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[Leonid Bershidsky] No, Iceland hasn’t solved the gender pay gap

By Bloomberg

Published : Jan. 7, 2018 - 17:38

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Sen. Bernie Sanders says it’s worth following the example of “our brothers and sisters in Iceland” who last year passed the world’s most demanding law on equal pay for men and women. But the legislation, which took effect on Jan. 1, could end up hurting women without some added measures. Even ultra-egalitarian Iceland isn’t ready to take them.

No other country has gone as far as Iceland in demanding equal pay for equal work. The 2017 law doesn’t just expose a company that violates the principle to lawsuits. It requires all firms with 25 or more employees to set a value for each task a worker in a certain position is expected to perform, then fix salaries to the sum of those values. Bigger companies have a year to certify their compliance, obtained from authorized assessors, to the country’s government Center for Gender Equality. The smallest ones have until the end of 2021. Recertification is due every three years, the law stipulates.

Iceland is doing this to redress a pay gap of 5.7 percent (although women’s rights activists use higher numbers). Only one rich nation -- New Zealand -- has a slightly smaller gap; it’s 18 percent in the US. The payroll certification will probably shrink it further, making Iceland the undisputed world leader in this area. But it will likely hurt women’s labor market participation there.

Reasons why employers try to pay women less for equal work range from patriarchal prejudice to women’s tendency to negotiate less aggressively than men do. But the most persistent of these reasons has to do with the perception that once a women has children, her priorities shift away from work. The only way to completely eliminate that perception is to get men to accept an equal share of child-rearing responsibilities. It’s doubtful that any government or civic-minded employer can do that, but they can at least try, mostly by adjusting parental leave policies.

Iceland has the world’s most equal parental leave system. It’s the only country where men and women get the same amount of nontransferable leave -- three months each. The couple is also given an additional three months to be shared as the parents please -- but in practice, only 19.7 percent of men use any of the transferable leave. That’s what happens in every country that allows parents to decide how much leave each will take. In Spain, only 1.6 percent of fathers use transferable leave; in far more egalitarian Denmark, 24 percent do.

Gender stereotypes of the man as the provider and the woman as the caregiver survive every attempt at equalization. During Iceland’s prolonged economic crisis after the 2008 financial crash, men’s uptake of paternity leave declined because they were the ones expected to draw their full salary, not the partial one paid while taking care of the kids.

That division of gender roles won’t go away even with obligatory payroll certification. The tough new requirements will make it harder for employers to compensate for women’s perceived family orientation by paying less, so, all things being equal, they’ll be inclined to hire fewer women. That won’t be easy to discourage. While it’s relatively easy to legislate gender equality, say, for corporate boards, proving that a certain candidate wasn’t hired because of her gender can be daunting. Most rejected candidates will keep looking for a job rather than sue.

Even in Iceland, the equality-promoting measures treat the symptoms of inequality without altering the underlying gender roles. That can work up to a point, but absolute equality can’t be achieved in that way. And in Spain, Poland or Italy, where only tiny numbers of men use transferable paternity leave -- or in the US, where only the mother gets mandatory parental leave -- applying Iceland’s equal pay certification law would almost certainly deal a serious blow to women’s employment.

Iceland’s example should be improved on, not followed. A country mandating equal, completely non-transferable family leave for both men and women would begin to degrade the stereotype propping up the pay gap. If men and women must both take time off to take care of a child, and if they are actively encouraged to put equal effort into child-rearing -- something that can only be good for children -- employers will cease to regard men as the more committed workers. Then, Icelandic-style payroll certification could take care of the other dynamics that currently favor men in salary negotiations.

By Leonid Bershidsky

Leonid Bershidsky is a Bloomberg View columnist. -- Ed.