can pay transparency policies close the gender wage gap

SPE-2020-1359, http://dx.doi.org/10.2139/SSRN.3523828. 2. Increase the use of intentionally gender-neutral job classification systems. These are more common in the public sector. This has negative implications for their pay, particularly in jobs with inflexible work hours (Goldin, 2014[17]). Dont prohibit workers from discussing pay To counter pervasive gender bias, state policymakers in several states have passed laws banning pay secrecy. WebRecognising this serious challenge, many OECD countries have begun implementing novel pay transparency policies to close the gender wage gap. According to the U.S. Department of Labor , women working full time, year round are paid 83.7% of what men are paid, and the gap widens even more for Black and This needs to be matched with government or union enforcement of the content of action plans, within a reasonable timeframe, to help ensure pay transparency measures can actually reduce the gender pay gap. at different grades, levels of responsibility or positions. Pay transparency and the wage gap These anti-secrecy laws not only reduce the stress of job hunting, they also play an important role in eliminating the gender pay gap. Countries like Sweden, Finland, and France involve unions or works councils extensively in the pay auditing process (Chapter4), for instance, and these actors function as agents of workers at that stage, even if they are not always required to consider the gender wage gap during salary negotiations (see Chapter5). A notable exception to this trend is Sweden, which requires equal pay audits from firms with at least ten employees. 7628 calls were received during the year, 54% of which involved questions about what data should be incorporated in an audit. Only a minority of employers choose an organization under Article7 GEA. The pay gap between women and men has long stood in the way of gender equality Many factors drive the wage gap between women and men, but there are few June 21, 2023 - 7:49 am. Today, the wage gap between the median earnings of full-time working women and men stands at 13% on average across OECDcountries. These policies can function well in publicising gender wage gaps, and, in particular, the discriminatory element of it but only with the appropriate policy design and implementation. Finally, different earnings components may be used in different countries estimates. In fact, only 4% of employees surveyed in companies with over200 employees had ever submitted a request to obtain pay information (Government of Germany (BMFSFJ), 2020[25]). [4] Bennedsen,M. etal. 1. There is also a toolbox for employers, updated in 2021, with practical tips and assistance for the preparation, analysis and use of internal company income reports (www.fairer-lohn.gv.at). Nevertheless it still represents a remarkable gender inequality, particularly among high earners (see Box1.2). However, two studies Mixed into this discussion is the idea that greater transparency could end gendered pay inequity, but does data back this up? [32] Kim,M. (2015), Pay Secrecy and the Gender Wage Gap in the United States, Industrial Relations: A Journal of Economy and Society, Vol. In February2021, the OECD distributed a detailed policy questionnaire (see Annex A) via the Employment, Labour and Social Affairs Committee (ELSAC) to gender, labour, and/or social ministries in every OECD country in order to take stock of gender wage mapping and pay transparency measures aimed at promoting equal pay between women and men. [22] OECD (2017), Building an Inclusive Mexico:Policies and Good Governance for Gender Equality, OECD Publishing, Paris, https://dx.doi.org/10.1787/9789264265493-en. OECD average presents the unweighted average of the latest data across all OECDcountries. #block-googletagmanagerheader .field { padding-bottom:0 !important; } The gender wage gap presented in Figure1.1 and Figure1.2 is defined as the difference between median earnings of men and women as a proportion of median earnings of men. the hourly wage for female workers in the finance industry in 2019 was $27, almost a third less than the While some countries conduct awareness-raising and training campaigns, a more comprehensive approach that targets all affected actors, at different stages of policy design, will help ensure policy measures are effective (Box1.5). Finding information on a comparators pay may be, in practice, easier in the public sector than the private sector in many countries. Virginia has adopted a pay transparency law that prohibits employers from discharging or taking any other retaliatory action against an Embed pay transparency within a broader, systematic, life course approach to promoting gender equality in society, labour markets, governance and public policy. To address this persistent challenge, many governments are now mandating promising new pay transparency tools like employer pay gap reporting, equal pay audits, and gender-neutral job classification systems. While employers are not required to reply, the Workplace Relations Commission (which hears and decides complaints of discrimination under the Employment Equality Act) may intervene if an employer does not reply or provides false information (OECD GPTQ 2021). Wharton Business Daily covers the latest policy changes, shifts in the markets, tech innovation, retail trends, marketing and advertising, and much more. These objective criteria tend to encompass job-related characteristics such as skills, effort, levels of responsibility, working conditions and qualifications. The wage gap in this report refers to full-time (dependent) employees. [31] Perez-Truglia,R. (2019), Measuring the Value of Self- and Social-Image: Evidence from a Natural Experiment. An exception is Chile, where poverty risks are nearly equal between women and men. The goal was to close the firms gender pay gap, which hovered around 4 percent in the early years of the initiative. (For a summary of this literature, see (Blau and Kahn, 2016[18])). IZA DP No. Although several Nordic countries and Italy already had pay disclosure requirements in place when the EC Recommendation on Pay Transparency was announced, the Recommendation has been essential in spurring other EU member states into action. In Germany, upon an employees request, firms with at least 200 employees are required to name a similar activity (or one of equal value) and share the pay information from a group of at least six employees (OECD GPTQ 2021). This is important given that administrative burden is a frequently cited concern raised by countries encountering pushback from companies (OECD GPTQ 2021) (European Commission, 2017[26]), though recent research suggests that the actual pay reporting cost to companies averages well under EUR1000 annually (Eurofound, 2020[27]).3. Carry out more and more rigorous evaluations of wage outcomes. [21] OECD (2019), Pensions at a Glance 2019:OECD and G20 Indicators, OECD Publishing, Paris, https://dx.doi.org/10.1787/b6d3dcfc-en. Increase the share of firms that are covered by reporting requirements. For instance, in Lithuania, the government has worked with stakeholders to establish guidelines on how companies can create a gender-neutral job classification scheme. Pay This has been proven through randomised field experiments. Enforce reporting with a dedicated government actor, such as a labour inspector, rights ombudsman or a certified external auditor, to improve compliance and the quality of reporting. [6] Bheim,R. and S.Gust (2021), The Austrian Pay Transparency Law and the Gender Wage Gap, IZA DP No. Transparency is one of the leading tools weve identified for closing the wage gap, Andrea Johnson, director of state policy at the National Womens Law In previous years, Norways income tax records were even more accessible: from 2001 to 2014 Norwegian tax records were uploaded online and made available to the (anonymous) public. Ten countries mandate that job classification systems, when they are used, be gender neutral. Another major barrier is the enormous inequality that exists in the distribution of unpaid work hours (OECD Gender Data Portal, 2021[14]). Such an approach will significantly lessen the need for pay transparency measures to address what have often become deeply embedded inequalities during the working years. Job classifications can be used not only to address gender gaps but also other forms of discrimination among workers, as pay is defined for the job regardless of who carries it out. In 2020, 420 in-person or (after March2020) online training sessions were carried out and 1430 companies were trained. The OECD, the International Labour Organization (ILO) and UN Women lead the Equal Pay International Coalition (EPIC). Women are overrepresented in part-time jobs, and underrepresented in jobs with long work hours, throughout the OECD (OECD, 2017[11]; 2019[12]). .cd-main-content p, blockquote {margin-bottom:1em;} features top business leaders, innovators, and renowned Wharton faculty discussing topics that really matter and that draw from the Schools unique and deep expertise across its 10 academic areas. This is a cost that could potentially be publicly subsidised for small employers. [12] OECD (2019), Part-time and Partly Equal: Gender and Work in the Netherlands, OECD Publishing, Paris, https://dx.doi.org/10.1787/204235cf-en. June 21, 2023 - 7:49 am The EUs new pay transparency directive wont close the gender pay gap by itself. Variables beyond pay statistics may also be relevant as part of gender audits. Since the Pay Equity Act came into force in August 2021, the Government of Canada has been working to reduce the gender wage gap in federally regulated workplaces. 25435, http://dx.doi.org/10.3386/W25435. Use of the median to capture average earnings may affect estimates of the size of the gender gap. [28] United Kingdom Government Equalities Office (2018). It may also give workers a global perspective on how their employer treats women and men in the workplace. The OECD has long prioritised eliminating the gender wage gap in its policy research and in its formal Recommendations.1 In addition to identifying relevant family and labour market supports to improve gender equality outcomes, the 2013 OECD Gender Recommendation of the Council on Gender Equality in Education, Employment and Entrepreneurship (OECD, 2017[16]) calls upon OECD member countries to. France offers an example of a country with an extensive but straightforward list of wage statistics4 required for an audit (Chapter4), and countries like Canada, Israel, Portugal, France and Switzerland have developed publicly available official calculators to help companies meet pay reporting requirements. In short, who should qualify as a comparable colleague for the basis of a pay comparison? This makes it difficult for governments to determine whether current pay transparency laws are achieving their stated gender equity goals. These measures offer a relatively simple way to identify and address gender wage gaps when they occur in a workplace but their design and implementation matter. Pay transparency is an umbrella term referring to policy measures that attempt to share pay information in an effort to address gender pay gaps. Pay Transparency Tools to Close the Gender Wage Gap. These policies typically target firms with at least 30-50 employees. Academic research, when available, has found that pay transparency has slightly reduced the gender wage gap in countries with adequate enforcement and/or policy visibility. Governments must take a holistic, multifaceted approach to ending gender inequalities, from a very young age, at home, in society, and in labour markets. Access to tax records was subsequently restricted to registered users only (Perez-Truglia, 2019[31]). Research has shown that pay transparency does narrow the pay gap but it is not Just under half of OECDcountries use job classification systems in the public and/or private sector, which attempt to standardise pay and make it transparent across men and women within specific job categories. Whether mandating equal pay discussions during collective bargaining is necessary may depend upon worker bargaining power and the role and coverage of unions. But it will help. Even countries with relatively advanced and longstanding auditing systems such as Finland and Sweden report that some companies are doing the bare minimum to meet reporting requirements, let alone advance an action plan to combat their firms gender wage gap. Web1.1. The widest gender pay gaps are in the two East Asian OECDcountries (Japan and Korea) and Israel. The use of this work, whether digital or print, is governed by the Terms and Conditions to be found at http://www.oecd.org/termsandconditions. Research shows that women tend to be less likely than men to negotiate for a higher salary, and when they do negotiate they tend to face backlash, or a social penalty (Bowles, 2014[24]). Does Pay Transparency Close the Gender Wage Gap?, a report by compensation data and software firm PayScale, reveals that disclosing how wages and Horizontal segregation refers to the concentration of women and men in different sectors and occupations. Not all countries have implemented wage transparency policies. Before sharing sensitive information, make sure youre on a federal government site. Pay transparency in job postings can substantially impact the number of applicants for employers, as 91% of job seekers say that they are more likely to apply for a job with pay information. This information should include complementary or variable components beyond the fixed basic salary, such as payments in kind and bonuses., Reporting on pay: Member States should put in place measures that ensure that employers in undertakings and organisations with at least 50 employees regularly inform employees, workers representatives and social partners of the average remuneration by category of employee or position, broken down by gender., Pay audits: Member States should take appropriate measures to ensure that pay audits are conducted in undertakings and organisations with at least 250 employees.

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