3. Equal pay for work of equal value – a look at previous research

This section of the report provides an overview of previous research on the gender pay gap, particularly in relation to gender-segregated labour markets, the valuation of work and the Nordic pay formation model.

All Nordic countries have passed laws to address the fact that women are generally paid less than men. The EU has also provided recommendations and, most recently, introduced binding regulations through the Pay Transparency Directive (2023/970) to close the pay gap in Member States. However, despite laws and regulations to close the pay gap being in place for decades, the pay gaps remain stubborn. In the Nordic countries, the pay gap ranges from 9.3%, in Iceland, to 15.5%, in Finland (Eurostat, 2022). In recent years, the pay gaps in Sweden and Finland have not narrowed at all, and in Sweden it widened slightly between 2022 and 2023 (Ekberg et al., 2024). In Norway, while the trend of the pay gap narrowing has not completely ended (Grini & Fløtre, 2023), the difference in average monthly pay remained almost unchanged, about 13%, between 2015 and 2022 (Hoen et al., 2024).

Causes of the gender pay gap are found in several areas. Policy decisions taken in the Nordic countries to address the pay gap seem to be based mainly on theories of discrimination, with employers required to map and analyse their pay practices to prevent gender pay discrimination. However, it has been shown that even when gender pay audits are mandated by law, many employers fail to carry them out, or carry them out without really trying to identify and address the gender pay gap, which in turn contributes to the persistence of differences in pay between men and women (Kumlin, 2016; Måwe, 2019).

What Stockdale and Nader (2013) call sociological theories suggests that the pay gap is also related to structural factors in the labour market. Various analyses of the pay gap point to gender segregation of the labour market as the most important factor. In the Nordic countries, the majority of occupations and jobs are dominated either by men or by women (Måwe, 2019; Wagner & Teigen, 2021). This means that even if all employers individually endeavoured to pay their employees equally, some proportion of the pay gap would remain: Employer A may apply gender-neutral pay for its employees in a field dominated by women, as may Employer B, whose employees work in a field dominated by men with better average pay, thus while the men at Employer A and women at Employer B would receive equally high pay as their colleagues of the opposite sex, the general gender pay gap within the labour market would not be reduced (cf. Salminen-Karlsson & Fogelberg Eriksson, 2023).

Leaving the task of addressing unfair pay differences between women and men to individual employers ignores the gender segregation of the labour market, which coincides with the traditional undervaluation, in terms of pay, of jobs predominantly performed by women.

Gender pay gaps at the occupational level are recognised and taken into account in reports published by authorities across the Nordic countries at the national level (e.g. Ekberg et al., 2023a; Grini & Fløtre, 2023). In these reports, occupation is considered a variable like age, labour market sector or education level. They show that occupation as a variable generally explains the majority of the gender pay gap at the national level, without further analysis. More detailed analyses of this variable are necessary to formulate policies that promote equal pay. In this regard, it is particularly important to consider the gender segregation of the labour market.

The theory of the gender-segregated (or segmented) labour market explains the gender pay gap as an expression of the general labour market being divided into two, with the employees on one side (primary) being mostly men and the other (secondary) mostly women. These labour markets have different general levels of pay, as well as different working conditions, and movement between them is limited (Gaweł & Mroczek-Dabrowska, 2020; Semenza et al., 2021). O’Reilly et al. (2015) reviewed the literature on the gender pay gap in several countries over the past 40 years and found that gender segregation of the labour market exists in all countries and persists because few workers cross this boundary, although there is some variation between different national cultural contexts.

Nicolás-Martínez et al. (2023) argue that segregation can be traced to the roles women are assigned in society, not least with regard to health and social care. The Nordic countries have a high percentage of women in the workforce, but they also have highly segregated labour markets (Ellingsaeter, 2013; Kowalewska, 2023). This has been attributed to the existence of a large public sector with a predominantly female labour force; the development of the welfare state meant that the care work previously performed by women in the home shifted to paid work in the service of society. Unpaid work in the home was replaced by low-paid work in the public sphere (Rubery & Grimshaw, 2015; Wagner et al., 2020).

In the Nordic countries, the solution to reducing the gender pay gap is rarely seen as pay equalisation between occupations; instead, women are encouraged to move to male-dominated occupations with higher pay (Koskinen Sandberg & Saari, 2019; Wagner et al., 2020). However, Peetz (2015) notes that segregation is maintained by both workers and employers. Workers have grown up in a world with gender-segregated jobs, and it is often easier for them to visualise their future in an occupation in which they are not a minority in terms of gender. Employers, on the other hand, have specific ideas about the kind of employees that best meet their needs, which may favour a particular gender.

A gender-segregated labour market does not imply a pay gap in itself. The pay gap arises when work in the part of the labour market that is dominated by women is valued less in terms of pay. Undervaluation of work dominated by women means that occupations dominated by women are paid less than those dominated by men, despite comparable working conditions and requirements, when there is no other reasonable justification for this situation (Grimshaw & Rubery, 2007).

According to Rubery and Grimshaw (2015), the size of the pay gap is directly related to how society values public services. In the Nordic welfare states, the value of public services has not been reflected in the national pay structure, as exemplified by Saari et al. (2021) with nurses in Finland. Saari et al. note that low ‘female wages’ for care occupations are not only a historical phenomenon but also institutionalised in contemporary wage movements.

Wagner and Teigen (2022) point out that women in the public sector have not been able to use the market-based argument to increase their wages, i.e. they have not been able to threaten to switch to an employer that would pay better wages. One argument for the privatisation of the public sector has been that it allows employees in occupations dominated by women to rely on the market-based argument. However, the intended results have not materialised – privatisation has not been shown to reduce the pay gap, on the contrary, wages of care workers have sometimes deteriorated further as a result of privatisation (Egede Hansen et al., 2023; Thörnquist in SOU 2014:34).

In the Nordic countries, except Denmark, where employers are required to ensure equal pay, various job evaluation systems have been recommended to compare male- and female-dominated jobs with different content but similar requirements. A foundational study by Joan Acker (1989) on the evaluation of jobs in the public sector established, as early as 1989, a fact to which Koskinen Sandberg (2017), for example, returns: job evaluation is not a neutral tool. Since it is a question of valuation, it matters how the valuers perceive what is better or worse, or more or less valuable.

What job evaluation systems aim to measure is not really the value of work (to an employer, the organisation, society) but the requirements of work. In this respect, most systems refer to the factors defined by the International Labour Organization (ILO): skills, effort, responsibility and working conditions (ILO, 2013). These factors are also reflected in the EU Pay Transparency Directive (2023/970). Different job evaluation systems define these factors slightly differently, have different subcategories and weight the factors differently, resulting in variation in how valuable (or rather how demanding) different male- and female-dominated jobs are perceived to be. Feminist scholars have pointed out, among other things, that demands in occupations traditionally dominated by women are easily rendered invisible (Bender & Pigeyere, 2016; Steinberg, 1992). These include social skills, mental effort, responsibility for people and stressful working conditions.

Iceland has come the furthest in using job evaluation and pay audits to equalise pay. As of 2018, employers with more than 250 employees, revised in 2021 to employers with more than 25 employees, are required to certify that they have and use a gender-neutral job evaluation model. Among the Nordic countries, the gender pay gap has narrowed fastest in Iceland since 2010.

In Finland, job evaluations in some collective agreements are based on commercial models (Sosiaali- ja terveysministeriö, 2022). Swedish employers use a number of different commercial models for job evaluations. The expert network Lönelotsarna provides a payroll analysis tool, Analys Lönelots, for use by employers, which was previously administered by the Equality Ombudsman. Lönelotsarna has used the tool to evaluate 425 occupations in the Swedish labour market to demonstrate the structural pay differences resulting from gender segregation (Harriman et al., 2023).

Using job evaluation to compare occupations across an entire labour market also requires interpretation. The requirements of different occupations can be viewed and weighted differently in the assessment of equivalence. Even if there is a structure that guides and limits the possibilities of interpretation, the evaluation can still not be completely objective.

Pay formation is similar across the Nordic countries, with some variations. Labour market parties (employer organisations and trade unions) negotiate and establish collective agreements which, to varying degrees in the different countries, define (lower) limits for the pay levels that can be set by individual employers. The extent to which the state is involved in the negotiation processes varies, as does the level of detail in the agreements (see also Stüber, 2024, for an overview of pay formation models in the Nordic countries).

It is only in the last decade that Nordic researchers have looked more closely at the impact of the Nordic pay formation model on gender pay gaps. They have found that the model has hindered the closing of gender pay gaps in a variety of ways, despite trade unions at times strongly defending gender equality. This has been described as ‘egalitarian inequality’ (Wagner & Teigen, 2022) and ‘institutional undervaluation’ (Koskinen Sandberg, 2017).

The Nordic model makes it difficult to conduct pay comparisons and ensure parity of pay between different occupations under the same employer, as these occupations may belong to different collective agreements with different employment conditions. The same applies at the national level – occupations with equivalent requirements exist in both the private and public sectors, for example, and are thus negotiated by different actors with different priorities.

In Finland, Norway and Sweden, there is a more or less formalised agreement that pay increases in the export industry determine the general level of pay increases. The public sector, which is dominated by women, should therefore not experience higher pay increases than the export industry, which is dominated by men. The fact that this relationship cements the structural pay gap is pointed out, for example, by NOU 2008:6 and Oslo Economics (2022). Thus, there are differences not only between occupations dominated by men and those dominated by women but also within the same occupations for employees operating in different sectors.