Equal pay is often viewed as a fundamental marker of gender equality. As a target, it is also notoriously difficult to achieve. Despite a variety of policy measures, including equal pay legislation, adopted to promote equal pay, the gender pay gap persists around the globe. Recent equal pay disputes include the ones in private sector organisations, such as Tesco and the BBC, but also disputes in public sector organisations, such as the Birmingham and Glasgow local governments. Similar issues exist in Nordic countries, including Finland, which are otherwise known as model countries for gender equality.
We argue that one of the main contributing factors behind the gender pay gap is the undervaluation of women’s work, which has become institutionalised within the structures of labour market practices, such as collective bargaining. For equal pay, we must acknowledge the monetary value of feminised work and work done by women.
Highly feminised jobs in care and reproductive areas are likely to be undervalued and underpaid in several national contexts. This undervaluation has much to do with the historical roots of these occupations as work done by women at the domestic sphere, without pay. The understanding of appropriate wage levels for men and women is deeply rooted in societal value systems. We have coined the concept of institutionalised undervaluation to describe how the cultural gendered valuations have become part of the structures of the labour markets, collective agreements and wage determination practices.
Finnish local government sector
The Finnish local government sector provides an interesting case for studying undervaluation. A local authority is a single employer and is obliged by law to treat all employees equally, including paying equal wages for work of equal value. In practice, equal treatment is extremely difficult to implement and investigate, as there are several collective agreements with different wage determination.
Unlike UK local governments, which use a single status agreement, Finnish local governments use a total of five major collective agreements. In Finland, the local government is a female-dominated sector, with 80 per cent of its personnel being women. The largest collective agreement, the General Collective Agreement (General CA), covers almost only females (90 per cent). The General CA applies to jobs such as child care, health care and social work. Among the five major collective agreements, the General CA is on average the lowest paying. The Technical Sector Collective Agreement (Technical CA) covers mainly male employees (80 per cent). Other collective agreements are Education CA, Phycisians’ CA and Hourly Workers’ CA.
(Un)fairness of pay practices
One of the main functions of a pay system is to produce a credible hierarchy. However, neutral-appearing pay systems can also offer unwarranted legitimacy for discriminatory pay practices by presenting them as legitimate. The Finnish local government sector and its pay systems serve as a good example of this. The sector’s collective agreements claim that fair and equal wages are paid within the sector based on job demands and performance on the job. Some local authorities do this more extensively than others. The big picture still remains that the sector has different wage determination practices in all five major collective agreements, including different wage levels.
For the most part the wages are not the result of analytical evaluation, since such evaluation is not advised in the local government collective agreements. For example in the General CA, a job ranking system based on pre-determined criteria is used. It is a method of assessing the overall value of the job, without using a point-method. It is rather imprecise when compared to an analytical evaluation. The imprecision and lack of transparency makes conducting equal value comparisons very challenging.
Is feminised work undervalued?
From the perspective of the employee the question is: Is my pay fair, when compared to others in similarly demanding jobs, with similar effort? When wage determination is differentiated, this question remains conveniently unanswered, since it is difficult to grasp to whom the comparisons should be made, and how. It is also a challenge to HR professionals, who typically would be responsible for these comparisons.
To investigate the undervaluation of feminised work, we would need to analytically evaluate and compare, using the exact same criteria, both female and male dominant jobs in different collective agreements. Our research findings indicate that if these kind of comparisons were made, an institutionalised undervaluation of feminised work is very likely to be found.
The impacts of upcoming reforms
The Finnish health and social services sector, currently part of local governments, is likely to go through a major reform in 2021. The responsibility for the organisation of these services will be transferred from local authorities to regional governments and, as in many other countries, there will also be some privatisation. New collective agreements will replace the old ones. All personnel in this sector will be working for either the regional government, its subsidiaries or private sector companies.
The reform creates massive pressure for wage harmonisation, as personnel from different municipalities would be working for the same employer. The pressure might also increase pay transparency and open up debate regarding fairness and justice. On the other hand, the privatisation of health and social services, which also happens as part of the reform, might weaken the working conditions of employees who currently work for local governments, as they are transferred to a different collective agreement. Also, local government employees that are not working in health and social services will remain part of the local government.
What can be done?
Since in feminised occupations there are few men to whose wage comparison could be made, institutionalised undervaluation escapes much of the current equal pay policy. However, feminisation is no justification for lower wages. For equal pay, we must recognise the monetary value of work done by women. Even though there are no easy answers, there are some promising policy initiatives, such as the Icelandic Equal Pay Standard. While the standard is implemented at organisational level, and as such does not resolve all of the structural inequalities within the labour market, it is likely to promote equal pay within the local authorities to a significant extent. These organisations would have to pass the audit process of their pay practices to get the equal pay certification. This would push the local government sector to rethink its pay practices from an equal pay perspective towards a more gender-equal future pay practices.
- This blog post is based on the authors’ paper “The Institutionalized Undervaluation of Women’s Work: The Case of Local Government Sector Collective Agreements”, Work, Employment and Society (2018).
- The post gives the views of its authors, not the position of LSE Business Review or the London School of Economics.
- Featured image credit: Photo by Tradimus, under a CC BY 3.0 licence, via Wikimedia Commons
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Paula Koskinen Sandberg is a postdoctoral researcher in gender studies, Faculty of Social Sciences, Tampere University, Finland. She has published on topics such as gender inequalities in pay systems, the institutionalised undervaluation of women’s work and the social partners’ role in drafting Finnish gender equality legislation. Her current research interests include gender pay equity, equal pay policy, corporatism and changing Nordic welfare states.
Roosa Kohvakka is a reward and compensation consultant at Mandatum Life. Over the years she has developed dozens of pay systems both in the private and public sector, including municipalities. Before consulting, she worked as a researcher in projects concerning pay equality and pay knowledge. Her passion is in designing pay practices that are motivating, fair and meaningful. She has a M.Sc. in Economics from the University of Jyväskylä, Finland.