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Time to stop treating Jack and Jill differently – With Iceland leading the way, should we follow too?


Gender Pay Equity Icelandic Legislation

Most of us are familiar with the Jack and Jill nursery rhyme. What that nursery rhyme does not tell you is that if Jack and Jill fetched water for a living, chances are Jill would get paid much less for fetching the same amount of water as Jack!

The gender gap at work is not a new topic of discussion, and people across the globe have been organising for decades to bring down the wage difference between men and women. And while the world has made progress in this direction, Iceland's landmark legislation that came into effect this January has bumped up this movement to the next level.

What is this new Icelandic Law?

As of January 01, 2018, an Icelandic law makes it illegal for employers to pay men and women different wages for the same type and amount of work. The way this law will be enforced is that companies with more than 25 employees will now need a certification from the government to the effect that there exists no wage gap within their organisation based merely on one's gender.

The law, which was supported by both the government and the opposition, also makes provisions for a difference in wages. However, the employer will now need to prove to the government the basis of such a difference. This means that arbitrarily determining pay and using ambiguous performance metrics will no longer work.

A Giant Leap in the Right Direction

This is undoubtedly good news for women, but this is also great news for the workforce in general. What this legislation is going to effectively accomplish is that it will force a closer evaluation of the inputs used to determine remuneration levels. Gender, of course, is one of the most overt biases that is visible at work. But there are many other biases at play if one looks closely. Favouritism, nepotism, racism to name a few. Legislation similar to the one Iceland has just brought into effect can help organisations aim at all of these issues.

Employers in Iceland will no longer be able to solely rely on the managers' 'opinion' about an employee's performance. Nor would employers be able to use arbitrary 'market standards' for paying a certain person. Companies will need to put specific tools, markers and processes in place for measuring employee performance as well as determining employee remuneration – a transparent process that is clearly visible to the employee, the manager, the company management as well as the government. This also ensures that employees who perform are rewarded and thus stay more engaged in what they do. Employers will also need to spend time in defining the exact 'size' of a job so that the employee knows exactly what is expected of them and not be surprised when they see their ratings.

One of the great things about this new legislation is at the time of recruitment when performance has not yet been determined, a clear methodology for determining starting pay rates must be evident thereby dealing directly with one of the assumed “gender” issues of negotiating ability/strength.

The Business Case for Gender Equity

But that is not all. Gender equality makes tremendous business sense, too, according to Monique Villa who is the CEO of Thomson Reuters Foundation. In her article for the World Economic Forum she writes that while gender equality remains a human right, it also has immense economic potential. Companies with a strong history of gender diversity are likely to be 15% more profitable than others in their industry. A similar pattern of gender diverse organisations outperforming their peers has been seen within fortune 500 companies as well. This alone could be enough incentive for companies to embrace gender equality. Villa goes on to say that many studies have shown that financially independent women, by virtue of having more control on their lives, bring a positive impact on the political and economic environment surrounding their extended families, societies as well as countries. 

Time for Us to Step Up?

Iceland's message to the world is clear - “We are ready to lead the way. Your move is next.” Even before this legislation, Iceland has consistently been at the top of World Economic Forum's (WEF) Gender Gap Reports for many years. And yet, they felt the need to take this one step further.

How is your organisation dealing with ambiguities in performance and remuneration management? To learn how you can build a balanced and effective remuneration policy for your organisation, read our e-book - “Money doesn’t buy you happiness (or engaged employees)”. It offers practical advice and HR management tools for Hr specialists who manage their company’s remuneration review.Download your copy here


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