On Wednesday, March 8th, International Women’s Day, the government of Iceland announced that they would soon introduce legislation aimed at closing the gender pay gap in the country.
The bill would require any business, private or public, with more than 25 employees to get certification stating that they provided equal pay for equal work. Not only would the proposed legislation protect against instances of gender pay differences, but it would also seek to prevent discrimination based on ethnicity, sexuality, or nationality.
Some countries, as well as the state of Minnesota have equal pay certification programs, but Iceland’s would be the first to be mandatory. The goal of this small island nation of 330,000 is to have this law implemented by 2020.
Few details about the bill have been released and will likely not be available until the government formally introduces the bill in parliament.
In the meantime, I foresee two key problems with the law. First is execution. This would appear to be a large undertaking that the government would have to prepare for by creating new policies, institutions, and positions that would have to not only oversee the registration of any existing firm with over 25 employees, but also make sure any new businesses comply with the law.
The second problem is enforcement. It is all fine and well to require corporations to verify that they have equal pay, but what if they do not have equal pay? Is there going to be a punishment or fine? Will the firms have time to adjust their practices to come into compliance with the law? How often will the government keep check on the practices? Will the companies have to be recertified at any point in time?
These are just a few key questions that the Icelandic government will have to address.
Some have wondered if a similar law would work in the United States. And unfortunately I believe the answer is no. According to the most recent census data there are around 600,000 companies in the United States that have over 25 employees. This does not include the dozens of federal and state agencies that would also be subject to the law.
This number would require such an outpouring of resources from the government that I do not think it is feasible. The fact remains however, that this country suffers from a gender pay gap that is exasperated by race, nationality, religion, and any other number of factors. So what do we do about it?
I believe there are a few key policy changes that need to be made. First, it must be easier to combat wage discrimination. Second, make it more acceptable and allowable for people to openly discuss their compensation. And finally, to allow for those who have lost wages due to discrimination to be compensated.