined in a recruitment plan. |
Yes, However, requirements for mapping and reporting on equal pay are only every two years. |
Portugal |
After analysing the Balance Pay,1 if pay differences are detected by the Labour Inspectorate (ACT), relevant employers must present an evaluation plan of the pay differences in the company that is intended both to justify those pay differences and to eliminate those with no objective justification. This regime applies, during the two first years of validity of the law, to companies with 250 employees or more and from the third year of validity of the law onwards, to companies with 50 employees or more. |
This evaluation plan must be presented within 120 working days after ACT notification and be put in place for a period of 12 months and should be developed on the evaluation of job components. Following the 12 months period, the employer shall communicate to the ACT a report on the results of the implementation plan and demonstrate the justification or correction of pay differences. |
Spain |
All pay audits must include an action plan to correct the identified inequalities. When a pay gap of 25% or more is detected, employers must justify that the gap is not gender related. If the result of the diagnosis reveals the under-representation of persons of a particular sex in certain positions or hierarchical levels, the equality plans shall include measures to correct it, and may establish positive action measures in order to eliminate both horizontal and vertical occupational segregation of women. |
Action plans must include objectives, actions, schedule, responsible persons, and monitoring system. Pay information or its absence may serve to carry out appropriate administrative and judicial actions, whether individual or collective. |
Sweden |
All employers must take active measures, i.e. pursuing prevention and promotion work by: a) investigating the existence of any risks of discrimination or reprisals or any other obstacles to individuals’ equal rights and opportunities in the establishment in question, b) analysing the causes of any risks and obstacles discovered, c) taking the prevention and promotion measures that can reasonably be demanded, and d) monitoring and evaluating measures under points 1‑3. (Chapter 3 § 2 Discrimination Act) |
Work should be conducted continuously, and measures are to be scheduled and implemented as soon as possible. |
Note: Table summarises required follow-up mechanisms as part of company pay reporting requirements in countries with such requirements.
1. With data from Quadros de Pessoal, an employment survey where employers provide individual level pay information for each worker in the survey, the Ministry of Work, Solidarity and Social Security creates a publicly available “Barometer of Pay Differences between Women and Men.” This Barometer presents average adjusted gender wage gaps across different firm sizes and sectors. It is available at http://www.gep.mtsss.gov.pt/trabalho.
Source: OECD Gender Pay Transparency Follow-Up Questionnaire (GPTQ) 2022 (see Annex A).
In many countries with follow-up mechanisms, there is a recognition of the importance of time restrictions and monitoring stipulations. However, the level of detail provided in these mechanisms varies. For instance, Norway reports only that such restrictions and stipulations exist, Iceland states that the action plan is timed, and the Japanese response states that action plans must include specific target periods.
Some countries offer more detailed specifications. In Canada under the Employment Equity Act (see endnote 8) time restrictions are well defined: measures are to be taken in a period of 1 to 3 years with a clear timetable for the implementation (see below). France, too, has opted to offer companies a period of 3 years for correcting inequalities (see below).
Monitoring committees can be beneficial for action plans, and it is recommended that they include an employee representative or trade union spokesperson and a senior member of the employer’s leadership. Certain countries have developed the monitoring aspect further. In Portugal, for example, if pay differences are detected by the Labour Inspectorate, employers must implement an evaluation plan for a period of 12 months. This plan must contain the evaluation of job components, based on objective criteria, in order to exclude any forms of gender discrimination12. After this period, the employer is required to communicate the results to the labour inspectorate. New Zealand’s Kia Toipoto establishes specific milestones for updating and publishing annual action plans based on gender and ethnicity data and union/employee feedback.
Also the EU Pay Transparency Directive (see endnote 6) places importance on monitoring by requiring member countries to designate a monitoring body and to support its functioning (see more in Chapter 6).
Finland and Sweden’s follow-up driven by the tripartite process
Finland requires relevant employers to conduct a pay survey every two years to assess gender equality in the workplace, develop measures for promoting gender equality and achieving pay equality, and review past measures. However, the Finnish regulation lacks built in time restrictions and monitoring stipulations.
Similarly in Sweden, all employers must conduct a wage audit and take active measures each year, continuously analysing any risks or obstacles to equal rights and opportunities and implementing prevention and promotion measures. Time restrictions in Sweden involve conducting work continuously, and scheduling and implementing measures as soon as possible. Box 4.3 details the Finnish and Swedish reporting systems.
Finland and Sweden have longer histories of reporting and/or auditing processes, and their auditing systems reportedly run smoothly and have high compliance – though Sweden has found that their system has had little effect on the gender wage gap, at least in smaller firms (Swedish National Audit Office, 2019[16]). This may be attributed to the tripartite nature of these programmes, with strong collaboration between employers, workers’ representatives and unions, who are trusted to advocate for gender equality in wages. In cases where the other parties are unable to come to an agreement, human rights or equality ombudsmen intervene. On the other hand, the strong presence of unions may also be perceived as a barrier to giving these policies stronger teeth (OECD, 2021[5]).
France’s score‑based follow-up mechanism with built in time restrictions
If a company’s overall score on the Professional Equality Index is below 75 points out of 100, the employer must define and publish appropriate and relevant corrective measures by agreement or, failing that, by unilateral decision. These measures must include actions to ensure effective remuneration. A company with an overall Index score of below 75 points out of 100 has three years to reach this threshold. If it fails to reach this threshold by the end of this period, it may be subject to a financial penalty amounting to 1% of its total payroll.
In the event of an overall score of less than 85 points out of 100, the employer must set and publish improvement targets for each of the indicators. These progress objectives, actions and quantified indicators set must consider the results obtained in the Index as well as, where appropriate, the corrective measures defined in the event of an overall score of less than 75 out of 100. The corrective measures and progress targets must be implemented as soon as the overall Index score is below the set thresholds.
Canada’s ambitious correction of gender pay gaps
Although the number of employers covered by Canada’s rules is relatively limited, Canada has opted for an ambitious correction of gender pay gaps. Under the Pay Equity Act, when differences in compensation between predominantly male and female job are detected, the compensation for those in the predominantly female job class must be increased to achieve pay equity.
Where relevant, these increases in compensation are due three years after the employer become subject to the PEA. If they represent >1% of the employer’s annual payroll, increases can be phased out over a period of time ranging from three years for large employers (100+ employees) to five years for smaller employers (10 to 99 employees), as long as every annual increase is at least one percent of the employer’s annual payroll. If the employer fails to do this, an employee or bargaining agent may make a complaint to the Commissioner. The Commissioner may order the employer to increase compensation based on the result of an investigation or audit.
It is important to keep in mind that the Canadian Pay Equity Act transparency policy applies only to federally regulated workplaces, which represent about 6% of the workforce. Nevertheless, this is an ambitious and straightforward way to reduce gender pay gaps.
Austria and Switzerland: Employers have high discretion in follow-up
In countries with no follow-up mechanisms incorporated into reporting rules, organisations may be less likely to further pursue the issue of pay equality.
For instance, Switzerland does not have mandatory follow-up mechanisms in place. However, although it remains the responsibility of the employees, shareholders of listed companies and the social partners to ensure a follow-up, in their response to the GPTQ the Swiss Government reports that companies often voluntarily carry out an initial analysis and make corrections on a regular basis.
On the other hand, in Austria income reports were usually drafted and submitted without further comment or follow-up to works councils. In their response, Austria indicated that the further analysis of reporting results and the development of follow-up measures could be strengthened both from company and works councils’ side. An evaluation study (Bundesministerium fur Bildung und Frauen, 2015[17]) identified a lack of detail in the legal basis for drafting the reports that might hinder the further internal use of the income reports, as well as the legal obligation to secrecy seems to hinder communication on the report and thus often the employees’ knowledge of the report.
References
[11] Bennedsen, M. et al. (2022), Do Firms Respond to Gender Pay Gap Transparency?.
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Notes
← 1. In Switzerland this inspection can alternatively be carried out by social partners or organisations promoting gender equality.
← 2. In Denmark, equal pay audits act as a voluntary alternative to pay gap reporting (see Box 4.3).
← 3. When the gender pay gap analysis is conducted with the Swiss Confederation’s standard analysis tool, it consists of a regression analysis where monthly gross wages are regressed on years of education, potential work experience (including its square), years of service, competence level, professional status, and a gender dummy. As such, the results try to enable an analysis of gender pay gaps for work of equal value.
← 4. All employers in Spain, regardless of size, are obliged to keep a register with the average values of salaries, salary supplements and non-wage payments of its staff, broken down by sex and distributed by professional groups, professional categories, or jobs of equal or equal value. Employees have the right to access, through the legal representation of workers in the company, to the wage register of their company. These registries are not available to the general public.
← 5. Available at https://cite.gov.pt/documents/14333/297943/CITE+-+Guia+de+avalia%C3%A7%C3%A3o+de+diferen%C3%A7as+remunerat%C3%B3rias.pdf/2a55800d-328a-465f-ad63-12853d3da9d6.
← 6. The European Union Pay Transparency Directive is available at https://www.europarl.europa.eu/doceo/document/TA-9-2023-0091_EN.html#title2.
← 7. More information available at Equal Pay Standard - Kvenréttindafélag Íslands (kvenrettindafelag.is), https://kvenrettindafelag.is/en/resources/equal-pay-standard/.
← 8. Canada’s pay reporting regulation is two-fold, pay gap reporting under the Employment Equity Act applies to federally regulated private-sector employers with 100 or more employees. These employers submit annual reports to the Minister of Labour by 1 June of each year. Conversely, under the Pay Equity Act, federally regulated employers in both the private (10 employees or more) and public sectors (no employee threshold) are required to submit an annual statement on their pay equity plans to the Pay Equity Commissioner.
← 9. Available online at https://index-egapro.travail.gouv.fr for relevant employers or in Excel format at Index de l’égalité professionnelle: calcul et questions/réponses - Ministère du Travail, du Plein emploi et de l’Insertion (travail-emploi.gouv.fr), https://travail-emploi.gouv.fr/droit-du-travail/egalite-professionnelle-discrimination-et-harcelement/indexegapro.
← 11. These countries self-identified as having pay gap reporting regimes, but not meeting the full criteria for equal pay audits, in OECD GPTQ 2022. For example, Australia’s response to OECD GPTQ 2022 states, “The Workplace Gender Equality Act does not mandate more extensive pay audits be conducted by organisations.” Therefore, while they have follow-up actions, they are not considered as a pay auditing country.