By Iain Stark, International HR leader and reward expert
As employers in the UK start to publish their second annual gender pay results, what is new in the rest of the world? The relatively limited impact so far in the UK has received a lot of commentary, and as always change will not be overnight. The focus of this blog is what lessons there may be from the approaches adopted by other countries.
The answer is that there are significant changes in what companies must disclose. The UK was a leader among major European countries when disclosure requirements came into force in April 2017 when employers had to disclose data if they had 250+ employees, but it has been quickly followed Germany from the start of 2018 if 200+ and France earlier this month if 1,000+ (September if 250-999; March 2020 if 50-249).
But before the assessment, some context is needed. For decades it has been illegal to pay women less than men in many countries. The Equal Pay Act in the UK in 1970 was preceded by John F. Kennedy signing a similar act in the US in 1963, and was followed shortly after by France (1972) and by India (1976), as examples. And even earlier equal pay for work of equal value was embedded in International Labor Organisation (ILO) Conventions in the 1950s.
However, the true impact to date is debatable. One reason may be the “yes, but” rationalisation that after adjusting for differences in experience, the typical roles carried out, the incidence of part-time vs. full-time, of sector, etc., there is no significant difference. But even after stripping out such factors, which themselves raise broader societal issues, gaps remain. In France the government assesses an unexplained gap of 9% as the new legislation comes into force.
The drive now for corporate pay transparency runs in parallel with other actions such as the minimum proportion of women at board level in France (Copé-Zimmermann) and the recommended gender mix at board/senior leadership level in the UK (Hampton-Alexander). Expect this to continue. And it is not much of a stretch to link it with overall social pressures for change from movements such as #MeToo.
As companies are pushed into the spotlight, the table below is a net comparison of France, Germany and the UK. The UK sits between the scoring system in France, with potential penalties if the score is not “ok” in three years and the case-by-case individual disclosure in Germany.
Outside Europe? To date in the US, company-level transparency about pay equity has tended to focus on executive pay in absolute and relative terms, including the disclosure of pay ratios and median pay levels worldwide. There is legislation in some cities/states making it illegal to ask about prior salary in the hiring process, as one way to avoid pay differences being perpetuated across an individual career, but no overall company disclosure. In the world’s largest labour markets, China and India, there is general legislation requiring fairness in the workplace, including, as referenced above, in India, the Equal Remuneration Act, 1976 on this specific issue, but again not mandated disclosure.
What next? Such company-specific pay transparency is new, but as for other equity dimensions, this is only going in one direction. As similar legislation or guidance comes into effect across the world, even if there is no direct penalty, the penalty of bad publicity, with social media to the fore (glassdoor; #MeToo, etc.) will push employers to work to correct any gaps as they seek to attract and retain. Beyond the country-specific reporting, France, Germany and the UK have offered all employers food for thought about different ways to assess how they stand and actions required.
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Iain, Thanks for the article, and views on a critical global issue. Its not creating law but its effective implementation in true spirits that will hopefully bring some changes. what about incentivising companies which have a favorable score - in terms of lower corporate taxes, etc so the companies are motivated to bring pay parity. I also feel if portals like Glass-door also can have a rating of companies so that employee will prefer companies with a favorable rating on pay parity.
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