Can pay transparency policies help close the gender wage gap? The OECD thinks so.

16 Dec 2021

The Organisation for Economic Cooperation and Development (OECD) recently released a new report, Pay Transparency Tools to Close the Gender Wage Gap, which looks at the ways OECD countries are requiring companies to reveal the existence and size of pay inequity among employees. This is the first OECD-wide stocktaking of pay transparency measures, and the report finds a high level of commitment and policy momentum across countries trying to close the gender wage gap.

Eighteen out of the 38 OECD countries mandate systematic, regular gender wage gap reporting by private sector firms. This can entail calculating and reporting a range of different wage gap statistics, or the simple overall wage gap, to stakeholders such as workers, their representatives, a government agency, and/or the public.
Within this group, nine OECD countries have implemented comprehensive equal pay auditing processes. Equal pay audits require additional gender data analysis and typically propose follow-up strategies to address inequalities. Most of these policies were introduced in the past decade, and most of this movement took place in Europe, reflecting the 2014 European Commission Recommendation on strengthening the principle of equal pay between men and women through transparency. 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 classifications, often presented as salary scales, 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.

These pay transparency processes are based on important legal principles of equal pay for work of equal value, or equal pay for equal work. Twenty-seven OECD countries report to the OECD that they have clarified the concept of equal pay for equal work and/or work of equal value in national legislation. Most other OECD countries have clarified equal pay principles through the courts and case law.

Each of these policies, defined further in the report, have the potential to narrow the gender wage gap. But strengthening reforms, greater stakeholder engagement, and more and better evaluations of pay transparency measures are still needed.

To learn more, please check out the report here.