7 September 2022

Pay And Pay Gaps: An International Round-up

Ius Laboris


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The cost-of-living crisis and soaring energy costs in many parts of the world have meant an increased focus on minimum wage levels, while addressing gender and other pay gaps remains in the spotlight.
UK Employment and HR
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The cost-of-living crisis and soaring energy costs in many parts of the world have meant an increased focus on minimum wage levels, while addressing gender and other pay gaps remains in the spotlight.

Minimum wage

Amid the current huge economic uncertainty, governments have taken a variety of different approaches when it comes to national minimum wage increases. Some countries have opted for big hikes, such as Hungary (nearly 20%), Mexico (22%) and Germany (where the government has introduced a bill in parliament to raise the minimum wage to EUR 12 per hour in October 2022, an increase of 22% from the increase already implemented in January).

Others have taken a more cautious approach. In some jurisdictions, minimum wages remain frozen, such as Hong Kong which froze its minimum wage in 2021 for the first time since its introduction in 2011. Countries that do not have national minimum wages may come under more pressure to introduce them. Egypt, for example, introduced a new private sector minimum wage from 1 January 2022. This is an area to watch, as pressure is put on wages by the cost-of-living crisis and rising energy prices.

In the meantime, the EU has reached an agreement on the text of a new EU framework directive on adequate minimum wages. This will not set an EU-wide minimum wage but aims to promote better and more effective minimum wage protection in all EU member states. The draft directive also explicitly intends to strengthen and extend the coverage of collective bargaining throughout the EU.

Pay equity

Countries continue to roll out gender pay gap reporting legislation. Ireland will be the next major country in Europe to do so. From this year, employers in Ireland will be required to publish the gender pay and bonus gap for the workforce as a whole, their views on what is causing any gap and plans for closing it. Gaps must be calculated using 12 months' data up to June, and then published by December. The new requirements will initially apply to organisations with 250 or more employees, dropping to 50 employees in 2025. Ireland also has a new code of practice on equal pay.

Italy introduced new laws in December 2021 to tackle the gender pay gap, reducing the threshold for gender pay gap reporting obligations from companies with 100 employees to those with over 50 and introducing a new 'pink label' certification scheme for organisations adopting gender equality measures. Employers who obtain the pink label will pay a little less in social security contributions. France has strengthened its regime, by requiring companies to publish more details about their gap and to publish proposed corrective measures where they do not meet a minimum 'score'. Spain also now requires employers to keep detailed pay registers, which include a record of their justification for pay gaps exceeding 25%, and to carry out equal pay audits.

The EU has finally got the ball rolling on a new Pay Transparency Directive. The initial draft published in March 2021 was to apply to organisations with 250 or more employees, but MEPs recently voted for this to be reduced to 50. The proposals would require employers to publish pay gaps for the workforce as a whole, and also report internally on pay gaps within categories of workers doing the same work, or work of equal value. Significant pay gaps in any category of worker will mean that the employer must carry out a detailed equal pay assessment and develop an action plan. The draft Directive includes other measures to target pay discrimination, including a ban on asking job applicants about their salary history, an obligation on employers to publish information about pay ranges on job adverts, and a right for workers to know the average pay for workers doing the same job or jobs of equal value. Negotiations on the final text continue.

Outside the EU, Israel has introduced new gender pay gap reporting requirements, requiring employers to publish information about the average wage differentials between men and women, with the first reports due to be published by 1 June 2022. Israel has also provided employees with the right to know what comparable employees are paid. In the US, New York City is introducing a law requiring job adverts to state the minimum and maximum salary offered and Washington is following suit with a similar disclosure requirement due to come into effect in January 2023. Similar laws were enacted in Maryland (disclosure upon request) and in Ohio in Cincinnati and Toledo (disclosure after conditional offer of employment). Further, in Nevada, employers must provide it to external applicants post-interview, and to current employees interviewing for new roles, if requested.

In Canada, Ontario implemented the Pay Equity Act last year to ensure men and women receive equal pay for work of equal value.

In the UK, the government has announced it will not proceed with mandatory ethnicity pay gap reporting but will provide guidance for businesses that want to do it voluntarily.

In Australia, the new Labour government has announced a number of measures to tackle 'insecure work' and address gender inequity in the workplace. These include making gender pay equity an objective of the Fair Work Act, and strengthening the Act's equal remuneration provisions by ensuring that agency workers receive the same remuneration as employees of the host employer and by limiting the number of consecutive fixed-term contracts an employer can offer for the same role.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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