11. Concluding discussion

At the centre of this summary discussion is the question of the implementation of the Pay Transparency Directive and how this might affect the Nordic social partner model. The extent to which further measures may be necessary, either through legislation or collective agreements, is also discussed. As the Nordic Council of Ministers has expressed an ambition to strengthen exchanges in the area of equal pay, equal work and job evaluation and to build alliances in the Nordic countries, some proposals for such further work are presented in this conclusion.

The concept of work of equal value and the importance of the Pay Transparency Directive

It appears from the report that the concept of work of equal value is by no means new. It has been established since the ILO was founded in 1919 and has since been clarified in ILO Convention No. 100 and by the case law of the Court of Justice of the EU. It should be noted that the Nordic Council of Ministers issued a publication on the subject in 1992. The ILO Convention states that the State has a special responsibility to implement the principle of equal pay for work of equal value. The report describes the involvement of the State in tripartite commissions on equal pay, as in the Finnish, Danish and Icelandic examples. In Sweden, a commission on equal lifetime earnings has submitted a comprehensive report. What these commissions have in common is that the eventual proposals presented have all too rarely resulted in specific measures to address gender-related imbalances in the labour market. Social partners have generally shown little ambition to integrate the concept of work of equal value within their own collective agreements and to approach it as a concept that requires practical application. This is specifically described in Chapters 5, 7, and 9. An observation in one of the Finnish reports serves as an example: It is noted that labour market organisations generally declare that they are committed to promoting gender equality and that they evaluate the gender impact of their own collective agreements. However, there is a contradiction in the fact that these declarations rarely seem to be translated into specific actions that lead to change.

The realisation that the voluntary route has been regularly used to avoid taking action leading to change is the basis for the adoption of the Pay Transparency Directive 2023/970. The adoption of the Directive was preceded by a nine-year phase in which the motivation to take voluntary action was tested. The meaning of these different recommended actions, also referred to as a ‘toolbox’, is set out in the 2014 European Commission Recommendation.

European Commission, Commission Recommendation on strengthening the principle of equal pay between men and women through transparency, COM(2014)1405 final.

The Pay Transparency Directive as a threat to the Nordic social partner models

The transposition of the Directive into national legislation will require changes both on the part of government supervisory authorities and social partners on local and central level. A much more active approach to the concept of equal work and work of equal value will be necessary than has been the case to date. However, the process of implementing the Directive is likely to meet with resistance, not least from social partner representatives on central level. A joint statement from Danish and Swedish social partner representatives on central level exemplifies the resistance to streamlining the application of the EU principle of equal pay for equal work.

Svenskt Näringsliv (Confederation of Swedish Enterprise; 2021) Lönetransparendirektiv direkt hot mot de svenska och danska arbetsmarknadsmodellerna (Pay Transparency Directive a direct threat to the Swedish and Danish labour market models). Statement 30 November 2021 from the Chair of the trade union confederations LO and PTK (Sweden) and FH (Denmark), together with the MD of the Confederation of Swedish Enterprise and Dansk Arbejdsgiverforening (Confederation of Danish Employers).

The key sentiments expressed are that the Directive must allow for interaction with existing labour market rules, that the rules must be clear and predictable and that the rules must not interfere with the autonomy of social partners and their right to negotiate and conclude collective agreements. As a comment on these supposed threats to the Nordic labour market model, the following can be said:

A court ruling is required to overrule collective agreements that have been concluded. The likelihood that the implementation of the Directive would lead to a wave of lawsuits by Nordic workers alleging that their employers are guilty of pay discrimination seems unlikely, especially in light of the fact that cases of successful pay discrimination litigation have so far been extremely few. This is one of the reasons the main focus of the Directive is on proactive commitments that do not require the involvement of the courts. There is also no mention in the Directive of equality bodies or supervisory bodies taking over the role of labour market parties in negotiating and concluding collective agreements. Instead, the core of the Directive is about transparency and setting clear rules. Such clarity relates to the use and application of pay criteria that are either based on collective agreements or reflect unilateral decisions by employers. Clarity should also be reflected in the framework set for the behaviour of equality bodies and supervisory bodies. Such clarity can be achieved by means of a statutory text that specifies the framework for the authorities’ behaviour.

There is one provision in the Pay Transparency Directive that is likely to affect parties’ agreements on pay setting. The provision states that a maximum pay differential of 5 per cent within a category of workers can be subject to ‘joint pay evaluation’. This provision is described and exemplified in Chapter 8. At the same time, it is important to remember that the ILO Convention is based on a tripartite agreement. This means that the principle of equal pay for work of equal value is an obligation for the social partners. Firstly, the rule means that social partners on local level need to pay attention to the fact that the determination of pay for individual workers must be objectively justified on the basis of documented pay criteria. Secondly, local parties must ensure that the application of these criteria is not discriminatory. The question is whether this is a real problem? What employer would want to apply unfair and discriminatory pay criteria? The reality is that this rule is only relevant for employers with at least 100 employees. In such a large organisation, there is always a professional HR department that is expected to be well versed in applicable laws and collective agreements.

As a result of the efforts of the Swedish Equal Opportunities Ombudsman, the pay of several thousand employees was adjusted in the early 2000s. The average pay increase in one of these reviews was close to SEK 1,300, according to the ten monetary value.

See, for example, Miljongranskningen - Resultat av etapp 2 och slutrapport, (The Million Audit – Phase 2 results and final report). From the report, the following is apparent, p. 26: “The 177 employers whose cases were closed as of 8 October 2008 have a total of 96,000 employees. The pay adjustments detected up to 8 October 2008 cover at least 1,528 workers, representing 1.6% of all employees. Of these, 1 027 are women and 66 are men. For 435 persons, gender has not been disclosed.” According to the report, the average pay rise was about SEK 1,280 per person per month.

There is no evidence that these pay adjustments have affected or threatened the Swedish pay formation model. It therefore seems unlikely that any pay adjustments that can be expected in the future, as a result of the implementation of the Pay Transparency Directive, would threaten the established partner models.

The state's responsibility to counteract bureaucracy and to develop templates and tools

The implementation of the Directive means that large amounts of payroll data need to be compiled and analysed at the establishment level, reported to a monitoring body, analysed at the authority level and compiled to be made available to the public and for further reporting to the European Commission. The number of employers affected by the reporting requirement in Sweden, with just over 10 million inhabitants, is estimated to be 5,500.

These employers consist of about 4,950 private companies, 160 government agencies, 21 regions and 290 municipalities.

In Norway, it is about 4,000 employers.

There is reason to criticise the Directive’s wording on the requirements for the collection and compilation of pay data as having been prepared with insufficient care. This can be exemplified by the wording of Article 29.3.c, which states that the work of Member States in analysing the causes of the gender pay gap, in this case referring to the work of the monitoring body, shall be supported “in particular of the analytical work and tools of the EIGE.”

EIGE is an acronym for European Institute for Gender Equality.

The problem in this context is twofold. As previously mentioned, EIGE has still not started to develop a pay analysis tool more than six months after the adoption of the Directive. Moreover, the planned development of a pay analysis tool does not provide for analysing pay data at the national level, as envisaged in Article 29. Instead, the aim is to develop a tool for assessing job requirements that can be applied at the single establishment level, as implied by the word tool in Article 4.2.

As described in Chapter 8, employers will need extensive guidance and administrative support. Analytical tools and templates need to be developed for use at the operational level (local level) for the purpose of, among other things, submitting data at the central level (the monitoring body). Tools are also needed for analysing pay differentials and for the production of statistics at the central level, i.e. by the monitoring body. These different analytical tools and templates need to be developed in a coherent and harmonised way. The development of tools under Article 4.2 to analyse pay differentials between work of equal value, which may cut across the boundaries of collective agreement, cannot be seen as a primary task of either an individual trade union organisation or an employer organisation. The need for these tools and templates arises from demands for action at the state level.

This follows from the wording of Article 4.2. However, a Member State may delegate responsibility for developing such tools if there is an established practice to do so (Article 33). However, this is not the case in any Nordic country.

Therefore, the responsibility for this development work should rest with the state. To reduce employers’ costs, simplify administrative burdens and ensure that all reporting and evaluation at the government level are carried out as efficiently as possible, it is essential that the state take overall responsibility in this area. The actual development work, with the possibility of sector-specific variants, should preferably take place in consultation with labour market parties. If the state does not take this responsibility, it is at hand that large salary consulting companies step in to sell in-house developed solutions. In such a scenario, the country's employers may pay all or part of the bill for the development work of necessary tools that follow from the requirements of the Pay Transparency Directive.

Statements from the ILO, quoted here in 2013, emphasise the responsibility of the State in this area:

Where the Government is not in a position to influence levels of remuneration it must nevertheless promote the application of the principle of equal remuneration for work of equal value. Where remuneration is determined by collective agreements or individual contracts in the private sector as well as in the informal economy this should occur. In promoting the application of equal remuneration, the State cannot be passive, and needs to take proactive measures. Key elements of ensuring and promoting the application of the principle of equal remuneration in accordance with the Convention are the obligations to promote objective methods for the evaluation of jobs and to cooperate with workers’ and employers’ organizations.

(Equal Pay, an Introductory Guide, s. 60.)

A Finnish report on the impact of Kollektivavtalens effekter utifrån ett könsperspektiv (The impact of collective agreements from a gender perspective) recognises the need to complement general legislation on pay surveys. In this context, sector-specific tools and methods resulting from collective agreements can be of value, as pay structures, labour force composition and other conditions can vary widely between different contractual sectors.

Needs for action not directly addressed by the Pay Transparency Directive

Importance of supervision for compliance with legislation

A key issue for the enforcement of equal pay for work of equal value is effective and adequately funded supervision. In this area, the overall Nordic experience is disappointing, especially given how long pay survey provisions have existed in Sweden. The Pay Transparency Directive risks becoming a paper tiger if the reporting requirement is not combined with an effective system of penalties. This is recognised in the Swedish report SOU 2024:40.

See the draft legislative proposal 3a chapter. § 16 (“data on pay differentials between women and men performing work that is considered equal or of equal value”) in combination with 3a chapter. § 18 (“shall be ordered to pay a penalty”).

It is also necessary that the authority responsible for reviewing pay surveys has a high level of knowledge of the construction of collective agreements. Feedback on pay surveys that show deficiencies, or need to be supplemented, must be formulated in an initiated manner that provides guidance for social partners at local level.

The Directive’s 5 per cent rule and the ‘Murphy case’

The 5 per cent rule described earlier in the Directive imposes specific requirements to address pay differentials within a ‘category of workers’ of work of equal value. In previous reviews carried out by the Swedish Equal Opportunities Ombudsman, it has been noted that some employers wishing to maintain existing pay ratios thought they had found a way to minimise the number of jobs that need to be compared within the same level or group of work of equal value. This approach entails creating many different levels of work of equal value and conducting subsequent comparisons only within each level of equivalence. As described in Chapter 5, this issue was the subject of a judicial review in Sweden in a case concerning Holmen Paper. The Board rejected the Ombudsman’s argument that a category with lower work requirements, but which nevertheless had a higher pay level, needed to be included in the comparison and analysis of work of equal value. The Board considered that this requirement was only evident from the preparatory statements and not from the text of the law itself. The law was subsequently amended, and it was emphasised in this context that this issue had already been clarified by the ECJ in Case 157/86 Murphy.

The current wording of the Swedish legislation is as follows here as well as in the English version, extract from the Discrimination Act (2008:567) Chapter 3, § 9.

A similar clarification to the one introduced in the Swedish pay survey provisions currently does not exist in the other Nordic countries.

The market pay situation as a reason for deviating from the principle of equal pay

Another loophole that has been frequently used as an argument in favour of maintaining existing pay structures is to refer to the somewhat vague concept of market pay situation. This issue is discussed in more detail at the end of Chapter 5. This theme is not touched upon either in the text of the Directive or in its introduction, also known as the preamble. There is therefore a risk that this well-documented problem will be forgotten, as instructions have been given in several Nordic countries not to propose legislation beyond what is necessary for the implementation of the Directive. In view of the purpose of the Directive, it is necessary for this issue to be addressed by both legislators and social partners. In the latter case, this can be done in the context of drafting collective agreements, or jointly prepared comments, aimed at facilitating interaction between legislation and collective agreements. It is important that documented difficulties in retaining and recruiting staff are distinguished from situations in which reference to market forces reflects a desire to avoid critical scrutiny of an organisation’s pay policy positions.

Aligning collective agreements with the terminology of EU law

The Finnish report, Kollektivavtalens effekter utifrån ett könsperspektiv (The impact of collective agreements from a gender perspective), mentioned in Chapter 5, emphasises the need for the terminology used in collective agreements to be better adapted to the concepts arising from EU law. Similar reasoning follows from the summary in Chapter 9, which emphasises that the concept of work requirements can be interpreted in different ways and that the concept is more or less closely linked to two sets of rules with completely different purposes. On the one hand, work requirements have an indirect meaning with regard to the implementation of occupational classifications according to the ISCO standard and, on the other hand, the concept of work requirements has a precise legal meaning, as is evident from the Pay Transparency Directive. It is important that collective agreements are designed to facilitate interaction with various regulations that impose requirements on local parties. An example of such a requirement is reporting gender pay differentials between regarding equal work and work of equal value, broken down according to basic pay and complementary or variable components.

Forms of consultation and interaction between local parties

Article 9.6 of the Pay Transparency Directive provides wording on consultation with employee representatives. Article 10.1 requires employers to cooperate with employee representatives in listed circumstances. In the normal course of duties, trade unions are tasked to represent their own members. Can employee representatives be expected to abandon this role in the context of a pay survey? Unfair pay differentials are by definition a violation of an individual’s human rights.

“The right not to be discriminated against on grounds of sex is one of the fundamental human rights whose observance the Court has a duty to ensure.” United cases C-270/97 and C-271/97 Deutsche Post AG, items 56 and 57.

Is the group conducting these negotiations expected to take joint responsibility in relation to the pay of all employees, regardless of union affiliation? If so, there are many similarities with the role of a safety representative in health and safety matters. There is therefore reason to pay particular attention to the formulation of procedural rules with regard to consultation and cooperation under the Pay Transparency Directive. This may involve clarifications both in the legal text and in collective agreements at central or local levels.

The implications of dealing with pay issues in two separate systems are described in more detail in the article ‘Samverkan och lönekartläggning’ (Cooperation and pay surveys), Fransson and Stüber (2004).

Knowledge and experience in analysing a pay structure from a gender perspective

Analysing a pay structure from a gender perspective requires knowledge and experience. Such knowledge is not automatically acquired by completing a human resources programme, holding a position of trust as a trade union representative or working for an anti-discrimination authority. If there is a lack of knowledge to critically review pay surveys, the implementation of the Directive risks reinforcing the legitimacy of existing pay structures. Article 11 of the Pay Transparency Directive recognises the need for Member States to provide support in the form of technical assistance and training. The issue of imparting the necessary knowledge needs to be addressed at a number of different levels, including in the content of human resources training programmes, by social partners in the development of joint training materials and specific guides adapted to each sector and in internal training for public officials with supervision responsibilities regarding the equal pay principle.

See Stüber (2021) on Integrering av jämställdhetsperspektiv i personalvetarutbildningar (Integration of gender perspective in human resources specialist programmes).

Work of equal value – the individual is linked to the structural

The scope for addressing the gender pay gap at the national level under the Pay Transparency Directive is limited. This has been observed in several of the referenced reports. The Directive does not provide a mechanism for closing pay differentials between different occupations, sectors or industries. Its operational focus is on closing pay differentials between women and men at the level of an individual employers. At the same time, the reporting and publication requirements open up new avenues for bringing the issue of structural pay differentials into the public discourse. This in turn can increase pressure on both politicians and social partners to take further action.

The requirements for equal pay for equal work and work of equal value cannot be seen in isolation from other preventive provisions in Nordic discrimination legislation. These include, for example, requirements to reconcile work and parenthood, working time issues or requirements for preventive measures to counteract sexual harassment. The issue of equal pay is thus linked to the question of how unpaid domestic work is organised or to the theme of men’s violence against women, both at a structural and an individual level. Different provisions on proactive measures thus have a mutually reinforcing effect.

On issues related to sexual harassment, there has been a tangible norm shift. Following #metoo, there is an apparent consensus on zero tolerance of sexual harassment in the workplace in the Nordic countries. This norm change, compared to the situation in the 1990s before sexual harassment became a legal concept, is also an expression of the development of an individual-based human rights perspective.

So far, the same individual rights-based perspective does not seem to be as evident when it comes to gender pay differentials. An approximate pay differential of 5 per cent, as shown by the aggregate statistics for Denmark and Norway, may seem small in terms of various gender pay gap indices in international comparisons.

See, for example, statistics from the OECD based on data from 2022, http://www.oecd.org/gender/.

From an individual perspective, such small pay differentials, when accumulated over time, amount to a loss of lifetime income in the millions.

This calculation is based on people with an average pay level and an assumption of a constant pay differential of 5–6 per cent over 40 years.

Byrial Bjørst, who also served as a reference person for this report, has in an earlier text captured the connection between the structural level and the everyday life of individuals as follows:

The pay gap has a direct impact on the opportunities for women and men – not only in everyday life when we shop, but also when we buy a house, when we choose whether to live alone, get into a relationship or stay in a relationship. The pay gap affects couples’ decisions about who should take leave with the children or which of our careers should take precedence. The pay gap also leads to differences in our options when we retire. The pay gap is not just an expression of the inequality in the incomes of men and women. It is also a cause of inequality in all aspects of life. Improving equality between men and women requires a reduction in the pay gap. It is not whether the pay gap is illegal or whether it is explained or unexplained that matters. What matters is that it is closed.

Bjørst (2019, p. 11).

The Nordic Council of Ministers’ (continued) project on work of equal value

This report is part of an initiative by the Nordic Council of Ministers that aims, among other things, to strengthen exchanges in the area of equal pay, work of equal value and job evaluation and to build alliances in the Nordic countries. This will take the form of meetings and events as well as documentation of work carried out.

This report has described a number of different aspects of the issue of work of equal value. It is suggested that further exchanges on work of equal value could be organised around the following themes:

Development of statistics and indicators aimed at better describing progress towards equal pay for work of equal value at the national level and development of complementary control variables to describe the gender pay gap.
The development of tools and templates to meet the various analysis and reporting requirements of the Pay Transparency Directive. Methods for assessing labour requirements as well as measures to reduce costs and the administrative burden for employers fall within this field.
Sharing experience on how the new information resulting from the reporting requirements of the Transparency Directive is used and compiled. This could include media coverage as well as the publication of reports by public authorities and social partners or academic research.
Linking work of equal value to the broader gender equality policy context and thus the interplay of the issue with other gender equality policy objectives.
Legal issues related to the principle of equal pay; for example, whether the Pay Transparency Directive is transposed in all Nordic countries, how this is done and following the development of case law.
The role of collective agreements in promoting the principle of equal pay. Are there changes as a result of the Pay Transparency Directive and if so, how are these reflected?