In recent years, the ‘gender pay gap’ has become a hot topic in the business world. Yet, although there’s a lot of talk about the steps countries and organisations must take to tackle pay disparity, there’s sadly been little in the way of action.

The International Labour Organization estimates that, on average, women continue to be paid about 20 per cent less than men across the world. Even more concerning is the World Economic Forum’s ‘Global Gender Gap Report 2020’, which found the gender pay gap could take the best part of three centuries to close. Meaning that if attempts to address the gap continue to progress at their present rate, nobody alive today will be around to benefit…

Defining ‘equal pay’

Iceland continues to be the top country for gender parity. (And it’s no coincidence that the country which has held the title for 11 years in a row is also the first to enforce equal pay by law.)

Most countries — although not all — now address wage discrimination in their laws, such as by mandating equal pay for equal work. ‘Equal work’ could be defined as work that involves similar tasks, knowledge and skills or work that requires similar demands in terms of effort and decision-making. However, what constitutes ‘equal work’ can differ greatly from country to country.

‘Equal pay’ can also apply to various contractual terms rather than merely basic pay. For example, it could cover anything from non-discretionary bonuses and overtime rates and allowances to pension schemes and sick pay. Again, this will be different depending on the relevant laws in that jurisdiction.

In some countries, such as the UK, the right to equal pay applies to many different work arrangements. It doesn’t matter how long the worker has been employed or whether they have a full-time, part-time, fixed-term, zero-hours or casual contract. This isn’t the case in all countries though, and there are often fewer laws to protect those doing part-time work or on casual contracts.

Businesses must do more

Unfortunately, paying women less than men for the same work is only part of the story. Often, women and men are also sorted into different sectors, with women typically concentrated in lower-paying occupations.

Clearly, just following the law is not enough — particularly when equality laws can vary so significantly from one country to the next.

Instead, organisations must consider some of the root causes of the gender pay gap and find ways to mandate equal remuneration for work of equal value and encourage equal employment opportunities across all areas. For instance, there are far fewer women than men in management and leadership positions, especially at higher levels. Equally, women still lag behind men in STEM areas which are associated with higher-paid jobs.

The gender pay gap is often also a consequence of different working hours and time out of the workforce. Women are more likely than men to take career breaks or work on a part-time basis to raise children. When they return to work, they are then likely to have fallen behind in advancement and remuneration. In countries where domestic workers and extended family help are readily available, this tends to be less of an issue.

To help eliminate the pay gap, organisations must promote an inclusive business culture and use fair, transparent processes for recruitment. This includes basing pay on the position itself rather than previous pay, which can perpetuate the gender pay gap.

Companies should also look to make jobs more flexible at all levels so that more women can access senior, higher-paid roles. Encouraging men and women to share childcare responsibilities and offering benefits schemes which include provisions for childcare can also help to level the playing field and improve women’s participation in the labour market.

Doing the right thing

Countries that have enshrined gender equality in laws — such as Sweden, Belgium, Denmark and France — are often cited as some of the best places to live and work. Yet, even in these countries, implementation can be haphazard.

Although companies might think they are doing enough to meet equal pay requirements, there are many common practices which can lead to risks with equal pay, including managerial discretion over starting salaries, out-of-date job evaluations, lack of transparency in pay and grading systems, discretionary pay systems and non-payment of contractual bonuses during maternity leave.

As such, you must take steps to ensure compliance with equality laws in the countries where you operate by identifying, explaining and eliminating unjustifiable pay gaps. Failing to do so could result in an expensive employment tribunal and irreparable damage to your reputation and employee relations.

However, taking stock of equality and diversity measures across your organisation is also about doing the right thing. And if you’re keen to attract the best talent from around the world, you want to be seen as a fair, equal-opportunities employer.

If you want to remain on the right side of compliance during your global expansion journey, a Professional Employer Organisation can help. For specific advice on equal pay laws in the countries you operate in, contact PEO Worldwide today.