On January 1st, 2018, Iceland became the first country in the world to make pay inequality illegal. Companies that cannot prove pay equality will be fined close to $500 a day that the gap continues to exist.
Iceland, and many other countries globally, do have legislation on the books that make pay inequality illegal. That is not unique and is true for countries such as the United States, the United Kingdom and other major players in the global economy. What is unique about this Iceland law is the fine. Never before has there been a countrywide pay equality certification or a fine imposed should a company fail to meet that standard. There are now financial repercussions for companies that do not live up to a basic standard of equality.
This rather momentous move for Iceland has global implications for the gender gap.
Every year, the World Economic Forum publishes The Global Gender Gap Report. This report looks at all countries global and ranks them on a scale from zero to one in terms of women’s economic participation, educational attainment, health, and political Empowerment. The closer to one a country gets, theoretically, the smaller the gender gap. This year, Iceland, Norway, Finland, Rwanda and Sweden round out the top five while the Islamic Republic of Iran, Chad, Syria, Pakistan and Yemen make up the bottom.
Though there were slight decreases in the health outcomes for men and women being made, this progress was only 1%, from 95% to 96%. For political participation, this percentage didn’t move at all. The report is careful to state that this progress is nuanced by many small but significant changes one way or the other. With an economic gap of 58% between the sexes, it is forecasted that women will have to wait 217 years before they earn as much as men and have equal representation in the workplace. The progress for closing the gender gap globally remains bleak.
Now that Iceland has taken this step, will other countries follow suit?
This is a little hard to imagine. Nordic countries that also top the World Economic Forum Gender Gap list might be in a position to do this sooner rather than later. Even Rwanda, the only African nation to make the top ten of this list could be in a position to make this move with it’s ever increasing emphasis on creating inclusive economic policies. But major players in the global economy like China and the United States have quite a long way to go.
Shortly after the announcement of Iceland’s new law, Bernie Sanders, a liberal United States Senator called on Congress to follow suit. The current political situation in the United States makes this an unlikely move in the next three years. Similarly for China, a country that sits below the global weighted average in the World Economic Forum report, would have to make many changes to it’s economic development strategy for a bold move, such as Iceland has made, to work.
Even if other countries do not follow Iceland’s example, the gender pay gap may be closing. Globally, women are speaking out and demanding equity. Some of these pop culture movements have serious financial implications such as the legal fund set up by TIME’S UP launched just last week. The progress towards pay equality may be a long one, considering most countries other than Iceland have a long way to go, but progress is a long time coming. Iceland just took a major step in the right direction.
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