1. Can pay transparency policies close the gender wage gap?

Valerie Frey

Abstract

As part of their efforts to close gender wage gaps, many OECD countries are implementing promising new pay transparency tools like employer pay gap reporting, equal pay audits, and job classification systems. 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. This chapter discusses the persistence of the gender wage gap throughout the OECD, presents definitions and an overview of pay transparency policies in OECD countries, and closes with a detailed discussion of lessons learned and policy recommendations.

Key findings and policy recommendations

A range of public measures and societal, educational, and labour market transformations over generations have done little to close the gender wage gap around the world. Today, the wage gap between the median earnings of full-time working women and men stands at 13% on average across OECD countries.

To confront this pay inequity, many governments in OECD countries are implementing promising new pay transparency policies. Eighteen OECD countries mandate some form of systematic, regular reporting by private sector firms on gender wage gaps. Within this group, nine have implemented comprehensive equal pay auditing processes in the private sector that require follow-up strategies to address inequalities.

These measures hold considerable allure. Pay transparency offers a relatively simple and intuitive tool both to identify and address the gender wage gap when it occurs in a workplace. 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.

Countries that do not currently have pay transparency policies in place should strongly consider implementing them. For countries that are advancing pay transparency, this report recommends the following targeted steps – presented in an extended summary in Chapter 1 entitled “Lessons Learned” – to improve pay transparency policies to close the gender wage gap.

Legislate to ensure the foundational concept of equal pay for work of equal value and help correct for the historical undervaluation of jobs typically held by women.
Allow individual workers to request pay information on comparable workers.
Encourage the more widespread use of intentionally gender-neutral job classification systems.
Generate buy-in from different actors – including social partners, workers, the government and the public – to improve pay gap reporting compliance, take-up and quality. This involves raising awareness widely.
Identify the most important wage gap statistics that should be reported, and provide clear guidelines for reporting in order to simplify processes for employers.
Improve the quality of reporting and follow-up action plans across firms, and work to ensure that reporting processes are followed by actionable, tailored and enforceable plans to address wage gaps that are found.
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.
Dedicate resources to more and better impact evaluations, including research on both wage outcomes and policy process outcomes.
Consider mandating the discussion of equal pay considerations during wage negotiations in collective bargaining.
Embed pay transparency within a broader, systematic, life course approach to promoting gender equality in society, labour markets, governance and public policy. This includes gender-equal access to all levels and subjects of schooling, family and work-life balance supports like childcare and parental leave, efforts to improve the division of unpaid work, anti-discrimination legislation, improving women’s access to leadership roles, and closing gender gaps in old age.

1.1. 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 straightforward solutions to close it. Closing gender gaps in educational attainment have helped, but not enough. The same is true for family supports, like public childcare and paid leave, which have helped boost women’s labour force participation over the past few decades. Efforts to reduce horizontal and vertical segregation (Box 1.1) and attempts to equalise the gendered distribution of unpaid care work have moved at a glacial pace in most countries. Equal pay laws and anti-discrimination laws have been crucial for ensuring workers’ rights and exist widely throughout the OECD, but in practice these laws put the onus of equal pay on individual workers and do little to close gender wage gaps more broadly.

It is no wonder, then, that a sizeable gender wage gap persists in every OECD country, with rates ranging from around 4% to over 30% when looking at median full-time earners (Figure 1.1). These aggregate gender pay gaps likely underestimate the extent of the gender pay gap across different groups, as there are compounding, intersecting forms of discrimination based on different background factors like race/ethnicity, gender identity and sexual orientation. About half of the governments in the OECD say that women being paid less than men for the same work is one of the top three gender inequality challenges facing their country (OECD, 2017[1]).

1.2. New approaches to target equal pay

Pay transparency and wage mapping measures are gaining momentum among governments trying to close the gender wage gap. Pay transparency measures are viewed as particularly important for addressing the discriminatory wage gap, i.e. the part of the gender wage gap that cannot be attributed to observable worker characteristics like level and field of education (Hofman et al., 2020[2]; European Commission, 2020[3]).

Eighteen out of the 38 OECD countries mandate systematic, regular gender wage gap reporting by private sector firms. Within this group, nine implemented comprehensive equal pay auditing processes, which require additional gender data analysis and typically propose follow-up strategies to address inequalities (Figure 1.1). Most of these policies were introduced in the past decade, and most of this movement took place in Europe. Many of these pay reporting rules cover the public sector, as well.

Just under half of OECD countries 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. These are more common in the public sector. Ten countries mandate that job classification systems, when they are used, be gender neutral. This is an attempt to correct for gender biases in job valuations that can exacerbate pay disparities. Gender-neutral job classification systems are often embedded within equal pay auditing processes, suggesting they may become more widespread if pay auditing policies gain momentum.

Figure 1.1. About half of OECD countries require pay gap reporting and/or auditing by private sector firms

1.2.1. Evaluations are limited, but they show pay transparency holds promise

Because most pay transparency policies are relatively new, there has been limited research carried out evaluating their effects on wage and employment outcomes. The available research on national pay transparency rules has largely concentrated on company pay reporting obligations.1

Studies of company pay reporting rules have typically found small reductions in the gender wage gap when reporting measures are accompanied by the threat of sanctions and/or relatively high policy visibility, as is the case in Denmark (Bennedsen et al., 2019[4]) and the United Kingdom (Blundell, 2021[5]). The positive effects arise through a reduction in men’s wages, rather than an increase in women’s wages. Where enforcement mechanisms or wage gap visibility are weaker, however, these measures seem to have had fewer positive effects (Böheim and Gust, 2021[6]; Gulyas, Seitz and Sinha, 2020[7]).

Studies looking at smaller, targeted populations of workers, such as university faculty in Canada and the United States, have also found that publishing salaries helps to close the gender wage gap (Baker et al., 2019[8]; Obloj and Zenger, 2020[9]).

Pay transparency policies should continue to be evaluated in different contexts to see how features of different systems may affect gender wage gaps in different ways. Given that pay transparency policies are often phased in with rules based on firm size, these policies are ripe for rigorous, quasi-experimental evaluations with nearly comparable “treatment” and “control” groups around the policy threshold.

Although the evidence base is still being built, pay transparency policies hold significant appeal. Pay transparency measures represent a relatively simple, intuitive tool both to identify and to take action against the gender wage gap in the workplace – particularly in mid-sized and larger organisations with dedicated human resources management that can calculate gender gaps.

Crucially, pay transparency policies give workers, employers and the public an important tool to combat gender inequality: they offer an acknowledgement of the existence and the size of gender pay gaps.

This report takes stock of the policies, laws and regulations around pay transparency and wage mapping across the 38 OECD member countries. The report explores:

Countries’ efforts to define the concept of “work of equal value” and gender-neutral job classification systems (Chapter 2);
Company pay reporting requirements (Chapter 3);
Equal pay auditing requirements (Chapter 4);
The role of social partners and collective bargaining in equal pay (Chapter 5).

Each of these policies, defined in Box 1.1, have strong potential to narrow the gender wage gap. But strengthening reforms, greater stakeholder engagement, and more and better evaluations are needed.

Box 1.1. Key terms and definitions in this report

A comparator, in the context of equal pay litigation, refers to a worker whose salary is used as a reference for another person who is in a comparable working situation. Guidelines as to who qualifies as a comparator (and whether a comparator is necessary to prove pay discrimination) vary by country (Chapter 1). A comparator may be real or hypothetical (European Commission, 2015[10]).

Equal pay for work of equal value implies that women and men should get equal pay if they do identical or similar jobs, and that they should also earn equal pay if they do completely different work that can be shown to be of equal value when based on “objective” criteria. These objective criteria tend to encompass job-related characteristics such as skills, effort, levels of responsibility, working conditions and qualifications. Many countries have attempted to clarify the use of the concept of “work of equal value” in national legislation (Chapter 2).

An equal pay audit is a process conducted by an employer or external auditor that should include an analysis of the proportion of women and men in different positions, an analysis of the job evaluation and classification system used, and detailed information on pay and pay differentials on the basis of gender. An equal pay audit is more intensive than simple pay reporting. A pay audit should make an effort to analyse any gender pay gaps found, should attempt to identify the reasons behind these gaps, and could be used to help develop targeted actions on equal pay (Chapter 4).

Horizontal segregation refers to the concentration of women and men in different sectors and occupations. For example, women are typically overrepresented in teaching and men are typically overrepresented in engineering.

Job classifications tend to be part of a job evaluation process and commonly entail human resource personnel and/or social partners ranking each job within an organisation against objective criteria that relates to the required skills, effort, responsibilities, working conditions, education, and difficulty of a role, amongst other observable characteristics. Related to this, gender-neutral job classification systems refer to job classification systems that account for the gender predominance of a given job class and categorise work based on the same objective criteria for men and women (Chapter 2).

The OECD Gender Pay Transparency Questionnaire 2020 (OECD GPTQ 2020, see Annex A), is the reference questionnaire for the policies presented and discussed in this report.

Pay reporting refers to public policies mandating that employers regularly report (including to employees, workers’ representatives, social partners, a government body, and/or the public) gender pay gap statistics. Such statistics typically include the average or median remuneration of men and women at the company or workplace level, but may be more detailed (Chapter 3).

Pay transparency is an umbrella term referring to policy measures that attempt to share pay information in an effort to address gender pay gaps. Such measures may include mandating pay reporting, equal pay auditing, job classification systems, and publishing pay information in job vacancies.

Vertical segregation refers to the concentration of women and men at different levels of an organisational hierarchy, e.g. at different grades, levels of responsibility or positions.

1.3. The gender wage gap in OECD countries

The OECD average gender wage gap stands at 12.8% – meaning that a woman working full-time today makes 87 cents, on average, for every dollar or euro a full-time working man makes at median earnings (Figure 1.1) The gap gets even larger when looking at the average pay all working women and men take home at the end of the year, because women tend to spend fewer hours in paid work than men do. Women are overrepresented in part-time jobs, and underrepresented in jobs with long work hours, throughout the OECD (OECD, 2017[11]; 2019[12]).

Figure 1.2. Women make about 87 cents for every man’s dollar, on average, across OECD countries

The widest gender pay gaps are in the two East Asian OECD countries (Japan and Korea) and Israel. In some countries – such as Greece, Italy and Turkey – small gender pay gaps are the result of selection effects reflecting the relatively small number of women who participate in the labour market. These countries have comparatively lower female labour force participation, but their more highly educated (and higher-earning) female workers tend to remain in the official labour force, thereby inflating female median earnings (OECD Family Database, 2021[13]).

This gender pay gap of 12.8% is an improvement from the gap of nearly 19% in 1996, when most OECD countries began reporting this statistic (Figure 1.3). Nevertheless it still represents a remarkable gender inequality, particularly among high earners (see Box 1.2).

Figure 1.3. Progress in closing the gender wage gap has been slow

Box 1.2. Measuring the gender wage gap in OECD countries

Defining the gender wage gap

The gender wage gap presented in Figure 1.1 and Figure 1.2 is defined as the difference between median earnings of men and women as a proportion of median earnings of men. The wage gap in this report refers to full-time (dependent) employees. The gap is unadjusted, that is, not corrected for gender differences in observable characteristics that may explain part of the earnings gap. However, to account for gender differences in working hours and part-time employment, the gap is based where possible on earnings for full-time employees only.

A word of caution when comparing across countries

OECD data on earnings are collected annually through labour force surveys and household surveys, and are presented in the OECD Employment Database. Depending on the country, the earnings data used can refer to hourly (e.g. Denmark, Greece, Iceland, New Zealand and Portugal), weekly (e.g. Australia, Canada, Ireland, the United Kingdom and the United States), monthly (e.g. Belgium, Chile, the Czech Republic, Estonia, France, Germany, Hungary, Italy, Israel, Japan, Korea, Latvia, Lithuania, Luxembourg, Mexico, the Netherlands, Norway, Poland, the Slovak Republic, Slovenia, Sweden, Switzerland, Turkey) or annual (e.g. Austria, Finland, Spain) earnings on a gross or net (e.g. Italy) basis. Gender differences may be slightly over-estimated where measurement is based on a gross wage because of the inclusion of taxes and social security contributions (for example, second earners – who are often women – will in some countries be subject to different tax thresholds than their first earners partners). Trend data should also be interpreted with care as survey methods across countries change regularly, creating breaks in the series and causing artificial fluctuations from year to year. Finally, different earnings components may be used in different countries’ estimates. For more detailed information, see country-level metadata in the gender wage gap table 1 on OECD.Stat.

Earnings are measured in Figure 1.1 through the use of the median, as opposed to the mean. Use of the median to capture average earnings may affect estimates of the size of the gender gap. It is preferred here because mean averages are subject to distortion from extreme values – indeed, use of the mean often produces a wider gender pay gap, largely because in most countries men are over represented among individuals with very high earnings. However, median values do not capture variation in the gender wage gap across the income distribution. Figure 1.4 includes data on gender pay gaps at the top and bottom deciles of the earnings distribution and shows that gender pay gaps are often widest at the among top earners – reflecting the difficulty for women to advance in labour markets. The presence of minimum wage regulations contributes to the narrower gender pay gaps among low-income workers.

Figure 1.4. The gender wage gap is generally larger for the highest earners

← 1. Gender wage gap statistics are available at OECD.stat at https://stats.oecd.org/Index.aspx?QueryId=64160.

1.3.1. Causes and consequences of unequal pay

Many factors drive the gender wage gap. One issue is horizontal segregation, meaning that men and women are concentrated in specific sectors or jobs. Women tend to be overrepresented in fields that pay relatively lower wages, such as caregiving and service sector jobs, and underrepresented in fields with relatively higher wages, such as science and technology jobs.

Vertical segregation, meaning that men and women are concentrated in different job levels, also affects women’s pay. Women’s career progression is often limited, particularly in those sectors with fewer women, and across OECD countries women are underrepresented in management roles (OECD Gender Data Portal, 2021[14]).

Another major barrier is the enormous inequality that exists in the distribution of unpaid work hours (OECD Gender Data Portal, 2021[14]). Women do much more cooking, cleaning, looking after the elderly, and childcare than men, which, in turn, limits both the time women can spend in paid work and their possibilities to advance in the paid labour market (OECD, 2021[15]; 2017[11]; 2017[16]). This has negative implications for their pay, particularly in jobs with inflexible work hours (Goldin, 2014[17]).

Importantly, discrimination negatively affects women’s pay. This has been proven through randomised field experiments. In these types of studies, researchers generally create fictitious job candidates applying for jobs, by correspondence, with exactly the same applicant credentials except for the gender of the applicant. These studies have found discrimination against women both in the hiring process for higher-paid jobs and in the starting salaries that are offered. (For a summary of this literature, see (Blau and Kahn, 2016[18])). This almost certainly has downstream effects on the gender wage gap over the life course.

This longstanding gender wage gap is a global injustice. Aside from the economic imperatives of gender equality in labour markets (OECD, 2017[1]; World Bank, 2018[19]), there are even more important implications for human rights and social justice. Women’s economic empowerment has obvious positive consequences for women’s agency, freedom, and social and political empowerment.

Unequal wages during the working years have long and compounding effects on gender inequality throughout the life course. Lower earnings lessen women’s economic independence throughout life, but the consequences are painfully obvious in old age.

There is a sizeable gender gap in retirement income, wealth and pensions that arises after a lifetime of unequal earnings across OECD countries. Women aged 65 and older receive only around three-quarters of the retirement income of men from public and private pension arrangements on average in the OECD (OECD, 2021[20]; 2019[21]). Related to this (and to women’s longer life expectancy), nearly every OECD country 2 has higher poverty rates for women than men. The average old-age poverty rate for women in OECD countries is 15.7%, while for men it is 10.3% (OECD, 2019[21]).

Women’s earnings are important at the household level, as well. During childrearing years, mothers’ equal participation in the labour market is essential for both raising overall family income and for ensuring a more equal distribution of (paid and unpaid) resources at home. Additionally, it is now almost conventional wisdom in economics that children do better in areas like health when their mothers control a larger share of household resources. This control over spending is influenced (though obviously not entirely) by who brings the income into the home (OECD, 2019[12]).

Box 1.3. Gender wage gap statistics: A common denominator across countries

Every OECD country collects and analyses gender-disaggregated pay data at the national level, and typically publishes them on their national statistics office’s (NSO) website. This tends to be broken down by sector, industry, occupation and/or qualification and is collected on a periodic basis such as weekly, monthly or annually. These are usually produced by national statistical offices and/or labour ministries.

Best practice includes acknowledging that there is no homogenous “woman,” and understanding that factors such as sex, ethnicity, race and class intersect with one another and can lead to larger gaps in labour market outcomes based upon these features. Most OECD countries do not report data with this intersectional framework in mind. Nevertheless, some countries’ NSOs and/or labour ministries collect and report earnings data by gender and race/ethnicity (such as Canada, Mexico, New Zealand and the United States), while others do account for various age groups by gender (such as Norway and Australia) or foreign worker status by gender (such as the Czech Republic).

In terms of analysing, reporting and disseminating a wide range of gender-disaggregated labour and social statistics, Mexico often stands out as best practice in the OECD. With the support of the National Institute of Women (INMUJERES), Mexico has made a good commitment to mainstream gender throughout all aspects of governance, including the production of national statistics (OECD, 2017[22]). Mexico’s National Institute for Statistics and Geography [Instituto Nacional de Estadística y Geografía (INEGI)] and its public social programme evaluation institution [Consejo Nacional de Evaluacion de la Politica de Desarrollo Social (CONEVAL)] produce a wide range of indicators on women’s economic outcomes. Noteworthy examples include the “Gender Atlas”,1 which includes subnational gender-disaggregated pay statistics, as well as an extensive annual report entitled Women and Men (Mujeres y Hombres). This report assesses gender gaps across a broad range of social and economic variables, including labour force participation, indigenous status, informality, poverty, and earnings.

In the United States, the Department of Labor and the U.S. Census Bureau recently jointly published a study using linked survey and administrative data to analyse and improve estimates of the gender wage gap within detailed occupations, while also accounting for gender differences in work experience 2.

← 1. Available at http://gaia.inegi.org.mx/atlas_genero/.

← 2. Available at https://www2.census.gov/ces/wp/2020/CES-WP-20-34.pdf.

Source: OECD Gender Pay Transparency Questionnaire (2021), OECD countries’ national statistics websites.

1.4. Why do we need pay transparency?

Closing the gender wage gap depends crucially on knowing whether, how, and to what extent such gaps exist. At the aggregate level – within a workplace, town, region, country, and so on – administrative data and labour force statistics can help researchers and governments identify when gender wage gaps occur and what might be driving them.

So-called observable factors driving the gender wage gap include an employee’s age, level of education, field of study, sector of employment, workplace, parenthood status, and other variables (OECD, 2017[1]). Recent research using match employer-employee data suggests that nearly 80% of the gender wage gap, across a sample of 16 OECD countries, is attributable to pay inequity within firms, (OECD, 2021[23]).

It is very difficult, however, for an individual worker to know whether she or he is being underpaid – and with whom their salary should be compared. Very few countries guarantee workers the right to learn a specific colleague’s (or small group of colleagues’) pay (Box 1.4).

Many countries identify privacy and data protections as a hurdle to sharing a specific, comparable colleague’s pay (OECD GPTQ 2021). Logistical or operational barriers are another issue; as with other transparency requirements, some companies claim that identifying and sharing the salary of a “comparator” is too high an administrative burden (OECD GPTQ 2021), though it is not clear that doing so would be much more difficult than other forms of pay reporting.

Furthermore, the issue of finding either a hypothetical comparator or an accurate, real-life comparator has been a longstanding challenge across countries (European Commission, 2020[3]). In short, who should qualify as a comparable colleague for the basis of a pay comparison?

Countries have used different approaches to address the comparator issue. Such approaches include legislation allowing the comparison of salary with the previous person who held a post, allowing comparison with a group of colleagues, requiring that the comparator be of an opposite sex, and/or requiring that the comparator be employed within the same company (European Commission, 2020[3]) (OECD GPTQ 2021). New Zealand, notably, has recognised that the historic undervaluation of traditionally women’s work necessitates a comparator being sourced from a different sector. Some other countries have said that a comparator should not be necessary at all to prove unfair pay.

In sum, the comparator question remains a difficult, practical puzzle to solve when pay discrimination cases arise.

1.4.1. The limits of using pay information to (self) advocate

It must be emphasised that gender wage gaps represent a much broader problem, in both societies and labour markets, which cannot be fixed individually.

When armed with the knowledge that they have been underpaid, a worker tends to have a limited number of options: do nothing, negotiate higher pay, or initiate a pay equity claim. In all three instances the onus of identifying, raising, and rectifying (possibly discriminatory) pay inequity rests on the individual, which is a very large burden.

While pay transparency laws may give workers more information, their effectiveness largely relies upon workers having bargaining power to negotiate collectively or individually – and to negotiate without backlash, which is less likely the case for female workers. 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]).

This means that even if a female worker correctly identifies a pay equity issue, raising it with her employer may not be an easy step or a feasible solution. Additionally, pay equity claims that go through the legal system tend to be costly, both in time and money.

Nevertheless, legal mechanisms must be in place for either an individual or a group of workers to seek recourse if they are indeed underpaid for doing work of equal value to a colleague or workers supplying work of equal value. To support this, objective criteria to assess work of equal value should be used for pay equity claims. Access to justice should be streamlined and the burden of proof in pay discrimination cases should rest on the respondent (European Commission, 2020[3]).

Box 1.4. How much does my co-worker make?

For an individual worker, remedying unfair pay depends crucially on knowing how much a comparable colleague earns. A few OECD countries have given private sector employees the right to request the salary information of comparable colleagues, but usually under limited conditions.

A few countries facilitate the disclosure of comparators’ pay in discrimination cases

Some countries facilitate salary comparisons when an employee is seeking recourse against possible discrimination. Ireland, for example, allows workers with discrimination complaints to request pay information on colleagues. 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).

In Austria, when examining whether pay discrimination has occurred in a specific case, the court or the Equal Treatment Commission will request that an employer disclose the pay structure of the company (insofar as needed for the specific case) as well as the pay of comparable workers. However, there is no explicit legal basis for this; this procedure results from the need to be able to verify the alleged discrimination. If the employer does not comply with this request, this circumstance is subject to an assessment of evidence. In proceedings before Austria’s Equal Treatment Commission, income data on comparable workers may be requested from the relevant social insurance institution.

Norway, in both the private and public sector, allows a worker who suspects pay discrimination to demand their employer’s written confirmation of the pay level and the criteria of setting pay for the person or persons with whom the worker is making a comparison. The recipient of the disclosed information is often required to sign a confidentiality declaration. Workers, their representatives, the Anti-Discrimination Tribunal, the Equality and Anti-discrimination Ombudsman, and researchers have a right to the disclosure of the results of a pay review. In previous years, Norwegians’ individual tax records were published online and available to the public, but due to privacy issues this wage data disclosure has been tightened.1

Chile and Germany require companies to share a group of comparators’ pay

Other countries require companies to share comparator pay information for a group of comparators, not an individual comparator. In Chile, a union may request (on behalf of an employee) salary information as long as there are five or more workers in the relevant position or function. In Germany, upon an employee’s 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).

The existence of these measures does not guarantee take up. For instance, in Germany, a survey of employers and employees found that an employee’s right to obtain pay information was relatively unknown even amongst affected workers. In fact, only 4% of employees surveyed in companies with over 200 employees had ever submitted a request to obtain pay information (Government of Germany (BMFSFJ), 2020[25]).

Job classification schemes help improve knowledge of comparators’ pay in the public sector

Finding information on a comparator’s pay may be, in practice, easier in the public sector than the private sector in many countries. Job classification systems – which list pay for different jobs or job classes – are more frequently used in the public sector. This provides considerable transparency in pay for given positions or job classes (Chapter 2): knowing only a colleague’s job title, one can learn their pay with some accuracy. Some countries, such as France and Sweden, nevertheless guarantee workers the right to access a public sector worker’s pay information, usually so long as privacy protections are in place for the position or person about whom data are requested (OECD GPTQ 2021).

← 1. In previous years, Norway’s income tax records were even more accessible: from 2001 to 2014 Norwegian tax records were uploaded online and made available to the (anonymous) public. However this resulted in privacy violations, such as the bullying of children of low-income workers, and was found to have decreased life satisfaction among poorer individuals. Access to tax records was subsequently restricted to registered users only (Perez-Truglia, 2019[31]).

1.5. Gender pay transparency policies: Shining a light on gender wage gaps

Governments in OECD countries have begun innovating fairly recently with systemic pay transparency policies. In many countries with pay auditing or pay reporting requirements, these rules only went into effect over the past decade. This represents an important, relatively rapid, and large-scale shift to address pay inequality across OECD countries.

All of these pay transparency measures can function at least as well as a right to request a comparator’s pay – but only if they are designed and implemented well.

1.5.1. Lessons learned

What works in pay transparency policies

Many pay transparency policies have been only recently introduced and need more systemic evaluation, but some policy conclusions have become apparent across countries. Other approaches are less frequently used but show promise.

Ensuring buy-in from different actors is important for ensuring compliance and take-up of pay gap reporting and equal pay auditing.
OECD governments frequently point to the low quality of employers’ reported wage gap statistics as a problem. Generating buy-in from stakeholders has the potential to help improve the quality of reporting and, when applicable, follow-up actions. Countries that include multiple actors in pay reporting typically involve workers, social partners and the government. Countries like Sweden, Finland, and France involve unions or works councils extensively in the pay auditing process (Chapter 4), 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 Chapter 5).
Worker and public awareness of pay reporting results can also help drive support for pay equity (Box 1.5), as in practice pay gap reporting rules are often not well known.
Wage gap reporting should have clear guidelines and straightforward processes.
Governments can help simplify the process of wage gap reporting by giving employers clear and direct definitions of what statistics must be reported. Digital tools, too, can help companies calculate wage gaps. 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 EUR 1 000 annually (Eurofound, 2020[27]).3
France offers an example of a country with an extensive but straightforward list of wage statistics 4 required for an audit (Chapter 4), and countries like Canada, Israel, Portugal, France and Switzerland have developed publicly available official calculators to help companies meet pay reporting requirements. The Swiss “Logib” tool,5 for example, usefully offers two modules for companies of different sizes to self-assess their gender wage gap.
The type of data reported matters.
Governments must consider the advantages and disadvantages of different wage gap statistics required in reporting. Some countries ask for one or two simple data points – like the wage gap at the mean and median – while others ask for an extensive list of gender-disaggregated statistics on wage and employment outcomes across different jobs.
There are benefits and drawbacks to each approach. Reporting the overall gender wage gap within firms, i.e. without separating workers by job, could encourage firms to train and promote women across occupations – and it may be easier for companies (particularly smaller firms) to calculate an overall gap with existing human resources staff, rather than having to outsource the analysis. It may also give workers a global perspective on how their employer treats women and men in the workplace. However, such a basic measure may conceal inequalities (and possibly discrimination) across workers in the same job. It also may not sufficiently support pay equity claims that require a comparator.
In comparison, reporting the gender wage gap by subgroups like occupation, skills or experience would better reveal inequalities across similar men and women.6 However, this has a larger administrative burden and may discourage proactive equality policies if differences are small, or even prevent firms from acting against parts of the gender wage gap that can be explained by observable characteristics.
To achieve pay equity goals, it is perhaps most effective for companies to calculate both sets of statistics, with the overall wage gap easily estimated based upon the disaggregated measures.
Variables beyond pay statistics may also be relevant as part of gender audits. For example, France requires companies to report how many women returning from maternity leave received regular step increases in pay, and countries like Germany, Korea and the United States mandate gender-disaggregated employer reporting on employee statistics other than pay, such as the gender composition of the workforce (Chapter 4).
Enforcement and penalties carried out by a dedicated government actor can help ensure compliance, though different enforcement strategies seem to be working well in different places. In the United Kingdom, for example, the “name and shame” approach – in which a company’s overall gender pay gap or failure to report is published online for public consumption – has likely contributed to 100% reporting compliance in the first two years of the programme.
The French auditing system has teeth in the form of inspections by the Ministry of Labour, Employment and Inclusion, which reports a consistent improvement in compliance since the latest auditing process went into effect in 2019. Italy relies on its dedicated regional Gender Equality Advisors, who work with the Labour Inspectorate to monitor compliance. In Iceland, companies’ pay equity outcomes are monitored by government-regulated auditors; this is also typically the case in Switzerland.7 In a novel strategy, Lithuania recently tasked its social insurance agency to begin publishing companies’ wage gap statistics based on administrative data.
Countries without a dedicated government actor regularly enforcing reporting requirements tend to have less data on compliance, so it is unclear how effective their measures are. In many countries, companies’ failure to comply adequately can be followed by financial sanctions.
Action plans should be developed to address gender gaps that are found. Complying with reporting obligations, in the form of identifying and reporting wage gaps, is a crucial first step. Yet reporting will do little to reduce pay inequity without a relevant, tailored plan created by firms to address such gaps. 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. Otherwise the gaps that are found may be ignored or left to workers and their representatives to address.
Job classification systems can offer a straightforward way to present workers’ pay across jobs. 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. They also can help facilitate calculations as part of pay reporting and auditing processes, and can help in pay equity cases – though they do little to reduce gender wage gaps caused by horizontal segregation. When job classification systems are designed with intentional equal pay considerations, they are more likely to achieve equal pay for work of equal value goals (Chapter 2).
Legislation around the concept of equal pay for work of equal value, rather than the simple concept of equal pay for equal work (i.e. the same or very similar job), can help to correct for the historical undervaluation of jobs and sectors that have typically been considered “women’s work”.
New Zealand is systematically advancing this approach,8 and it has also been supported in case law in places like Spain (Chapter 2). As part of its comprehensive auditing process, Iceland requires the analysis of pay gaps both for the same work and for work of equal value. However, the onus tends to remain on workers or their representatives to initiate pay equity claims, which are typically costly and time-intensive.

Room for improvement in pay transparency policies

Improve the quality of reporting. There are significant quality differences in companies’ reporting both within and across countries. 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 firm’s gender wage gap.
Improving the quality of reports likely requires the participation of a dedicated government actor with regular oversight responsibilities. Governments should increase the minimum standards needed to comply with the content of reporting obligations.
Increase the share of firms that are covered by reporting requirements. Most countries that mandate reporting require it for companies with a minimum of between 30 and 500 employees.9 Consequently, a large portion of the labour force is not covered by pay transparency rules – thereby limiting the effectiveness of such policies on the overall gender wage gap.
Countries tend to include carve-outs for smaller firms in an effort to reduce their administrative burden. However, as explained above, pay reporting is relatively low cost, particularly if governments provide an online pay gap calculator.
Carry out more – and more rigorous – evaluations of wage outcomes. Countries with pay transparency rules have not conducted rigorous evaluations of policy effects on pay outcomes. This makes it difficult for governments to determine whether current pay transparency laws are achieving their stated gender equity goals.
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.
When it is not possible to implement randomised experiments during programme implementation or reform, government research offices and academics should consider using quasi-experimental methods to evaluate pay transparency programme effects. This might entail, for example, exploiting discontinuities in outcomes between employers who are barely above a reporting requirement threshold with employers who are barely below a reporting requirement threshold, as has been done in academic research on Austria, Denmark and the United Kingdom (Chapter 3).
Increase and improve evaluations of policy processes, including the collection of compliance data. A number of countries do not actively keep track of whether firms are fulfilling pay transparency obligations. While many countries may have penalties for firm non-compliance, in many instances it can be unclear whether these penalties are enforced or sufficient to act as a deterrent. For instance, most countries were unable to provide data on how often pay transparency measures had been enforced (OECD GPTQ 2021).
Raise awareness of pay transparency initiatives among social partners, employees, employers and the public during policy design and delivery. 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 (Box 1.5).
Increase the use of intentionally gender-neutral job classification systems. There is considerable variation across OECD countries in the use and mandating of gender-neutral job classifications systems. Even if gender-neutral job classifications are not mandated, governments can help make them more widespread. For instance, in Lithuania, the government has worked with stakeholders to establish guidelines on how companies can create a gender-neutral job classification scheme.
Ensuring, where appropriate, that equal pay is mandated in collective bargaining. This could take place at the sectoral or workplace level. Whether mandating equal pay discussions during collective bargaining is necessary may depend upon worker bargaining power and the role and coverage of unions. For instance, Sweden reports that with high union coverage and a strong union role in promoting gender equality, mandating such a measure is not necessary. Regardless, ensuring that collective agreements cannot contravene existing equal pay or anti-discrimination laws is a necessary measure.
Reducing barriers to a successful equal pay claim. Equal pay cases tend to be relatively infrequent, and, when initiated, workers and their representatives tend to experience costly (both in time and money) legal proceedings. Countries should make use of alternative dispute resolution mechanisms and make the comparator easier to identify in equal pay claims. They should also move the onus to disprove discrimination from workers to the employer, as is being considered in Luxembourg.
Promote convergence in pay transparency commitments across OECD countries. Some countries, particularly in Europe, have initiated a range of pay transparency policies, while other countries have barely moved beyond basic equal pay legislation. A goal of this report is to share lessons learned, so that countries with a less developed approach to the gender wage gap may be encouraged to take a step in the direction of pay transparency, in line with national priorities, abilities and constraints.
Embed pay transparency within a broader public commitment to gender equality and closing the gender wage gap.
In many ways, pay transparency policies come too late – they seek to remedy wage gaps after years of gendered socialisation, gendered schooling, and gendered labour market decisions have occurred.
Governments must take a holistic, multifaceted approach to ending gender inequalities, from a very young age, at home, in society, and in labour markets. 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.

Box 1.5. Raising awareness of pay transparency policies

A majority of OECD countries – including Canada, Colombia, the Czech Republic, Finland, France, Germany, Greece, Ireland, Israel, Lithuania, Mexico, Norway, Poland, Portugal, Sweden and the United States – report that they have implemented campaigns to raise awareness of pay transparency measures and/or draw attention to the gender pay gap (OECD GPTQ 2021,). Across the OECD, countries report that awareness-raising campaigns have taken the form of:

Workshops or consultations, mostly aimed at affected employers (Canada, the Czech Republic, France, Germany, Ireland, Israel and Portugal);
Digital tools to help companies calculate or analyse their gender pay gaps (Austria,1 Canada, the Czech Republic, France, Israel, Norway, Portugal, Poland, Switzerland and Sweden);
Broad public awareness campaigns, including Equal Pay Days (Finland, Germany, Portugal and the United States);
Award schemes to promote best practice amongst companies (Austria,2 Greece, Mexico and Portugal).

Communication campaigns that complement pay transparency measures can help improve their effectiveness by raising awareness amongst employers of their obligations and amongst employees of their rights. However, in order to ensure all parties are aware of their rights and obligations, countries should adopt awareness campaigns for affected employers, employees, and their representatives alike. Currently, measures are mostly aimed at employers, but buy-in from one group of stakeholders is insufficient. Targeting both employers and employees can help address concerns raised amongst some countries about company compliance.

Publicly available and easily accessible online gender pay gap calculators can also help mitigate against concerns that pay reporting and auditing obligations are a large administrative burden placed upon affected companies, particularly smaller ones.

Country case studies in communication

Canada’s pay gap reporting and pay equity measures illustrate how a country can engage with many stakeholders to help ensure buy-in from the earliest stages of policy planning. Prior to the 2021 implementation of their measures (Chapter 4), the Canadian Government conducted early consultations with Statistics Canada, the Treasury Board Secretariat, the Canadian Human Rights Commission, and the OECD, as well as Australia and the United Kingdom, both of which had recently introduced pay reporting rules. The government held in-person consultation meetings with those affected by changes to the law and regulations, and their representatives, on both sides of the employer-employee relationship: federally regulated private-sector employers, unions, special interest groups, industry associations and representatives of provincial and municipal orders of government. To ensure wider reach, these in-person consultations were complemented by an online questionnaire for those unable to attend the sessions in person, as well as a platform for those who attended the sessions to provide further feedback. After publishing regulatory amendments and a specific guide for employers, Canada opened a 30-day consultation period for receiving comments, which led to minor changes. Currently, Canada is planning a communications campaign, aimed at employers and the public, to promote the data visualisation application and raise awareness of the pay gap transparency measures.

France, too, has taken a multipronged approach to widening awareness of its pay auditing system (Chapter 4). Several support tools have targeted small and medium-sized businesses. France offered training courses to heads of small and medium-sized enterprises help them calculate their Index and set up corrective measures if necessary. In 2020, 420 in-person or (after March 2020) online training sessions were carried out and 1 430 companies were trained. A hotline was put in place throughout 2020 to answer questions from employers on how to calculate and report the Index. 7 628 calls were received during the year, 54% of which involved questions about what data should be incorporated in an audit. In parallel, France initiated an educational campaign to explain its pay auditing system to companies, unions, and the general public. Several communication campaigns were organised for each data reporting deadline, additional content was published on the Ministry of Labour website, an information campaign was launched on social networks, the government held press conferences and press releases and communicated with journalists, and information about the programme was shared in several newsletters.

Germany is attempting to increase communication to strengthen the effectiveness of its equal pay programmes (Chapter 3). Based on the results of early government evaluations, the Federal Ministry for Family Affairs, Senior Citizens, Women and Youth (BMFSFJ) in July 2020 started a three-year programme to support companies in realising the principle of equal pay for equal work and work of equal value at the company level. The Federal Government will engage with companies to promote and achieve a more modern culture of work in terms of gender equality, especially in terms of equal pay. The planned three-year programme entails a best-practice-exchange and also talks for company representatives.

The United Kingdom has applied a novel strategy to understanding how wage gap statistics are interpreted by the public. Using a randomised control trial, the Behavioural Insights Team commissioned by the UK Government Equalities Office tested five alternative ways 3 of communicating the wage gap across two outcomes: 1) people’s attitude towards companies with low or high gender wage gaps, and 2) the level of understanding of different components of the gender wage gap (United Kingdom Government Equalities Office, 2018[28]). The study revealed that benchmarking information – placing a company’s result in the context of other companies’ results – helps readers differentiate between companies with high gender wage gaps and companies with low ones. When statistics are presented in terms of money, rather than a simple percentage, the ability to understand the gender pay gap is maximised. A likely explanation for this is that people relate to monetary comparisons (e.g. 90 pence to every pound) more easily than percentages. This presentation style is also the only one that achieved the aim of increasing public understanding of the pay gaps. This type of experimental research should be replicated elsewhere by countries trying to improve public understanding of gender wage gaps.

← 1. Austria has online tools for both workers and employers. There is an online salary calculator (www.gehaltsrechner.gv.at) that is used primarily by workers to calculate the salary that can be expected in certain occupations, industries and regions, including the gender pay gap in these areas (based on payroll tax data). 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).

← 2. Austria offers an “equal pay quality label,” which is awarded to companies based on their efforts to promote gender equality within the enterprise. The representation and number of women in leadership positions and measures regarding pay transparency are taken into account and assessed based on their quality and effectiveness.

← 3. The treatment groups were exposed to the following interventions: 1) the gender pay gap (GPG) presented as percentage and visually in a bar chart; 2) identical to 1st but with benchmarking (against other companies) information; 3) identical to 2, but GPG presented in terms of money and visually as coins; 4) GPG presented as percentages in the type of the U.K. Energy Performance Certificate. The control group only saw the percentage difference GPG.

1.6. Research design of the report

1.6.1. Participants and policy issues

This report covers the 38 member states of the OECD, spanning from North and South America to Europe and Asia-Pacific (https://www.oecd.org/about/members-and-partners/).

1.6.2. Data collection

In February 2021, 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.

The response rate was 100%, with 38 member states either completing the questionnaire in full or validating missing responses. The questionnaire requested details on the following public strategies for promoting equal pay in each country:

Right of employees to request information on pay levels
Regular reporting by companies on pay levels
Pay audits
The role of social partners and collective bargaining in equal pay
Gender-neutral job evaluation systems and defining the concept of “work of equal value”
Other pay transparency measures
Transparency measures led by social partners
Impact evaluations of measures to address equal pay
Other recent government policies to address explicitly the gender wage gap

The information collected for this report will also be used to fulfil the reporting requirements of 2013 OECD Recommendation of the Council on Gender Equality in Education, Employment and Entrepreneurship and the 2015 OECD Recommendation of the Council on Gender Equality in Public Life. Information was collected on both the private and the public sector to support these reporting requirements.

Box 1.6. International commitments to reduce the gender wage gap

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.

“[E]liminate the discriminatory gender wage gap by strengthening the legal framework and its enforcement for combating all forms of discrimination in pay, recruitment, training and promoting; promoting pay transparency; ensuring that the principle of equal pay for equal work or for work of equal value is respected in collective bargaining and/or labour law and practice; tackling stereotypes, segregation and indirect discrimination in the labour market, notably against part-time workers; promoting the reconciliation of work and family life (OECD, 2017[16]).”

The OECD, the International Labour Organization (ILO) and UN Women lead the Equal Pay International Coalition (EPIC). EPIC is a multi-stakeholder partnership seeking to achieve equal pay for women and men around the world, in line with the Sustainable Development Goal Target 8.5, the ILO Equal Remuneration Convention, 1951 (No. 100), and the OECD Recommendation on Gender Equality in Education, Employment and Entrepreneurship.

European co-operation has driven pay transparency forward

Much of the movement in pay transparency policies has coincided with the 2014 European Commission Recommendation of 7 March 2014 on strengthening the principle of equal pay between men and women through transparency (European Commission (2014/124/EU), 2014[29]). With this Recommendation, the European Commission (EC) presented clear recommendations on four pay transparency measures aimed at closing the gender wage gap in Europe:

Right of employees to obtain information on pay levels: “Member States should put in place appropriate and proportionate measures to ensure that employees can request information on pay levels, broken down by gender, for categories of employees doing the same work or work of equal value. 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. These audits should include an analysis of the proportion of women and men in each category of employee or position, an analysis of the job evaluation and classification system used and detailed information on pay and pay differentials on grounds of gender. These audits should be made available to workers’ representatives and social partners on request.”
Collective bargaining: “Without prejudice to the autonomy of social partners and in accordance with national law and practice, Member States should ensure that the issue of equal pay, including pay audits, is discussed at the appropriate level of collective bargaining.”

The EC also provided guidance in this Recommendation on improving data collection and reporting around gender pay gaps and the occurrence of pay discrimination cases; called on member states to clarify the concept of ‘work of equal value’ in their legislation; and encouraged the development and use of gender-neutral job evaluation and classification systems to prevent or identify and tackle possible pay discrimination based on gender-biased pay scales.

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. Indeed, as this report details, OECD countries in Europe have taken the lead, globally, in implementing transparency policies to close the gender wage gap.

Despite considerable progress in pay transparency in Europe, however, the 2014 Recommendation is not binding. Not all countries have implemented wage transparency policies. In 2019, the EC announced its intention to develop a proposal for binding pay transparency measures. This proposal is now undergoing peer review by member countries (European Commission, 2021[30]).

← 1. For an overview of this work, see www.oecd.org/gender.

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Notes

← 1. Another study looks at state-level pay secrecy laws in the United States, which prohibit employees from sharing their wage information with others. Kim (2015) finds that the prohibition of pay secrecy rules corresponds with a lower gender wage gap, particularly among more highly-educated workers (Kim, 2015[32]).

← 2. An exception is Chile, where poverty risks are nearly equal between women and men.

← 3. This is a cost that could potentially be publicly subsidised for small employers.

← 4. Guidelines to the reporting requirements of France’s Professional Equality Index (PEI) between Women and Men (l’Index de l’égalité professionnelle entre les femmes et les hommes) are available at this site (in French): https://travail-emploi.gouv.fr/droit-du-travail/egalite-professionnelle-discrimination-et-harcelement/indexegapro

← 5. Switzerland’s Logib calculator is available at https://www.logib.admin.ch/home.

← 6. A recent survey of 124 employers and employee representatives in 14 countries found a preference for reporting the gender wage groups with more fine-grained details, e.g. for specific positions or tasks, rather than the aggregated gender wage gap for the entire organisation (Eurofound, 2020[27]).

← 7. In Switzerland, a pay equity audit can be carried out by an independent body that is not regulated by the government, i.e. an organization under Article 7 of the Gender Equality Act or an employees’ representation (see Article 13d para 1b Gender Equality Act (GEA)). These organizations under Article 7 GEA are not audit firms in the sense of the Auditor Oversight Act. However, in practice most audits will be carried out by firms of auditors licensed under the aforementioned Auditor Oversight Act. Only a minority of employers choose an organization under Article 7 GEA.

← 8. New Zealand is attempting to correct for historical pay discrimination by addressing remuneration gaps across male-dominated and female-dominated occupations that hold equal value. Since the Equal Pay Amendment Act of 2020, a new pay equity procedure allows unions, or individual employees, to raise pay equity claims on the basis that the work the claim relates to is predominantly performed by women, defined as 60 percent of the workforce being female, and is currently, or has historically been, undervalued. Once undervaluation has been established, the work can be compared with comparable work predominantly performed by men (Chapter 2).

← 9. A notable exception to this trend is Sweden, which requires equal pay audits from firms with at least ten employees.

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