No country in the world has yet achieved wage equality between men and women. What sounds shocking in the 21st century has three main reasons: women are penalized when they have children, they often work in low-wage sectors, and women have fewer opportunities for advancement.
Switzerland also struggles to close the wage gap between genders. In this country, it is particularly wide compared to other European countries: on average, women earn about 18 percent less than men. This means that they work almost a fifth of the year for free, measured against the wages typically earned by men – in private companies, the gap is even 19.5 percent. The Federal Office for Gender Equality makes it concrete: on average, women earn 1,500 francs less per month than their male colleagues. The gender pay gap is similarly high in Germany and Austria, at 18 and 18.8 percent respectively.
The gap also has consequences for the economy
This difference is especially painful for women, but not only for them. The World Bank estimates that unequal wages cost the global economy 160 trillion US dollars every year. By comparison, global economic output is expected to be around 105 trillion this year.
It would be possible to close the so-called gender pay gap. Pay transparency is particularly effective in uncovering discrimination in pay, i.e., the gap that cannot be explained by objective differences such as educational level. This is the conclusion of the Organization for Economic Cooperation and Development (OECD) in a study: "The disclosure of salaries provides employees, employers, and the public with an important tool in the fight against income inequality, as it makes not only the existence of the problem but also its dimension visible," the study states.
Swiss companies must conduct an analysis every five years
Some countries already use this tool to combat wage discrimination. They require their companies to disclose the wage differences between genders – and have had success with it. Switzerland has also taken a step in this regard. Since 2020, companies with more than 100 employees have been required to conduct a so-called wage equality analysis every five years and have it reviewed by an independent body. Although only one percent of all companies are affected, they employ 46 percent of all workers in Switzerland.
For this purpose, the government offers a free online tool called Logib for companies. The investigation is intended to uncover wage inequalities due to gender, and all employees must be informed about it. However, it is unclear whether this always happens in practice.
No controls and no sanctions
It is also questionable whether this change will actually have an effect. Moreover, the local legislature has neither provided controls over compliance with the reporting obligation by companies nor sanctions for firms with high gender-specific pay differences. And how large the wage differences between men and women within companies may be is also not specified in the law. Logib only stipulates that a company must repeat the analysis in five years if the wage inequality in the company exceeds five percent. If the wage gap is below that, the company is exempt from conducting another wage analysis in five years. It is therefore questionable how much companies are really interested in doing something about wage discrimination.
Denmark sets an example
Other European countries have shown that similar legal regulations have already reduced wage inequality. In the UK, for example, companies with more than 250 employees are required to publish a report on the wage gap between male and female employees online annually. If they do not, they are sanctioned. The law has had an effect: the gender pay gap in the UK has since decreased by three percentage points, although it still stands at around 19 percent.
Denmark is further ahead, where companies have been required to report since 2006. With success: women there earn on average 11 percent less than men – in 2006, the wage gap was around 20 percent. In Denmark, companies with as few as 35 employees are required to ensure transparency, including small and medium-sized businesses. They must also inform their employees about the results of the wage analyses.
The results should be made public
In Switzerland, the regulation is still so new that the effect can hardly be measured. However, progress is likely to be slow if companies only have to report every five years and have no consequences to fear. It would also be important for the results of the wage analyses to be made public. This would also raise awareness – both in politics and among those looking for a fair employer. This would also put pressure on management to solve the problem if wage discrimination came to light. First, because of the threat of reputational damage, and second, because companies want – and need – to remain attractive employers for their employees and applicants in the future.
This is particularly important in times of labor shortages. "Companies facing labor shortages are under greater pressure to create equal employment conditions for women, especially in the IT sector." says entrepreneur and headhunter Esther-Mirjam de Boer. Swiss companies need to realize: "If equality really works for them, they have better chances in the dried-up labor market."
Majority of Swiss are in favor of pay transparency
In most industries, however, pay transparency remains taboo. Only one-third of Swiss companies are willing to publicly disclose their employees' salaries, according to a Jobcloud study from last year. The topic is well-received by the population, however: according to a survey by the online portal Statista from 2019, 57 percent of Swiss people are in favor of pay transparency.
It is difficult to measure how much legally mandated pay transparency really contributes to reducing the gender pay gap. However, initial studies show that such regulations are particularly effective when they are controlled and companies are sanctioned for non-compliance or the measures have high political visibility. If non-compliance has no consequences for companies, the laws are rather ineffective. Moreover, the results of wage analyses should be prominently published. The "naming and shaming" – or "naming and praising" for exemplary companies – should not be underestimated, say OECD experts.
