The Enduring Pay Gap Problem
The concept of equal pay for equal work seems irrefutably simple. Yet, turning this concept into workplace reality is no easy task. After all, how do we decide what constitutes equal work?
Work of equal value has been notoriously difficult to objectively assess. With so many variables at play, and without data-driven, organized methods of assessing, many organizations are essentially taking a stab in the dark when they aim for equal pay.
Of course, this isn’t effective. The proof that it isn’t working? In the U.S, the gender pay gap has hardly budged in the last two decades. In the EU, the women are still earning, on average, 13% less per hour than men.
And it’s not just gender. Pay gaps prevail for people of different ages, races and nationalities. When it comes to age, the gap is difficult to assess because it can be tricky to disentangle age from tenure and expertise. Ultimately, subject expertise doesn’t necessarily correlate with how many years a person has been working.
Race-based pay discrepancies are also difficult to assess and address because, fundamentally, the data just doesn’t exist. In Europe, many organizations are not collecting information on how race and pay correlate within their job architectures.
So, the first step towards tackling the enduring equal pay problem? Hard data. Many decision makers are still in denial about a pay gap in their organization. Often, it takes seeing a visual representation of how pay is distributed - for example a gradar pay gap analysis graph - to accept that inequalities are rife.
With perspectives from across the EU, our panel discussed how attitudes towards pay equality vary significantly across borders.
In Spain, job evaluation is a relatively new concept. The ‘shock treatment’ of new pay equality regulations in the country made a lot of companies realise that they needed structure and order in their job architectures in order to start tackling unequal pay.
In Germany, whilst some global organizations have whole departments dedicated to diversity and equality, others still have next to no job architecture in place. Such companies are likely to correlate pay with titles, often arbitrarily adpopting labels such as ‘senior’ for staff with longer tenure - but not necessarily elevated skills.
Despite good laws for parental leave - a vital tool in bridging the gender pay gap - there’s still a noticeable lack of women working in high grade positions. This shows that, even in countries where robust policies are in place, organizations still need to play their part in ensuring that women are represented in executive roles.
As the new EU Pay Directive comes into effect, its sweeping changes are likely to impact each country variably. Where there weren’t already robust local laws in place, some work cultures will experience a seismic shift. Other legislations may add their own equal pay initiatives on top of the Directive’s mandated demands.
The EU Pay Transparency Directive
The EU Pay Transparency Directive aims to establish EU-wide standards on pay transparency measures. The overarching goal? To squash the EU’s enduring gender pay gap and empower workers to assert their right to equal pay.
One of the fundamental requirements of the Directive is that organizations will need to have an objective method for measuring the value of work. For companies without a job evaluation system - or the ones still using obsolete slotting systems - this fresh requirement will have a huge impact.
The directive also empowers victims of unequal pay by allowing them to recieve compensation in the form of back pay and bonuses. Vitally, in an equal pay claim, the burden of responsibility to prove will fall on the employer to prove that pay discrimination didn’t take place.
So, perhaps one of the biggest changes the mandate will bring? An EU-wide shared-consciousness about pay equality. Employees will be empowered to ask questions about gender pay gaps in their organizations, as well as to take action when unequal pay seems evident. It’s not just legislation that will become more consistent; employee expectations will become more uniform across the EU.
It’s clear the Directive represents a tangible step forward in closing the gender pay gap, with sweeping changes set to hugely impact HR departments across the EU. You can read more about the EU Pay Transparency Directive - and how it’s set to impact your organization - here.
The Future of Equal Pay
As the expectations of new generations of employees shift, pay transparency and equality will become key values that they look for when job hunting. It’s clear that equal pay will need to become a key component of talent acquisition strategy if organizations want to continue to attract and retain top talent.
Something else that’s crystal clear? Compensation and grading can’t only be understood by a handful of HR professionals. Managers should also be deeply knowledgeable, allowing them to explain pay choices and advocate for pay equality.
There’s a complex web of factors that contribute to pay inequality. Many of them - gendered jobs, educational biases and parental leave policy - go beyond a HR department’s reach. Yet, ultimately, objective grading and an organized job architecture are the first line of defense against pay inequality.
If one thing is certain, it’s that pay equality is a topic that’s far from exhausted. Ultimately, it’s not just pay policies and regulations that are changing; employee shared-consciousness is also set to shift. Organizations, it’s time to get ready.
Want to prepare your business for pay transparency? Get in touch with our team today to find out how gradar can help!