Why Icelandic Women Keep Shutting Down the Economy
Despite both implementing pay equity policies, Canada and Iceland are failing to close the gender wage gap.
By Jillian Hayden
On October 24, 1975, Icelandic women took a bold stand against gender-based discrimination in the workplace. In a powerful display of unity, over 90% of the female population refused to engage in any form of labour, whether it be paid or unpaid, including work, childcare, or other responsibilities. This was a pivotal day for women in Iceland and all over the world, signifying strength in defiance and leading to the first Gender Equality Act, adopted the next year in 1976.
In October 2023, nearly half a century later, they did it again. Women and non-binary individuals across Iceland called for a 24 hour strike from all forms of labour. The protest led to a partial shutdown of the economy. Many stores had to close for the day or operate at a reduced capacity, and hospitals only admitted patients seeking urgent care.
Prime Minister Katrin Jakobsdottir was among the individuals who refrained from showing up to work, shutting down her office and joining the tens of thousands of women in protest of gender discrimination.
“As you know, we have not yet reached our goals of full gender equality and we are still tackling the gender-based wage gap, which is unacceptable in 2023,” Prime Minister Jakobsdóttir said in advance of the walkout. “We are still tackling gender-based violence, which has been a priority for my government to tackle.”
Historically, Iceland is acknowledged as a global leader in gender equality, consistently securing the top position in the World Economic Forum's global gender gap rankings for the 14th consecutive year. However, despite this achievement, in many professions, Icelandic women still earn 21% less than men. Recent polls also show that over 40% of women and non-binary people have experienced a form of gender based or sexual violence. Comparatively, Canadian women earn on average 10% less than their male colleagues and 44% have reported a form of gender based violence.
In 2020, Iceland became the first country in the world to pass a law requiring companies to pay all employees an equal salary for the same job. The legislation involves daily fines of $500USD daily for companies that fail to certify their equal pay system. Both employees and managers have reported the new legislation improves the work environment and women's trust in the company. Additionally, the law has been successful in shifting the burden of proof to the employer, creating transparent pay systems and enforcing compliance. However, despite the law being in place, workers are still seeing wage disparities.
Iceland is praised for being a good place for women and has been for years. It's been named the most progressive country in the world despite 90% of women and non-binary individuals unsatisfied by the gender wage disparities and violence against women.
Despite Icelands being a beacon of hope for the rest of the world, their actions are still inadequate. Although it is thriving in comparison to other countries, Iceland is still unable to end the gender wage gap.
According to the Directorate of Equality in Iceland, 94 companies still have not completed the required equal pay certification by the end of 2021 despite being given enough time. Although this makes up less than a quarter of the companies required to submit a report, it does show a substantial unwillingness to pay. It sends the message that it is easier to pay the $500USD a day instead of implementing equal pay throughout the organization.
In comparison, Canada is not faring any better – while the country’s policy towards closing the pay gap is more advanced than most countries, it is falling behind Iceland on compliance.
In 2021, Canada’s Pay Equity Act went into effect. It aims to address gender-based pay discrimination in federally regulated workplaces. Some key requirements include the creation and posting of a pay equity plan within three years, closing identified gaps through compensation increases, and annual reporting on plan implementation. The Act covers approximately 4,600 federally regulated employers and 1.3 million employees in the private and public sectors, parliamentary workplaces, and certain governing bodies, but pay equity in these places is also protected by other legislation.
This Act is being implemented over the course of one to five years depending on the sector of work. Some industries are given three to five years to finalize a pay equity plan for employers. This differs from universal implementation in Iceland, allotting Canadian companies much more time to avoid paying women the same as men for the same job. To obtain compliance, the Commissioner for Pay Equity can issue up to a $30,000 fine for companies with under 100 employees and up to $50,000 fine for companies with over 100 employees. These fines, although large in a lump sum, may still be more affordable for industries to pay than to enact policy change for pay equity.
In October 2023, Dr. Claudia Goldin won the Nobel Prize for her work on the gender wage gap. After mining 200 years of data, her research exhibited that increased economic growth did not lead to wage equality or more women in the workforce. Despite achieving higher rates of education than men, women are still underrepresented and under incentivized across the workforce.
Goldin's research has demonstrated that gender pay disparities do not exhibit a straightforward correlation with economic growth. Goldin highlighted the significant impact of parenthood on sustaining pay inequality. This is predominantly attributed to the reduction in earnings when women interrupt or limit their work commitments to raise children.
Applying the work of Claudia Goldin to the complex policy issue of wage parity suggests that we need to look past simply aiming for job creation to solve the gender wage gap. To close the gap we have a much larger issue on our hands, which is changing the societal norm that women take on disproportionately high amounts of domestic labour. Bringing government regulation into the homes to equally divide household tasks and childcare is both invasive and impossible, so we must look at other incentives that can decrease the domestic labour gap.
When women are not paid enough, everyone loses. Women are more likely to decline positions if the potential pay is not worth their time or up to the level of their male colleagues. This is harmful to the workforce because not every eligible worker is contributing the skills and education they have obtained back into the economy. Encouraging women to participate in the labour force through equal pay will improve poverty rates as well by encouraging dual income earners within a household.
Policies implemented so far simply do not go far enough to address the gender pay gap. But not all hope is lost – with stronger and more effective policies, we can get closer to finally closing the gap that perpetuates gender discrimination and does not give women the equal compensation that they deserve. Some of these policy options could include:
Strengthening penalties and incentives for compliance: Increasing fines and offering financial incentives, tax benefits, and other advantages can encourage companies to take pay equity more seriously.
Benchmarking and industry specific guidelines: Benchmarks provide clear standards to strive towards, fostering a sense of competition and accountability. Guidelines can ensure companies have specific and practical measures to follow.
Mandatory maternity leave for all employees despite gender: Extending the leave to all employees, regardless of gender, promotes gender neutral policies and acknowledges caregiving responsibilities are not exclusive to women.
Continuous review and adaptation: Review and adaptation systems ensure policies remain effective, relevant, and adaptable over time.
It is clear that companies and decision-makers alike are failing women – and as a result, economies as a whole suffer. Degrading women upon entry into the workforce by failing to compensate them fairly is extremely harmful to how they are valued in any sector. How often do women need to march in the streets for their employers and legislators to listen? As women continue to achieve higher education and enter the workforce, the benefits of ensuring women are paid their equal share are far too great for all of us to miss out on. This is not a failure of economic growth, it's a failure of economic inclusion.
Jillian is a current student at Max Bell who previously completed an Advanced Major in Finance and a Minor in Economics at St. Francis Xavier University. Passionate about economic inclusion, she has worked in the areas of affordable finance structures, asset allocation, and education accessibility. This year, she looks forward to obtaining the critical knowledge and skills from the MPP program to make meaningful contributions nationally and globally.
