Pay transparency: The not so hidden road to equality

There have recently been some encouraging developments for fair pay, with laws on pay transparency in Switzerland, France, and the UK, the long-awaited EU draft Directive for more transparency and reinforcement of the right to "Equal Pay for work of equal value" at the European Court of Justice. So what’s the current state of play? How does all this affect countries and companies? And what needs to be done now? This is exactly what speakers, experts, and interested parties from around the world discussed at the digital International Pay Transparency Conference on July 28, 2021. Here are the key points.

Fair pay is on everyone's radar. Various laws on fair pay have been published, adopted and implemented in recent years with the overarching theme of pay transparency. The UK has rigorous reporting mechanisms; Iceland established a groundbreaking Equal Pay Standard; France ranks companies on the Gender Equality Index. Just a few weeks ago, Spain passed two laws enforcing the requirement for companies to audit their pay structures, while Ireland followed the British example by introducing corporate reporting standards.

This March, the European Commission also published a draft Directive on fair pay. It has been long-awaited, and the proposals are bold. The text combines the best practices from across Europe – obligations for companies to provide reports and carry out audits, a right to information for staff – but most importantly, it shifts the burden of proof to companies and introduces fines and sanctions. In fact, the European Court of Justice only recently ruled in favor of fair pay, focusing particularly on the principle of equal pay for work of equal value.

A truly international reunion

The time was ripe to meet up and discuss all the progress made on pay transparency to date. Partnering once again with the Equal Pay International Coalition and with the support of the Berlin office of the International Labour Organization, the FPI brought together international speakers and experts on fair pay at the International Pay Transparency Conference. The conference was truly international, with speakers and guests from the US, UK, Iceland, Spain, Italy, Belgium, India, and Saudi Arabia representing companies, trade unions, employer organizations, NGOs and government.

The need for pay transparency

When entering discussions on fair pay, we often hear phrases like, “it’s too complicated to calculate all those gaps” or “we don’t have any gaps” but not on this occasion! Thomas Fischer, Head of Department at the German Ministry of Family Affairs noted that “we’re moving the discussion away from burdens and questions of absolute compliance towards pay transparency as an essential tool.” Indeed, all speakers agreed that transparency is absolutely critical for putting fair pay into practice. There’s no need for discussion, only the question of how transparency is implemented and what level of transparency best fits the organization’s culture. Marcus Priest, Global Head of Rewards at the international pharmaceutical company Novartis described the company’s involvement in the Equal Pay International Coalition and their road to transparency: “Fair pay is part of the open and transparent culture we’re building at Novartis.” Christine Theodorovics, Chief Strategic Development Officer at the international insurance company AXA Group agreed: “There is no magic recipe for fair pay, instead many different components come together to deliver success.” In any case, the key components are commitment – both internal and external – and a dedicated budget to close gaps. Margrét Bjarnadóttir, founder of the Icelandic software company PayAnalytics further elaborated: “Apart from closing pay gaps, it’s important to integrate pay equity considerations into compensation processes to keep those gaps closed.”

Sanctions, sanctions, sanctions

On the legislative side, the speakers welcomed the high number of legal initiatives currently in place. Dr Maria Concetta Corinto, Director at the Italian Ministry of Labor and Social Policies declared: “We support this Directive 100%!” Although not all speakers fully backed the current proposal by the European Commission, all agreed that fair pay-related issues, such as combating stereotypes and providing adequate care facilities, are equally important. Two major points were raised in reference to legal requirements. Firstly: sanctions, sanctions, sanctions. Katharina Miller, President of the European Women Lawyers Association explained: “Without sanctions, nothing works in social rights.” And secondly, reaching fair pay always means measuring pay gaps. But measuring gaps can be done in many different ways. Marie Konstance, Project Lead at the international organization Catalyst, explained that “everyone should measure results, not inputs, to show progress – even if the numbers aren’t perfect.”

The pandemic’s impacts on gender equality

Of course, the International Pay Transparency Conference also looked at the ongoing COVID-19 pandemic and its impacts on gender equality. The panel highlighted the point that there hadn’t been a backlash because of the pandemic but “women were expected to step down during COVID” making “gender equality the unfinished revolution”. Harry Kyriazis, Chairman of the Social Affairs Committee at BusinessEurope, further noted that “BusinessEurope and its national member organizations are all strongly committed to gender equality; which is why we engage constructively in the debate on the draft Directive and other measures that may effectively reduce the gender pay gap”.

The International Pay Transparency Conference clearly showed that pay transparency is the perfect mechanism for closing pay gaps and keeping them closed. Companies and civil society actors aren’t the only ones who have demonstrated their support for fair pay. Participants on the political side have also clearly stated: “There is an overarching coalition in the European Parliament and the European Commission to push further for fair pay.” Transparency may have different facets, but all speakers agreed that without transparency, gaps will remain. The German Minister for Family Affairs Christine Lambrecht concluded that “the discussion about the European Commission's proposal on pay transparency is finally where it belongs – in the public eye.”

We would like to cordially thank the German Federal Ministry for Family Affairs for realizing this conference. We further like to thank our partners, the Equal Pay International Coalition, the founding members ILO, OECD, and UN Women, and especially the ILO Office in Berlin for their hands-on support in making this inspirational event happen!