5. Equal pay in collective bargaining

Rose Khattar

The extent to which trade unions and collective bargaining can impact the gender pay gap will depend upon the prevalence of collective bargaining in a particular context (i.e. the share of workers covered by collective bargaining), what is negotiated in collective bargaining, the level of collective bargaining (such as company or sector level), the degree of co-ordination between social partners, the way workplace democracy takes place, and the political environment for tripartite social dialogue. In countries where collective bargaining processes are common and coverage is high, social partners can play a tangible role in closing the gender pay gap.

Some OECD countries have pursued obligations or incentives that attempt to elevate the issue of equal pay as part of collective bargaining processes. This mirrors, in part, the European Commission’s 2014 Recommendation on pay transparency: “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” (European Commission (2014/124/EU), 2014[1]).

In the remit of pay transparency, unions and worker representatives play an important role in the design, implementation and application of pay transparency. Collective bargaining processes can help introduce and monitor gender-neutral job classification or evaluation schemes, which effectively assign different levels of pay to different roles or job classes and, ideally, attempt to correct for the historic undervaluation of female-dominated jobs (Chapter 2). Collective bargaining is also integral, in many countries, in the analysis, dissemination, and communication of the results of employer pay reporting (Chapter 3) and equal pay audits (Chapter 4). Worker representatives can also help individual workers advocate for better pay when pay inequity is discovered through reporting or through the identification of a relevant pay comparator (Chapter 1).

Looking at a broader set of tools to close the gender wage gap, unions can use collective bargaining to introduce targeted raises to compensate for the concentration of women in low-paid jobs, such as the “5 Cs”: cleaning, catering, cashiering, caring and clerical work. Collective action can also help ensure gender-neutral evaluation criteria for career progression (such as specific conditions for women returning from maternity leave, to compensate for career and wage progression breaks) and can reduce the gender gap in discretionary pay. For example, a common criterion in performance-related pay is work attendance. Given that women do more unpaid work than men, on average, and consequently spend less time in paid work, women often score more poorly on performance-based pay measures that rely on work attendance. Collective agreements can include provisions for equality audits of this type of discretionary pay (OECD, 2020[2]).

While it is obviously difficult to measure agency and voice in cross-national perspective, it is worth raising the question of who negotiates for whom – and for what – in collective agreements. OECD research has found that women make up slightly less than half of union members, and that a smaller share of women than men are members of a union, on average across the OECD (OECD, 2019[3]). The same analysis finds no evidence cross-nationally that collective bargaining compresses the gender pay gap on average, and that the premium associated with firm-level bargaining is on average slightly larger for men than for women (OECD, 2019[3]). Governments’ mandating or incentivizing unions to ensure pay equity across genders therefore seems especially valuable.

Relatively few countries attempt to ensure that social partners consider the gender wage gap during collective bargaining negotiations. In total, nine of the 38 OECD countries report binding or non-binding measures that seek to ensure that equal pay is discussed during collective bargaining in the public and/or private sector.

Eight countries (Belgium, Canada, Chile, Costa Rica,1 France, Germany, Spain and Sweden) pursue this in the private sector and six countries (Austria, Canada, Chile, Costa Rica, France, Germany and Sweden) similarly do this in the public sector.

There is high variation across countries in terms of the nature of the obligation and level of collective bargaining, which can take place at national, regional, sectoral, occupational or firm level (OECD, 2019[3]) In Belgium and Germany, all levels are involved in collective bargaining on equal pay, whereas in Sweden the obligation is most often found at the company level. In France, the sector and company level are targeted by legal obligations, whereas in Chile it depends upon the terms of the collective agreement.

Belgium, France and Germany take relatively direct approaches to ensure equal pay is considered in collective agreements. Each country has measures in place to enforce this obligation. In Belgium, if a job classification is not gender neutral within a collective agreement, the agreement is included on a public “name and shame” list. In France, employers with at least 50 employees may face financial penalties if they do not uphold the law. In Germany, if a court finds that a clause in a collective agreement is discriminatory, it will declare this clause invalid. 

Other countries take a less direct approach. In Sweden, Spain and Chile, ensuring equal pay is discussed during collective bargaining is not binding. Social partners retain considerable autonomy. For countries with high union coverage and a strong union role in collective agreements, such as Sweden,2 a lack of enforceability may not necessarily limit effectiveness.

Belgium, France and Germany illustrate three different ways collective agreements can work to include and advance gender equality.

In Belgium, social partners play an important role in setting wages. In 2012, Belgium introduced the Equal Pay Act3 to ensure that the pay gap becomes a permanent theme in social dialogue at all levels of negotiation.

Working at the intersectoral level, the Central Economic Council issues an annual technical report that includes information on the evolution of the gender pay gap.4 This report serves the basis of negotiations for intersectoral agreements that takes place every two years. Intersectoral agreements must include measures to combat the gender pay gap, including gender-neutral job classifications (Chapter 2).

At the sectoral level, collective labour agreements also include measures to address the gender pay gap, including gender-neutral job classifications. Accordingly, existing and future sectoral job classifications must be gender neutral. The Federal Public Service Employment, Labour and Social Dialogue checks that sectoral classifications are gender neutral and does so in collaboration with experts (Chapter 2).

Considering that nearly 50% of employees in Belgium are members of a union – a relatively high coverage rate (Figure 5.1) – Belgium’s efforts to ensure equal pay considerations in collective agreements have the potential to reach a large share of dependent workers. However, the government notes that reducing administrative constraints and changing social norms could improve the effectiveness of these obligations.

In French companies with unions, worker representatives and employers engage every year5 in a negotiation on equality between women and men. This focuses in particular on measures aimed at eliminating pay gaps and improving quality of life at work.6 The agreement reached at the end of this negotiation, or, failing that, the action plan drawn up unilaterally by the employer, must contain progress objectives, actions to achieve them, and quantified indicators in three or four areas of action depending on whether the company has fewer or more than 300 employees, including remuneration. Financial penalties apply for employers with at least 50 employees. Additional negotiations on gender gaps must take place at the sectoral level.

Independent of bargaining agreements, worker representatives play an important role in France’s recently implemented equal pay auditing system, l’index de l’égalité professionnelle entre les femmes et les hommes (PEI, detailed in Chapter 4). Every year, by 1 March, companies with at least 50 employees must publish the results of their extensive gender equality audit on their website in a visible and legible manner. Employers must also communicate results to their workers’ elected social and economic committee and to the French Ministry of Labour, Employment and Inclusion.

Section 6 of Germany’s 2017 Transparency in Wage Structures Act7 calls upon parties to collective agreements and employees or worker representatives to collaborate in achieving the goal of equal pay for equal work or work of equal value between women and men. In Germany, those bound by collective agreements have to pay at least the wages that are laid down in the collective agreement. However, they are able to pay wages above if a higher wage is agreed in an employment contract. Further, collective bargaining parties are also bound by anti-discrimination law. If a court finds that a clause in a collective agreement is discriminatory, it will declare this clause as being invalid.

Social partners have also initiated action to further pay transparency as part of collective agreements. For example, in 2016, Nahrung-Genuss-Gaststätten (NSG), the Food, Beverages and Catering Union, started an ongoing initiative to support the equal pay principle in their collective wage agreements. NSG systematically reviewed 3 500 collective wage agreements to ensure compliance with equal pay principles and to identify any discriminatory practices.

The Transparency in Wage Structures Act Section 13, which focuses on individual procedures to verify equal pay, also involves works councils. Section 13 prescribes that employees working for employers bound by and applying collective wage agreements shall approach their works council when requesting their individual entitlement to disclosure. According to Section 13, “The employer shall grant the works committee access to the payroll showing employees’ gross wages and salaries and break these down. The payrolls must be broken down by gender and must contain all remuneration components, including extra benefits not contained in the collective wage agreement and such payments as are individually negotiated and disbursed.” Section 13 does not establish completely new duties, but is part of the framework of the duties of works councils according to the Works Constitution Act.

Canada’s Pay Equity Act came into force on 31 August 2021. Section 95 of the Pay Equity Act ensures that pay equity increases paid under the Act are automatically incorporated into existing collective agreements to ensure that pay equity is maintained through the collective bargaining process. This applies to both public and private federally regulated workplaces with ten or more employees.

Poland, Italy and the Netherlands may have upcoming measures depending upon whether the EU proposal for a Directive of the European Parliament and of the Council on strengthening the principle of equal pay between men and women through transparency is accepted.

No country that mandates or encourages these measures reports that the introduction of equal pay principles during collective bargaining is ineffective. France and Austria report that their legal obligations are operating in a very effective manner, though France notes that they face data collection and incompleteness issues and Austria reports social norms are a continued obstacle to closing gender pay gaps. Similarly, Belgium notes that administrative constraints and social norms limit effectiveness of mandating equal pay discussions in collective agreements. 

Spain and Sweden report that their measures are also working fairly effectively even though social partners are not mandated to include pay equality measures in collective agreements. Sweden reports that with high union membership a self-regulated social partnership model is effective.

Many countries do not explicitly promote the discussion of the gender pay gap in collective bargaining, but they either have supporting measures or report that pay equity is commonly covered in collective bargaining.

In some countries, such as the United States and Italy, the government does not play a role in mandating any specific topics for negotiation between parties. The United States, for instance, requires that parties in a voluntary recognised or National Labour Relations Board collective bargaining relationship bargain in good faith about matters pertaining to wages and other terms and conditions of employment – but these regulations do not explicitly include gender considerations. However the United States points to other mechanisms, such as the regular publication of gender-disaggregated median wages by union or non-union work status,8 as tools to help ensure that equality principles are maintained within collective agreements. 

In many countries, including (but not limited to) Poland, Turkey and Ireland, collective bargaining cannot contravene existing laws, including equal pay or anti-discrimination laws.

Sometimes equal pay is prioritised by social partners without government involvement. Norway, Iceland and Japan report that many social partners themselves continue to elevate equal pay principles, gender-neutral job evaluations and pay audits without it being mandated by the government. Unions, government and the business sector may also come together in a tripartite manner to discuss equal pay principles and work to close the gender pay gap, as is reported by Austria, Colombia, Finland, and Norway.

The remaining OECD countries that participated in the OECD GPTQ report that they do not have measures in place and do not anticipate any upcoming measures to promote equal pay discussions in collective bargaining. Issue awareness, privacy and data legislation, competing priorities, and the autonomy of social partners has prevented it from being introduced in a range of countries.

References

[1] European Commission (2014/124/EU) (2014), 2014/124/EU: Commission Recommendation of 7 March 2014 on strengthening the principle of equal pay between men and women through transparency, https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=celex%3A32014H0124 (accessed on 21 May 2021).

[2] OECD (2020), Can collective bargaining help close the gender wage gap for women in non-standard jobs?, OECD, Paris.

[3] OECD (2019), “Collective bargaining systems and workers’ voice arrangements in OECD countries”, in Negotiating Our Way Up: Collective Bargaining in a Changing World of Work, OECD Publishing, Paris, https://dx.doi.org/10.1787/a6ebacb7-en.

Notes

← 1. Costa Rica self-identified in the OECD GPTQ (2021) as having legal obligations or other measures (such as incentives) introduced to ensure that the issue of equal pay, including pay audits, is part of the collective bargaining process in the public and private sectors, but did not provide legislative or policy details.

← 2. Sweden reports in the OECD GPTQ (2021) that about 90% of workers are protected by collective agreements and about 70% of all workers in Sweden are affiliated to a trade union.

← 3. Available at: http://www.ejustice.just.fgov.be/eli/wet/2012/04February 2012204357/justel.

← 4. For more information, see https://emploi.belgique.be/fr/themes/egalite-et-non-discrimination/egalite-femmes-hommes-lecart-salarial or https://werk.belgie.be/nl/themas/gelijkheid-en-non-discriminatie/gelijkheid-vrouwen-mannen-de-loonkloof.

← 5. Alternatively this can take place at least once every four years, if a collective agreement on the timing of mandatory negotiations is reached.

← 6. For more information, see https://travail-emploi.gouv.fr/dialogue-social/negociation-collective/article/la-negociation-collective-en-entreprise-en-faveur-de-l-egalite-professionnelle (in French).

← 7. Available at: https://www.gesetze-im-internet.de/englisch_entgtranspg/englisch_entgtranspg.html.

← 8. A 2020 publication of Bureau of Labour Statistics analysis of gender-disaggregated earnings by union work status is available at: https://www.bls.gov/opub/ted/2020/nonunion-workers-had-weekly-earnings-81-percent-of-union-members-in-2019.htm.

← 9. Available at: https://www.westpac.co.nz/assets/About-us/sustainability-community/documents/Gender-Pay-Analysis-Report-2019-Westpac-NZ.pdf.

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