Valerie Frey
Pay Transparency Tools to Close the Gender Wage Gap
Gender Equality at Work
3. Company pay gap reporting
Abstract
Nearly half of OECD countries now require some private sector employers to report the gender wage gap within their organisation to stakeholders such as workers, worker representatives, a government body, and/or the general public. The conditions of pay gap reporting vary enormously across countries. While some governments mandate a high degree of statistical details across a high share of employers, typically as part of an equal pay auditing process, many countries have opted for a simpler reporting system whereby select employers are required to report the overall gender wage gap.
Key findings
Pay reporting rules require employers to regularly report gender pay gap statistics, such as the average or median remuneration of men and women, at the company or organisation level. This reporting can be shared with stakeholders like employees, workers’ representatives, social partners, a government body, and/or the public.
Eighteen OECD countries require certain private sector companies to report statistics on employee pay, disaggregated by gender, to designated stakeholders. A few countries embed these pay gap analyses within broader equal pay auditing processes aimed at gender equality in the labour market.
The limited research that has been conducted suggests that pay reporting with sanctions does help to close the gender wage gap, in part by bringing men’s pay in line with women’s. But more and better evaluations are needed to understand the effects of pay reporting obligations on wage outcomes across with different policy designs.
Administrative burden to firms, and lack of policy awareness, are frequently cited barriers to the effective functioning of pay reporting guidelines. While many governments have financial penalties in place for non-compliant employers, in practice these penalties are rarely enforced.
Employer reporting on gender wage gap statistics has become an increasingly common, straightforward part of national strategies to promote gender equality in pay. About half of OECD countries require private sector companies to report regularly gender-disaggregated statistics on their employees’ pay to workers, unions, and/or the public, and a similar number require reporting from public sector employers.
These measures are most frequently found in Europe, perhaps related to pay reporting in companies with at least 50 employees being listed as one of the four key pillars of the 2014 EC Recommendation (Chapter 1). In fact, among European OECD countries that do not currently have pay reporting regulations in place, several report that they are considering supporting the 2021 proposal by the European Commission to implement binding pay transparency measures.
In the absence of employees’ rights to obtain pay information on comparable employees (see Chapter 2), company pay reporting helps to substitute for this information by reporting on wage gaps within an organisation. The results of this within-company wage gap analysis are typically shared with employees via works councils or unions, shared with a government body, and/or shared with the public. Pay reporting helps to raise awareness of the presence, size and shape of pay inequity, and some early research suggests that such measures have had small effects on closing the wage gap.
One drawback of company pay reporting is that pay reporting data are typically not fine‑grained, especially when compared to employees’ rights to request pay information or the broader equal pay audit (Chapter 4). Some companies will be required to report average remuneration by job category or position, but in many cases countries mandate that companies only need to present the organisation-wide gender wage gap.
Presenting the overall gender wage gap has advantages: it helps to raise awareness of pay inequity, it encourages companies to think about horizontal and vertical segregation driving wage gaps, and it is relatively easy for companies to calculate themselves, thereby reducing administrative burden. However, reporting the aggregate gender wage gap can conceal inequalities and possibly discrimination across workers in the same job, and it may complicate equal pay claims – in other words, it may not go far enough in supporting individual employees who may be unfairly underpaid.
3.1. Almost half of OECD countries require private sector companies to report pay
18 OECD countries have1 (or are about to implement2) gender-disaggregated pay reporting requirements for private sector companies: Austria, Australia, Belgium, Canada, Chile,3 Denmark, Finland, France, Iceland, Israel, Italy, Lithuania, Portugal, Norway, Spain, Sweden, Switzerland and the United Kingdom. The main features of these policies can be found in Annex Table 3.A.1.
Several of these countries have embedded their company pay reporting requirements within broader, mandatory gender auditing processes4 (see Box 3.1 and Chapter 4).
A few other countries, such as Germany, Japan, Korea, Luxembourg and the United States have measures in place to ensure companies report gender statistics on outcomes other than pay, such as the gender composition of the workforce (Box 3.2).
Some countries use a more ad hoc approach. Costa Rica, Greece, and Turkey ask inspectors to consider gender wage gap outcomes during labour inspections, while Ireland requires wage gap reporting during a broader inspection of certain companies.
3.1.1. Reporting and enforcement in the private sector
In countries with private sector pay reporting requirements, these measures cover firms ranging from a minimum size of ten employees (Sweden, as part of its broader pay auditing process) to a minimum of 518 employees (Israel, effective 2022). Most countries require that companies carry out their pay analyses and report the results every one or two years.
Gender pay gap reports are not often made available to the general public. Companies are usually required to report pay gap statistics only to employee representatives, such as unions, works councils or other employee representatives, which typically have an obligation to share results with employees. Reporting to a government agency is required in a minority of countries, such as Australia, Canada, Chile,5 France, Italy, Portugal, the United Kingdom, and Iceland and Switzerland6 requires that pay gap analyses be reviewed by a government-regulated auditor. Only a few countries publish companies’ pay gap statistics publicly online, though the level of detail varies.
Figure 3.1. Almost half of OECD countries require companies to report gender pay gap statistics
Note: Chart shows the distribution of pay reporting measures across OECD countries.
Nine countries in which companies meeting defined criteria (e.g. firm size) are required to carry out regular gender pay audits and report disaggregated pay gaps include: Canada, Finland, France, Iceland, Norway, Portugal, Spain, Switzerland, and Sweden (Chapter 4).
Nine countries in which companies meeting defined criteria are required regularly to report gender-disaggregated pay information without a broader audit are: Austria, Australia, Belgium, Chile (the financial sector), Denmark, Israel, Italy, Lithuania and the United Kingdom (Chapter 3).
Countries in which all companies meeting defined criteria are required to report gender-disaggregated data on workforce characteristics but not gender pay gap data are: Germany, Japan, Korea, Luxembourg and the United States (Chapter 3, Box 3.2).
Countries in which an ad hoc selection of companies are required to undergo gender pay audits, including as a targeted labour inspection (Costa Rica, Greece, Turkey) or sanction (Ireland) (Chapter 4).
Source: OECD Gender Pay Transparency Questionnaire (OECD GPTQ 2021, see Annex A).
Company pay reporting requirements are typically put in place through legislation.
Incentives or sanctions to ensure company pay reporting takes a variety of forms, including:
Publicly publishing individual firms’ reporting history (Australia7) and/or pay gap results (such as Canada, France, Portugal, and the United Kingdom)
Restrictions on participation in government tenders (Australia, Switzerland).
The possibility of fines (in Belgium, Canada, Denmark, Finland, France, Iceland, Italy, Lithuania, Norway,8 Portugal, Spain, Sweden and the United Kingdom).
While some pay reporting is better than none at all, many countries with pay reporting systems state that penalties are infrequently carried out and some countries do not closely monitor compliance. Spain, for example, has financial penalties in place for companies that do not fulfil reporting requirements, but the country does not report results on the number of companies that fail to report. Lithuania places primary responsibility for compliance on companies themselves, which may not be sufficient (OECD GPTQ 2021, see Annex A). In Canada, the Department of Employment and Social Development Labour Programme has the authority to issue a notice of a monetary penalty of up to USD 10 000 for a single violation and to USD 50 000 for repeated or continued violations when a private sector employer fails to file an employment equity annual report, does not include all required information, or knowingly provides false or misleading information in the report. However, no such monetary penalties have been issued since 1993.
Countries that embed pay reporting within pay auditing systems (Chapter 4) tend to have more comprehensive methods of monitoring compliance, including with dedicated government actors.
3.2. Country practices
Australia, Austria, Italy, Lithuania and the United Kingdom offer a diverse array of how pay reporting requirements reflect national preferences and circumstances. Countries with pay reporting within pay auditing systems are discussed in greater detail in Chapter 4.
3.2.1. Australia
Australia introduced its company pay reporting measures as part of the Workplace Gender Equality Act 2012, for first reporting in 2013‑14. The Act requires private sector companies with 100 or more employees to report annual salaries (base salary and total remuneration) by gender of all employees per organisation; these data are confidential and can only be made publicly available in aggregated form, meaning companies are not identifiable. Results are reported to individual employees, works councils and/or other workers’ representatives at the company level, and the federal government Workplace Gender Equality Agency (WGEA).
Australia publicly shares online some results of company reporting, such as the gender distribution of staff and the share of full-time and part-time employees who are male or female, through the WGEA – but pay gap outcomes are not made visible to the public. Instead, members of the public can search companies by name to see the company’s history of reporting pay statistics (a “yes/no” measure) and whether or not the company has a specific gender pay equity objectives included in a formal remuneration policy or strategy.9
In addition to this online portal allowing the public to identify companies that have not adequately complied with pay gap reporting, Australia can penalise companies’ non-compliance through tabling in Parliament and by prohibiting non-complying companies from participating in government tenders of any value.
3.2.2. Austria
Austria’s company pay reporting requirement was laid out in law in the Equal Treatment Act (Gleichbehandlungsgesetz) amendment of 2011 and applies to private sector organisations with at least 150 permanent employees. There are also requirements for the public sector.10 Every two years, a company is required to generate a report containing average or median wages, disaggregated by gender, either by company job classifications or by the job classifications used in the collective agreements. It must also contain the number of male and female employees within those categories.
Companies report these rules primarily to the central works council or works committee. If there is no worker representation, the company has to display the report in a room that is accessible to all employees. A secrecy obligation applies except when the report is used for an equal-play claim before a court or equality body.
In addition to this limited visibility, there are no financial penalties for non-compliance, which researchers have identified as a barrier to policy success; there is little academic evidence that the Austrian policy has closed the gender wage gap in affected firms (Gulyas, Seitz and Sinha, 2020[1]; Böheim and Gust, 2021[2]).
If a company fails to submit their report on pay levels by gender to the works council, the council may pursue their claims by judicial process. If such a council does not exist, individual employees themselves may seek a court order forcing the company to compile and disclose the report. The limitation period expires after three years. The government perceives the threat of court action to be a deterrent to non-compliance by companies (OECD GPTQ 2021).
3.2.3. Italy
Italy legislated pay reporting in the private and public sectors in 2006.11 Every two years, before a deadline of 30 April, private companies with more than 100 employees must submit to companies’ trade unions and to the Regional Gender Equality Advisor a report with statistics on hiring, positions, leave‑takings, dismissals and wage levels.12 Companies must provide information on the global amount of the remuneration paid during the year for all employees at the same level or job category. They do not have to report the average amounts of the employees by gender, but this information can be calculated on the basis of the data provided.
In 2018, companies were required to load their reports directly on a new digital platform, set up and managed by the Ministry of Labour and Social Policies.13 Through this website, the government reports, the data are homogeneously collected and can be analysed and compared more easily at the national level.
Italy has relatively strict penalties for non-compliance. If companies do not send their report on time, the unions and Regional Gender Equality Advisors can report the company to the Labour Inspectorate, which orders the submission of the report within 60 days. After that deadline expires, the company is fined up to EUR 2 580 by the Labour Inspectorate. In serious cases, any contributory benefits used by the company may be suspended for one year.
Aside from ensuring that companies regularly report, the Gender Equality Advisors (GEAs) at the regional level also play an important role in evaluating outcomes within companies. Gender Equality Advisors and unions analyse the reports. If, upon inspection, the GEAs detect a collective discrimination on the ground of gender (including pay gap), they can ask the employer to set up a plan aimed at removing the discrimination and inform the trade unions. If the employer’s plan is considered adequate for addressing discrimination, the case is considered solved by the Advisor out of court. If the employer’s plan is considered inadequate, the Advisor can act before a court; to this effect GEAs are considered public officers.14
3.2.4. Lithuania
Lithuania adopted company pay reporting requirements in 2017 as part of Article 23(2)15 of the Labour Code of Lithuania. Lithuania has straightforward annual reporting requirements that apply to all employers with over 20 employees – a relatively low threshold that should help cover many companies, relative to thresholds in most other countries. Companies are required to report averages by gender for the whole company and for each general job categories and/or salary class (so long as each group has more than two employees). Results are to be shared with work councils of worker representatives at the company level. Penalties are relatively small for a first offense (EUR 40 to EUR 560), but can rise up to EUR 1 200 for second offense.
Interestingly, as of April 2021, the Lithuanian Social Security Fund has been tasked with publishing publicly gender-differentiated corporate earnings. This reporting covers enterprises where the number of insured persons is at least eight, of which more than three are women or more than three are men.
In effect, Lithuania is using administrative data to publish company-level gender pay gaps. The government will therefore be providing pay transparency itself. This is a novel initiative in international perspective and should be evaluated going forward for effects on wage outcomes.
3.2.5. United Kingdom
The United Kingdom put its company pay reporting requirements into effect in 2017, as part of the Equality Act 2010 (Gender Pay Gap Information) Regulations 2017.16 Employers with 250 or more employees are required to assess the mean and median pay and bonuses for men and women across their organisation, and publish these gender pay gap statistics on the organisation’s website and on a UK government website dedicated to pay gap reporting (https://www.gov.uk/report-gender-pay-gap-data). Employers are required to report these statistics annually: by 30 March of every year for the public sector and by 4 April for the private for-profit and non-profit sectors.
While there are no direct penalties for non-compliance, the UK’s Equality and Human Rights Commission can take legal action against employers if they refuse to report – which can result in unlimited fines. Even without the threat of financial penalty, however, the UK Government reports that public pressure and reputational risk have provided strong incentives for employers to report. There was 100% compliance in the first two years of reporting.17
Academic research has found that the United Kingdom’s pay reporting requirements have led to small but significant reductions in the gender wage gap in affected firms, largely through lower men’s wages (Blundell, 2021[3]; Duchini, Simion and Turrell, 2020[4]).
3.2.6. New pay reporting initiatives
A few countries have pay reporting processes forthcoming or are considering introducing them in the future. Canada and Israel will initiate reporting requirements for certain employers in 2022 (Annex Table 3.A.1).
Several European countries, such as the Czech Republic, the Netherlands and Poland, report that they are awaiting the adoption of transparency legislation at the EU level that would apply to all member countries.
Ireland, Mexico, the Netherlands, New Zealand and the United States have reported on proposed initiatives or proposed legislation aimed at gender-disaggregated pay reporting, but none of these are yet in effect (OECD GPTQ 2021).
Countries without pay reporting policies point to administrative burdens, social norms, lack of issue awareness, data privacy concerns, and (other) political priorities as the reason pay reporting measures are not in place (OECD GPTQ 2021).
Box 3.1. Company pay reports versus audits: A distinction with differences
Defining pay reports versus audits:
Countries with pay reporting requirements have legal obligations or other measures in place that require or incentivise organisations to regularly report (including to employees, workers’ representatives, social partners, and/or a government body) statistics such as the average or median remuneration of men and women at company level in companies, enterprises or organisations.
Countries with equal pay audit requirements have legal obligations or other measures in place that require or incentivise organisations to undertake gender pay audits, either internally or carried out by an external actor. Audits could include analyses of gender pay gaps, the gender composition of job positions/levels/categories, and job evaluation and classification systems. Importantly, company audits of gender pay gaps can be distinguished from pay reports in that audits will make an effort to analyse any gender pay gaps found and are often followed by a strategy to address such gaps (European Commission, 2017[5]). Pay audits also implicitly tend to gather more information on the nature of pay gaps.
Different pay reporting policies may mean pay gaps are ignored
While most countries with pay auditing systems do require companies to report pay gaps, not all countries with pay reporting require the more intensive auditing process – which requires a broader “gender lens” and often entails follow-up actions to address gaps that are found.
Sweden, for example, does both. Sweden is included in this chapter’s pay reporting list because – in practice – the wage differential survey, analysis, and reporting components of Sweden’s more comprehensive pay auditing system are effectively very similar to the baseline company pay reporting measures used in other OECD countries discussed here. The Swedish pay auditing process requires employers with more than ten employees to “every year document their work on active measures … to prevent discrimination and promote preventing discrimination and serving in other ways to promote equal rights and opportunities regardless of gender, transgender identity or expression…”. This annual auditing process requires companies to survey and analyse, within their organisation, “pay differences between women and men performing work that is to be regarded as equal or of equal value,” along with other measures (Chapter 4). The results of these audits (also called “equal pay surveys” by Sweden’s National Audit Office) are then shared with employee organisations. These specific steps match the broad contours of measures that are considered company pay reporting policies elsewhere, even if they are part of Sweden’s broader, more comprehensive strategy to combat discrimination and pay inequality. Company pay gap analyses are embedded in an auditing process in other countries, too, such as Canada, Denmark (though audits are not mandatory there), Finland, France, Iceland, Norway, Switzerland and Spain.
Pay auditing processes are explained in greater detail in Chapter 4 of this report.
Box 3.2. Reporting on gender gaps other than pay
A few countries, such as Germany, Japan, Korea, Luxembourg and the United States, have gender-disaggregated data reporting measures in place – but, interestingly, these measures do not require reporting on pay by gender. While these measures are an important step at improving diversity within organisations, the lack of reporting on wages limits meaningful action in addressing gender pay gaps. This also implies that it may be relatively easy for these nations to create mandatory pay reporting schemes by simply adding pay to existing requirements.
Germany, for example, has extensive mandatory reporting and company auditing processes in place to promote gender equality in companies with over 500 employees, but companies are not required to report average nor median pay, disaggregated by gender, to workers, their representatives, or the public.1 Germany states that the reporting by companies should cover “1. [Companies’] measures to promote equality between women and men… and 2. [Companies’] measures to create equal pay for women and men. Employers who apply no measures have to give the grounds for this in their report.” This report must contain statistics disaggregated by gender on the average total number of employees, as well as the average number of full-time and part-time employees (Transparency in Wage Structures Act Part 4, Section 21). There is also a gender auditing process in Germany2 in which companies carry out an internal fact-gathering procedure to assess the current remuneration provisions, remuneration components and the job evaluation procedures, and then evaluate these and their application with a view to compliance with the principle of equal pay within the meaning of the Act. The results of these audits are shared with works councils and employees.
Yet despite these extensive and likely useful guidelines, there is no legal obligation, penalties or incentives in place to ensure that private or public sector employers regularly report the average or median remuneration of men and women at company level (OECD GPTQ 2021). The lack of penalties for reporting has been identified as a weakness of Germany’s broader auditing strategy (Aumayr-Pintar, 2019[6]), but the absence of reporting on actual pay gaps also limits the usefulness of reporting.
Japan requires public sector and private sector employers with more than 300 employees to share information annually such as the current share of employees that are women (and in which job categories) or different labour situations by gender (e.g. gender division of senior management, excessive work hours by gender, rates of parental leave, etc.). The reporting duty will expand to cover employers with more than 100 employees as of April 2022. Employers are also expected to make action plans for gender equality in the workforce
Korea offers a similar example: companies with more than 500 employees are required to show the gender distribution of job categories and managerial positions, and businesses whose figures score below a certain sectoral-based threshold are required to establish an improvement plan, but pay gap reporting is not mandated.
Luxembourg has a reporting duty on recruitments, promotions, and training by gender, for all companies with at least 15 employees, every two years – but pay data do not need to be reported.
The United States, too, requires gender data reporting, under a broader provision of the US Civil Rights Act. All private sector employers with 100 or more employees, and federal contractors with 50 or more employees meeting certain criteria, must submit demographic workforce data – including data by race/ethnicity, sex, and job categories – to the US Equal Employment Opportunity Commission. While the question of whether pay gap data should be reported has been recently taken up by the judicial branch of government, as of June 2021 gender pay gap data were not reported to the US government (OECD GPTQ 2021).
1. Interestingly, Germany has comparatively expansive provisions for individual workers and workers’ representatives to verify equal pay, such as by requesting information on workers’ pay. See the Transparency in Wage Structures Act (Entgelttransparenzgesetz) at https://www.bmfsfj.de/bmfsfj/themen/gleichstellung/frauen-und-arbeitswelt/lohngerechtigkeit/entgelttransparenzgesetz/entgelttransparenzgesetz-117952.
2. This is referred to as “Internal company procedures to verify and establish equal pay” in the Transparency in Wage Structures Act, Part 3.
3.3. Public sector gender-disaggregated pay reporting requirements
Austria, Belgium, Canada, Denmark, Finland, France, Iceland, Israel, Italy, Latvia, Lithuania, New Zealand, Norway, Spain, Sweden, the United Kingdom and the United States all require gender pay gap reporting in the public sector, though the shape of reporting varies (see Annex Table 3.A.2). In countries that have private sector pay reporting, requirements for the public sector tend to correspond (roughly) with those regulations.
In countries without private sector reporting, rules for the public sector take different forms. In New Zealand, for example, the Public Service Commission publishes gender pay gaps (at aggregate and individual departmental level) using pay data provided by departments. Departments also publish their own Gender Pay Gap Action Plans with more detailed gender pay data. In the United States, the Equal Employment Opportunity Commission (EEOC)18 requires federal executive branch agencies to report some pay information including sex-disaggregated staffing by pay bands, a form of job classification system (Chapter 2).
3.4. Measuring the effects of pay reporting on workers’ outcomes
The details of private sector pay reporting requirements are fairly diverse across countries, and efforts to measure the effects of these policies on wage outcomes have been infrequent. However, academic research suggests that mandatory employer pay reporting laws have helped to reduce the gender pay gap in countries with (relatively) stronger enforcement mechanisms, e.g. Denmark and the United Kingdom. This has typically happened through a reduction in men’s wages, rather than an increase in women’s. These studies do not find a decrease in productivity or profitability associated with companies affected by pay transparency laws.
The small number of rigorous evaluations of pay reporting laws is somewhat surprising, given that pay reporting rules are often implemented in a way that would enable quasi‑experimental policy evaluation (see, for example, Duchini, Simion and Turrell, 2020[4] and Blundell, 2021[3]). Pay reporting requirements are often introduced gradually and target, for example, firms of specific sizes at different points in a timeline.
Quasi‑experimental evaluations exploit nearly random assignment to policy “treatment” and “control” groups: some employers barely qualify for reporting requirements (“treatment”), while others are just under the threshold in terms of size or timing (“control”). Outcomes can therefore easily be compared across these otherwise very similar groups. One common strategy is the regression discontinuity approach (Zhu, 2019[7]). The design of pay transparency rules should be used to support policy evaluations of wage outcomes going forward.
3.4.1. More information may not mean redress for unfair wages
When thinking about the “effects” of pay reporting rules, it is of course important to consider the causal process between the policy and equal pay outcomes: while pay transparency laws may give workers more information, workers must also have sufficient bargaining power to negotiate for the policies to be effective.
At the collective level, this is increasingly challenging given a fall in union membership rates across most OECD countries (see Chapter 5). At the individual level, workers must also be able to negotiate without backlash. Research has shown that when women attempt to negotiate a higher salary, they are more likely than men to face backlash or a “social penalty” for their attempts to negotiate (Bowles, 2014[6]). In sum, even if a female worker suspects or identifies a pay equity issue, raising it with her employer may not be an easy step or a feasible solution.
3.4.2. Evaluations of national company pay reporting regulations
Austria
The two academic studies of Austrian pay reporting requirements, using different quasi‑experimental approaches, find that these reporting rules have had no visible impact yet on the gender pay gap ( (Böheim and Gust, 2021[2]) (Gulyas, Seitz and Sinha, 2020[1]). The authors suggest this may be due to weak enforcement mechanisms for reporting, no required follow-up actions if gaps are found, and a lack of public awareness of the pay transparency requirements. Böheim and Gust (2021) also find that the pay reporting rules led to a lower share of women working in large firms that were affected by the rules.
Denmark
Bennedsen et al. (2019) find that Denmark’s pay reporting requirement has lowered the gender wage gap in affected firms through a reduction in the growth of male wages. Companies just above the 35‑employee threshold for reporting also tend to hire more female workers and are more likely to promote female workers than companies just below the required reporting threshold (Bennedsen et al., 2019[8]).
France
In 2019, France implemented a comprehensive equal pay auditing system, with extensive reporting rules and enforcement, entitled l’index de l’égalité professionnelle entre les femmes et les hommes, or the professional equality index between women and men (henceforth PEI). The PEI is detailed in Chapter 4). Prior to the 2019 introduction of the PEI, however, a less rigorous system was in place that asked companies to commit to gender equality. Coly (2021) analyses this early policy, based on a 2010 law mandating the negotiation of agreements on gender equality for firms with more than 50 employees. (Note, however, that this policy did not explicitly require company pay reporting.19)
Coly finds that the previous law had no impact on the gender wage gap or other gender equality indicators, such as the wage promotion gap, in affected firms. Coly attributes this to the nature of the law’s obligations – while simply signing a gender equality agreement was mandatory, the implementation of the content of the agreement was not enforceable. Further, financial penalties associated with not signing an agreement were more lax than they are now20 (Coly, 2021[9]).
Switzerland
In 2020, Switzerland introduced a pay reporting system requiring audits of companies with 100 or more employees (see Chapter 4). Prior to this, however, the Swiss Federal Office for Gender Equality in 2006 introduced the wage gap calculator Logib and recommended its use for companies with at least 50 employees. Vaccaro (Vaccaro, 2018[10]) finds that this early version of the Logib tool led to a reduction in the gender wage gap due to employers’ adjusting the wages of new hires and that there was no reduction in female workers in affected firms. Enforcement of this earlier policy was a light touch: Switzerland monitored compliance among a small random selection of companies with public tender contracts.
Of course, the requirement of equal pay audits according to the current Gender Equality Act should not be confounded with random controls in public procurement. There are only around 30 controls a year at the federal level, covering around 0.1% of private companies that have obtained a public tender. Approximately 200 such controls will have been carried out between 2006 and the end of 2021.
United Kingdom
Two studies on mandatory company pay reporting in the UK find that the regulations slightly reduced the overall gender pay gap (Blundell, 2021[3]) (Duchini, Simion and Turrell, 2020[4]). This reduction appears to have occurred through a decrease in the wages of male workers, rather than an increase in the wages of female workers.
The researchers posit that the UK’s pay transparency rules have affected hiring practices, as well. Duchini, Simion and Turrell (2020) find that companies impacted by transparency rules tend to adopt hiring practices that are more attractive to women, including by providing wage information and information in flexible work arrangements in job ads. After establishing high public awareness of the pay reporting rules, Blundell (2021) runs a survey experiment and finds that over half of women would accept a 2.5% lower salary to avoid the (hypothetical) employer with the highest pay gap in their industry, with women prepared to accept, on average, 4.9% lower pay to avoid this high pay gap employer.
The public “naming and shaming” component of the UK measure has also meant that firms that perform poorly tend to experience reputational and adverse financial impacts when these results are made public (Duchini, Simion and Turrell, 2020[4]).
3.4.3. Evaluations of sector-specific pay reporting regulations
Canada
In Canada, employees in the public sector are affected by pay disclosure laws if they earn above specified income thresholds. Literature suggests that these pay transparency measures have reduced the gender pay gap amongst academics and those in the public sector (Baker et al., 2019[11]). While this is likely driven by a rise in female wages, individual wage changes are statistically insignificant (Baker et al., 2019[11]).
United States
While the United States does not have national pay transparency laws, different workers in different contexts have been affected by pay transparency measures. For instance, over time US academics in public universities have had their pay become more transparent and accessible through Freedom of Information requests, as well as on public websites. These transparency measures has been found to have reduced the gender pay gap within affected universities (Obloj and Zenger, 2020[12]) Similarly, the prohibition of pay secrecy rules in certain US states has corresponded with lower gender pay gaps, particularly among more highly educated workers (Kim, 2015[13]).
3.5. Evaluating pay reporting policies’ implementation and operation
Given that most of these pay reporting policies were introduced fairly recently – within the past two decades in most countries – it is also relevant to assess process outcomes. To what degree are companies actually complying with regulations, reporting pay gaps, and facing penalties if they are non-compliant?
A few countries that embed reporting within their broader equal pay auditing system, including Finland, France, and Sweden, have conducted evaluations of programme effectiveness in terms of outcomes like employer compliance and employee engagement (Chapter 4). Iceland has an evaluation ongoing but the results are not yet public.
Among countries with company pay reporting but without pay auditing systems, Austria has carried out a government evaluation of its pay reporting obligations and requirement that job advertisements21 list minimum pay, and Belgium has planned a pay reporting evaluation. The United Kingdom has done some assessments of pay reporting compliance, and there is a legal requirement to review the impact of gender pay gap reporting regulations within the first five years of operation (OECD GPTQ 2021).
In terms of compliance outcomes, OECD countries present a mixed picture of effectiveness. The United Kingdom, for example, has so far had two years of a very high compliance rate for pay reporting, perhaps related to the public nature of reporting there. A government report in Austria, too, found that companies generally comply with the statutory minimum standards for reporting (Bundesministerium fur Bildung und Frauen, 2015[14]). But many countries – even some with relatively sophisticated mechanisms for reporting and financial penalties – did not report to the OECD what share of employers were non-compliant and which were actually fined.
Figure 3.2. Countries’ reported obstacles to proper programme operation
Note: Countries were asked “What are (possible) obstacles to the proper functioning of this reporting requirement? Please elaborate the main barriers to the effective functioning of this right in practice. E.g. privacy and data protection legislation, issue awareness, political priorities, administrative/economic constraints, social norms.” This was an open text question and responses were sorted into comparable groups. This figure presents results for countries with pay reporting and equal pay auditing programmes. Countries could identify more than one barrier. Twelve countries with reporting or auditing requirements did not respond to this question.
Source: OECD GPTQ 2021.
3.6. Barriers to effective company pay reporting
What, then, are some of the barriers to the effective functioning of pay reporting processes? Governments with pay reporting and equal pay auditing systems were asked to identify common barriers to effective programme functioning in GPTQ 2021 (Figure 3.2). Most countries (12) gave no response, but among those who did, the most commonly cited concerns were administrative or economic burden for stakeholders and data privacy issues.
3.6.1. Company size requirements limit how many people are covered by pay transparency
Some of the challenges are implicit in this chapter’s discussion of programme design. Many small or mid-sized companies do not fall under pay reporting regulations due to their size, in part due to concerns (by companies and countries) that the administrative burden would be too high. However, a recent study estimates that the pay reporting cost to companies is well under EUR 1 000 annually (Eurofound, 2020[15]) – a cost that could potentially be publicly subsidised for small employers who cannot afford it.
These firm size rules mean that a portion of the workforce is not covered by pay transparency rules. This in and of itself can lead to or exacerbate existing inequitable outcomes – with some employees (for example at larger firms) able to access important gender pay information, others not. Of course, this policy design feature has also helped researchers understand quasi‑experimentally how pay reporting laws impact the gender pay gap.
3.6.2. Weak enforcement of pay reporting rules
Weak enforcement mechanisms can include a lack of government agencies monitoring pay reporting, low fine amounts, and low rates of fines issued. These likely hinder compliance. The results of wage gap reporting are also not shared publicly in many countries, which could otherwise serve as an informal sanction.
3.6.3. Claims of high administrative burden
Many countries state that company reporting requirements can present a high administrative or budgetary burden to firms and/or to the government, and that privacy and data protection are concerns (OECD GPTQ 2021). Other countries point to communication issues. Some countries say that a lack of awareness among employees and misunderstanding of the causes and treatment of the gender pay gap are obstacles to effective functioning of the policy.
3.6.4. Insufficient awareness of pay reporting policies
Countries’ responses to the OECD GPTQ show that policy awareness matters. Many countries report that employee and public awareness of pay reporting and auditing requirements is not very high. This limits policy effectiveness, as employees and their representatives may not expect much employer engagement on closing the gender wage gap. Austria reports, for example, that while pay gap reports are consistently shared with works councils, employee awareness of pay reporting is low and companies’ reports rarely reach employees (Bundesministerium fur Bildung und Frauen, 2015[14]). Public knowledge of these systems can help, too, as it may foster social pressure to address gender inequality. The United Kingdom reports that its strategy of publishing companies’ gender wage gap results online has been successful both in ensuring 100% compliance over the first two years of programme implementation and in encouraging a public discussion about the gender wage gap.
3.6.5. Other practical challenges
Even countries with fairly comprehensive pay reporting systems still report very practical (if addressable) challenges. The score and quality of pay reports can vary (Finland), the results of such studies are not always used to improve gender pay gap outcomes (Austria), and correctly identifying private companies that are subject to the requirement can be difficult, thus complicating enforcement (Italy) (OECD GPTQ 2021).
References
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Annex 3.A. Policy tables: Employer pay gap reporting requirements
Annex Table 3.A.1. Policy table: Private sector employer pay reporting
Summary of OECD countries’ pay reporting policies in countries with mandatory reporting in the private sector or with mandatory reporting in the private and public sectors, 2021. Companies with mandatory equal pay auditing systems detailed further in Chapter 4, Annex Table 4.A.1 and 4.A.2)
Note: Table summarises the key features of company pay reporting requirements in countries with such requirements in the private sector. Countries that require more extensive, widespread, mandatory equal pay audits are detailed in Chapter 4.
Source: OECD Gender Pay Transparency Questionnaire (GPTQ) 2021.
Annex Table 3.A.2. Policy Table: Public sector (only) pay reporting
Summary of OECD countries’ pay reporting policies in countries with mandatory reporting in only the public sector, 2021. Companies with mandatory equal pay auditing systems in the public are detailed further in Chapter 4, Table 4.2.
Note: Policy table summarises the key features of company pay reporting requirements in countries with such requirements that are exclusive to the public sector. Countries in which public sector reporting rules differ extensively from their private sector reporting rules are included in this table (e.g. Austria).
Source: OECD Gender Pay Transparency Questionnaire (GPTQ) 2021.
Notes
← 1. As of June 2021.
← 2. Canada and Israel’s measures will mandate gender pay gap reporting starting in 2022. For Canada, this builds on a pre‑existing reporting system that has required federally regulated private sector employers to provide pay information as part of their annual reporting on employment equity.
← 3. Chile’s pay reporting regulation only covers organisations that are monitored by the Commission for Financial Markets [Comisión para el Mercado Financiero (CMF)]. Companies must complete a gender analysis, including on pay, in order to remain compliant with CMF regulations.
← 4. A few countries – specifically Finland, Sweden, and Switzerland – self-identified in the OECD Gender Pay Transparency Questionnaire (OECD GPTQ 2021) as not having company pay reporting requirements, but these countries are included in this chapter because their pay reporting requirements are well-embedded in broader pay auditing systems. See Box 3.1 and Chapter 4.
← 5. Financial sector companies monitored by the Chilean CMF must submit this information to the CMF.
← 6. In Switzerland, an audit can be carried out by an independent body that is not regulated by the government, i.e. an organisation under Article 7 of the Gender Equality Act or an employees’ representation [see Article 13d para 1b Gender Equality Act (GEA)]. These organisations under Article 7 GEA are not audit firms in the sense of the Auditor Oversight Act. However, in practice most audits will be carried out by firms of auditors licensed under the Auditor Oversight Act. Only a minority of employers choose an organisation under Article 7 GEA.
← 7. Australia does not publish actual pay gaps within companies online, but it does publish the history of whether or not a company reported pay gaps to the government.
← 8. Norway does not have a regular system for fines, but the law allows the Anti-Discrimination Tribunal to impose enforcement fines for an employer’s breach of pay reporting.
← 9. These results are available at https://data.wgea.gov.au/organisations, under “Employer Action on Pay Equity”.
← 10. Available at https://www.ris.bka.gv.at/GeltendeFassung.wxe?Abfrage=Bundesnormen&Gesetzesnummer=10008858
← 11. This is mandated as part of Legislative Decree n. 198/2006 (Article 46). Available at https://www.normattiva.it/uri-res/N2Ls?urn: nir: stato: decreto.legislativo:2006-04-11;198.
← 12. At the time of OECD GTPQ reporting, Italy had granted postponements of data collection due to the COVID‑19 pandemic (https://www.lavoro.gov.it/strumenti-e-servizi/rapporto-periodico-situazione‑personale/Pagine/default.aspx).
← 13. The user guide is available at https://www.cliclavoro.gov.it/Aziende/Adempimenti/Documents/Guida-utente-RaPP.pdf.
← 14. These measures are laid out in under Article 13(2) and Article 37 of Italy’s legislative decree n. 198/2006.
← 15. Available at https://e-seimas.lrs.lt/portal/legalAct/lt/TAD/10c6bfd07bd511e6a0f68fd135e6f40c/asr.
← 16. Available at The Equality Act 2010 (Gender Pay Gap Information) Regulations 2017 (https://www.legislation.gov.uk/ukdsi/2017/9780111152010) and The Equality Act 2010 (Specific Duties and Public Authorities) Regulations 2017 (https://www.legislation.gov.uk/ukdsi/2017/9780111153277/contents)
← 17. At the time the OECD GPTQ reporting in spring 2021, the UK had postponed by six months the collection of gender pay gap statistics from 2020 due to the COVID‑19 pandemic.
← 18. This regulations come under the United States’ EEOC Management Directive 715
← 19. Even during this less stringent, pre‑PEI system France maintained some reporting on the comparative situation between women and men, including an analysis of differences in pay and career progression according to age, qualification and seniority. These data have been contained since 2015 in the economic and social database.
← 20. This is not to say that penalties did not exist; they were simply less extensive than they are today. Since 2012, companies could be notified of a penalty decision of up to 1% of the payroll in the absence of coverage by an agreement or action plan since 2012. In 2018, 71.5% of the formal notice procedures led to a regularisation of the situation of the companies concerned, which suggests a degree of compliance with the system prior to the PEI.
← 21. Interestingly, Austria’s report also studied the country’s rule requiring that job advertisements provide salary information and found that just under 90% of job advertisements met this criteria in 2014 (Bundesministerium fur Bildung und Frauen, 2015[14]).