• Insights

International Equal Pay Day: taking stock of the gender pay gap

Written by
Toffoletto de Luca Tamajo, working in employment law since 1925.
Authors
Emanuela Nespoli
Partner - Italy
Toffoletto De Luca Tamajo
Italy
17.09.21
4
International Equal Pay Day is on 18 September 2021: progress has been made on tackling the gender pay gap, but much more remains to be done.
Gender pay gap map

This map shows at glance which countries currently have reporting obligations in place for employers in relations to what men and women are paid in their organisations.

The fact that men and women should be paid equally is an established principle throughout most of the world. As an example, the right to equal pay for the same work or work of equal value between female and male workers has been a founding principle of the European Union since the 1957 Treaty of Rome and a 2006 Directive (Directive 2006/54/EC) on equal treatment of women and men in matters of employment and occupation already requires employers to ensure equal pay for equal work or work of equal value between women and men.

However, even if this principle is enshrined in legislation in almost all countries around the world, the actual state of inequity remains discouraging and furthermore, the COVID-19 pandemic has made it worse. Indeed, the relevant data for this year shows once more that the application of this principle is not so simple.

In particular, the Global Gender Gap Report 2021 drafted by the World Economic Forum investigates four different areas: economic participation and opportunity, education, health and political leadership in 156 different countries. Based on the above report, top of the list is Iceland, which is confirmed as the country with the highest score with respect to gender equality, while Western Europe is the region that has made the most progress (77.6%). Despite these encouraging results, gender equality has not yet been achieved by any country. The global gender gap level, which refers to the average progress toward parity, is 68%, a step back from 2020 (-0.6 percentage points). At this rate, it is estimated that it will take 135.6 years to close the global gender gap, compared to the 99.5 years assumed by the previous report.

Further evidence is the gap separating women from men in employment: 267.6 years will be needed to close the employment gap, if we continue at this rate. In addition to inequality in accessing the workforce, economic and wage disparities continue to be a major area for action. Despite some progress this year, the ratio of wages for women to men in a similar position still remains at 37%, that means that women are paid on average 37% less of what men are paid.

The health emergency and related economic downturn seems to have had a more severe impact on women than men. The Global Gender Gap Report 2021 mentioned that early projections from the ILO (International Labour Organization) suggest that 5% of all employed women have lost their jobs, compared to 3.9% of employed men. This is partly because the pandemic is having a greater impact on sectors where women are most present: restaurants, tourism, non-profit organisations, media and communications. In addition, women with children have experienced profound difficulties in maintaining work-life balance, especially in those countries, such as Italy, where women are the main caregivers (of children and elderly individuals).

As the above figures show, the issue is complex and multiple actions should be taken by governments across the world, not only to implement the fundamental principle of equal pay, but also to provide more support and services to mothers. These services may also be provided by employers through financial aid and tax efficiency measures.

In any case, an important first step is to actually be aware of the situation. In order to implement the necessary measures and take proper action to tackle inequality, governments and employers need to monitor and collect information on the current state of affairs.

On this point, there is good news: many countries have actually introduced reporting obligations for employers. To illustrate this, Ius Laboris developed an interactive map that shows the different levels of reporting obligations introduced in various countries around the world.

From the analysis carried out, it emerged that in some cases, local provisions only apply to ‘relevant employers’, that is, organisations with a significant headcount.

The type of information that must be included in the report varies according to the regulations implemented in each country. However, in general terms, all organisations must keep a record of the average salaries, salary supplements and non-salary amounts paid to their workforce, split by gender and, in some cases, separated by professional group.

Further, employers may not only be required to report but also publish the results of the data collected (France and UK) or in the annual report (Norway). In some cases the data is even published in specific national legal publications (such as the Federal Law Gazette in Germany).

In addition to reporting obligations, another significant issue is the representation of women on decision-making bodies and how to ensure more equality in that regard. In some countries (such as in Belgium, Austria, Italy and Germany), a mandatory gender quota exists for listed companies requiring them to ensure that one third of the Board of Directors is female.

Furthermore, Europe Directive 2019/878 (known as ‘CRD V’), has also intervened in the regulatory framework to introduce the principle of gender pay neutrality into remuneration policies which must be adopted by bank and financial institutions. In particular, according to CRV V, ‘gender neutral remuneration policy’ means a remuneration policy based on equal pay for male and female workers for equal work or work of equal value.

In July 2021, the European Bank Authority published its revised Guidelines on sound remuneration policies. This update takes into account the amendments introduced by CRD V that relate to sound institutional remuneration policies and, in particular, the requirement that remuneration policies should be gender neutral.

The Bank Authority in Italy has also incorporated a gender pay neutrality principle as a requirement for remuneration policies in credit institutions.

Nowadays the gender pay gap is considered a major issue and, as the Ius Laboris gender pay gap map shows, governments around the world are taking action. However, there is still much work to be done in order to close the gap.