Gender Equality - Part 2: Equal Pay For Work of Equal Value

Gender Equality - Part 2: Equal Pay For Work of Equal Value

Opening Premise: It is generally accepted that until such time as women are perceived to have - or in fact have - the same economic value as their male counterparts, true equality will be difficult to achieve regardless of any constitutional imperatives on equality. Ensuring equal pay for work of equal value will go a long way towards ensuring that women attain true equality.

Introduction

The principle of equal pay for male and female workers for work of equal value was first enshrined in ILO Convention No. 100 in 1951. The new Constitution saw the principles of equality enshrined in the Bill of Rights, widely regarded as the most progressive document of its kind. Subsequent international instruments such as the Beijing Platform for Action and the UN Convention on the Elimination of All Forms of Discrimination Against Women (CEDAW), which South Africa ratified without reservation in 1995 have further entrenched principles of gender equality. In the European Community the principle of ‘equal pay for equal work’ was laid down in Article 119 of the Treaty of Rome in 1957. After this apparent narrowing of the scope a broader wording was again used in Directive 75/117/EEC which expressly refers to the principle of equal pay for work of equal value. It states that there must be no discrimination on grounds of sex with regard to all aspects and conditions of remuneration for work to which equal value is attributed.

Yet in spite of South Africa's new constitutional legacy, gender equality and more specifically, gender equality in terms of equal pay for equal work (or work of equal value) remains an elusive ideal, despite two years of employment equity initiatives.

What is the explanation for these wage differentials between men and women?

According to a recent EU study, wage differences between men and women can be broken down into:

1. structural differences (resulting from differences in age, training or level of education),
2. incomplete data (statistics give no explanation for the gap),
3. direct wage discrimination (the work is regarded as of equal value, but the pay differs even taking account of structural differences) and
4. value discrimination (work mainly carried out by women is accorded less value than that carried out by men, even if the training required and level of responsibility involved, for example, are the same).

• The main structural wage differentials are those relating to age, training and occupation. For example the proportion of younger workers is greater among women than among men, seniority takes longer to acquire and progress through the career is slower. Women also have different jobs from men: fewer of them work full time, and they are employed in less well-paid sectors. Finally, women are trained in different fields from men.
• There are undoubtedly many other increasingly significant factors which come under the heading of ‘structural differences between men and women in the labour market. For example, women often have a different working pattern, in which the higher incidence of part-time working and career breaks have an impact on the structure and course of their careers and on their access to leading positions. Far fewer men than women work short hours or interrupt their careers, and men are thus less involved in reconciling work with family and caring tasks. This significantly slower career progress of women than of men is reflected in lower pay levels.
• Other explanations invariably lead to the conclusion that the main cause is ‘indirect or value discrimination’ between the jobs carried out by women and men.
• In South Africa, it is also reasonable to assume that while direct discrimination has largely been eliminated by unambiguous constitutional and employment legislation prohibiting discrimination on grounds of gender, there are insufficient checks, resources and sanctions in place to enforce these provisions.
• Indirect discrimination, in other words the different value placed by society on jobs or tasks which are mainly carried out by women and those mainly carried out by men, manifests itself principally in two forms which are closely related to the segregation of jobs and the phenomenon of the twofold labour market. Firstly there are the lower levels of pay in sectors which mainly employ women. For example, traditionally work in welfare-producing sectors, e.g. care work, is less well paid than work in prosperity-producing sectors, such as the banking sector, even though there is no objective reason, based on the difficulty of the work or its level of responsibility, why this should be so. Secondly, jobs in mixed sectors – i.e. those in which men and women are employed together – are valued differently depending on whether it is a man or a woman who does the work. Here, too, there is no objective reason for the difference in pay. A classic example is the difference between the (female) receptionist and the (male) doorkeeper.

The solution which is often proposed to combat this discrimination in terms of the value placed on tasks, and thus in the process of wage formation, is to make the sectors, training courses and occupations mixed so that there will be an automatic ‘revaluation effect’ on those occupations and sectors which used only to employ women. This may be a valid strategy, but it implies enhancing the value of women’s jobs only because men are doing them too, not because of their intrinsic value.

The subjective wage gap: value the chair and not the person sitting on it!

If women, then, perform work of equal value to that performed by men and nevertheless receive lower pay, one needs to ask to what extent the method of wage formation influences the difference in pay between men and women.

The wage formation process can follow various patterns. Every wage formation system, however, is based on a visible or invisible scale of values according a value or hierarchical position to a task after an assessment of the job. The value-rating of jobs means placing the jobs in a working organisation in the correct order of importance. One aim of these value-rating scales is to make the separate process of wage determination scientifically based by establishing pay structures on the basis of tasks of equal value. This wage determination process means ‘putting a value on the chair and not on the person sitting on it’, and thus giving pride of place to legitimacy or justifiability: equal pay for work of equal value!

Since classifications are never a purely technical matter and always reflect values and relationships, covert or indirect discrimination may lie hidden in the value-rating of tasks. This happens when too low a value is placed on characteristics associated with traditionally feminine jobs (e.g. social skills, physical and emotional care, concentration) and these jobs are thus given too low a place in task hierarchies and payrolls, while at the same time the characteristics associated with traditionally masculine jobs (leadership, technical insight, heavy physical work) are over-valued. There is also a link here with the segregation of the labour market. Discrimination in the value-rating of jobs can only occur when there are such things as men’s or women’s jobs, irrespective of whether these are carried out in a mixed sector or a sector in which mainly men or mainly women work.

The value-rating and classification of jobs must be :-

• gender-neutral
• with a transparent analytical system, which ensures the most objective and scientific basis possible
• describing and analysing tasks on the basis of pre-determined and clearly defined job characteristics such as knowledge, familiarity with the field, responsibility, leadership, independence, social skills, and working conditions.

Other test criteria of a gender-neutral system are:

• all the characteristics of a job should be evaluated;
• there should be a fair distribution of men’s and women’s job characteristics;
• a uniform approach should be taken to these characteristics (possible scores);
• the values allocated should be in proportion to the effort needed for the work (audit);
• the value-rating system should be applied throughout the firm (all jobs from the highest to the lowest);
• a justified position or grade in the hierarchy must be allocated which is in accordance with the substantial requirements of the job;
• the value scale used must be made visible if gender neutrality is to be guaranteed.

Role of Collective Bargaining in Pay Equality

There are various ways and means by which pay, or the cost of labour, may be determined, from legislation (political decisions, such as a minimum wage) and collective bargaining to individual contracts and direct participation in results and profits. Of these, however, collective bargaining still has a particularly important role to play.

The collective bargaining partners can help eliminate the wage gap by taking account of a number of fundamental conditions, and in particular by:

• incorporating sufficient transparency;
• providing information on the wage formation process
• guaranteeing gender-neutral job evaluation by employing neutral criteria and an analytical system.

To further re-enforce equality in pay measures, the parties should:-

• Ensure that both men and women are able to reconcile work and family commitments;
• Provide that employees who take a career breaks for family reasons are not excluded from later promotions;
• Ensure that women are present in the bargaining process and at senior level in organisations.

UK Code of Practice on Equal Pay

The UK Code of Practice on Equal Pay, issued by the Equal Opportunities Commission under the Sex Discrimination Act 1975 s 56A(1), and brought into force on 26 March 1997 (SI 1997/131) provides a good model for addressing gender pay equality. It is grounded in the concept that a right to equal pay free of sex bias is conferred under both domestic and European legislation. The guidance contained in the Code is based on decisions from the United Kingdom (the UK) courts and the European Court of Justice (the ECJ) and on good practice known to the UK Equal Opportunities Commission.

The following represents a summary of some of the key recommendations of this Code and represent good practice guidelines for South African employers determined to ensure pay equity between genders.

Review of pay systems for sex bias

Pay systems reviews are recommended as the most appropriate method of ensuring that a pay system delivers equal pay free from sex bias.

A pay systems review should involve the following stages:

Stage One

• Undertake a thorough analysis of the pay system to produce a breakdown of all employees, which covers for example, sex, job title, grade, whether part-time or full-time, with basic pay, performance ratings and all other elements of remuneration.

Stage Two

• Examine each element of the pay system against the data obtained in stage one

Stage Three

• Identify any elements of the pay system that the review indicates may be the source of any discrimination.

Stage Four

• Change any rules or practices, including those in collective agreements, which stages 1 to 3 have identified as likely to give rise to discrimination in pay. It is recommended that this should be done in consultation with employees, trade unions or staff representatives where appropriate. Stages 1 to 3 may reveal that practices and procedures in relation to recruitment, selection and access to training have contributed to discrimination in pay; in that event, these matters should also be addressed.

Stage Five

• Analyse the likely effects of any proposed changes in practice to the pay system before implementation, to identify and rectify any discrimination that could be caused.

Stage Six

• Give equal pay to current employees. Where the review shows that some employees are not receiving equal pay for equal work and the reasons cannot be shown to be free of sex bias, then a plan must be developed for dealing with this.

Stage Seven

• Set up a system of regular monitoring to allow checks to be made to pay practices.

Stage Eight

• Draw up and publish an equal pay policy with provision for assessing the new pay system or modification to a system in terms of sex discrimination. Also, in the interests of transparency, provide pay information as described on page 5 where this is not already usual practice.

Identification of discriminatory elements

Pay systems vary in complexity. Some have more elements than others. In the process of a review, each element will require examination against the statistical data generated at the initial analysis stage. Investigation may show discrimination in written rules and agreements, for example, limiting profit-related pay to employees who work above a minimum number of hours; or in the way processes are interpreted and applied, for example, failure to obtain adequate job descriptions during a job evaluation exercise.

Some of the more common pay elements are set out below, with examples of facts which could indicate problems of discrimination in pay and suggestions of further questions to be asked to reveal the cause of the pay difference and whether it can be shown to be free of sex bias.

<> Basic pay

** Women are consistently appointed at lower points on the pay scale than men.

- Check the criteria which determine promotion or recruitment starting pay. Are these spelt out clearly?

- Examine recruitment and promotion records for evidence of criteria that appear to be disadvantaging women. Can these criteria, eg qualification requirements, be justified objectively in terms of the demands of the job?

- Check the records for evidence of sex bias in the application of managerial discretion

** Women are paid less per hour than men for doing virtually the same job, but with different job and grade titles.

- Check whether there are any reasons other than custom and practice for the difference; if so, are these reasons justified objectively?

** Women progress more slowly through incremental salary scales and seldom reach higher points.

- Investigate the criteria applied for progression through the scale. Are these clearly understood? Does any particular criterion, eg length of service, work to the detriment of women more than men? If so, can the use of that criterion, or the extent to which it is relied on, be justified objectively?

- Review the length of the incremental scale. Is the scale longer than it need be? Are there good practical reasons for a scale of that length?

** Women progress more slowly through non-incremental salary ranges and seldom reach higher points.

- Check the criteria that applied when the structure was introduced and the current criteria for new recruits / promotees to each salary.

- Check whether there is a clear, well-understood mechanism for progressing through the salary range.

- Investigate the criteria for progression through the salary range and whether there are performance, qualification or other bars to upward movement. Can these be justified?

- Review the length of the salary range. Can this be justified by real need?

<> Bonus/premium rates/plus elements

** Female and male manual workers receive the same basic pay but only jobs mainly done by men have access to bonus earnings and those mainly done by women do not.

- Check the reason why. Does this reflect real differences, for example, in the value of the work or in productivity? Can it be justified objectively on grounds unrelated to sex?

** Where shift and overtime work is available and paid at a premium rate, fewer full-time women employees have access to this higher rated work.

- Check that women and men employees have equal access to this work and, if not, that the reasons can be justified objectively.

** A smaller percentage of women employees receive enhanced rates for weekend and unsocial hours work.

- Check the eligibility requirements for this work. Do any of these, for example, requiring that employees must be working full-time, work to the disadvantage of women? Can these requirements be objectively justified?

** Average female earnings under a variable payment system are lower than average male earnings (even where some women may have higher earnings than most men).

- Review the design and operation of the variable payment system. Do these genuinely reflect the demands of the jobs and the productivity needs of the organisation?

- In particular, check how factors such as downtime and personal needs breaks are dealt with in a variable payment system covering men and women.

<> Performance pay

** The performance pay system is applied largely to employees of one sex only and results in a pay discrepancy to the advantage of that group.

- Investigate the reasons why employees of the other sex are largely excluded from performance pay awards. Are these justified objectively for reasons unrelated to sex?

** Women receive lower performance ratings on average than men.

- Investigate the performance rating system. Is it really likely that women would on average perform less well than men? What are the possible reasons for this?

- Review the criteria for performance rating. Do employees and managers know what these are? Do any of these disadvantage women? Do any of these disadvantage ethnic minority women in particular? If so, are these criteria justified objectively?

- Monitor the ratings of individual managers. Do the results of the monitoring suggest a stereotypical interpretation of criteria? Are there appropriate controls on managerial discretion?

** Although women and men receive similar ratings, men achieve higher performance pay awards.

- Investigate the reasons for this. Is it linked to managerial discretion? Are potentially discriminatory criteria being applied in the linking of ratings to pay? Can these be justified objectively?

<> Pay based on additional skills or training

** In practice only or mainly male employees receive this supplement.

- Investigate the reasons for this. Are 'female' skills not recognised? Do women have the same access to any skills or training modules offered?

- Review the training/skills/qualifications criteria. Do they genuinely reflect enhanced ability to carry out the job duties?

- Review the procedures for implementing the supplement. Are managers and employees aware of the procedure? Are they operated fairly between men and women?

<> Pay based on an assessment of individual competencies

** There is a pay gap between the male and female employees who are assessed in this way.

- Review the competencies assessed. Are women and men assessed for the same set of competencies? Are the competencies being interpreted in a consistent way?

- Are potentially discriminatory criteria being applied? If so, are these justified objectively?

- Monitor the assessment of individual managers.

<> Pay benefits

** A smaller percentage of women employees than men are covered by the organisation's sick pay, pensions, low interest loans, share option schemes.

- Check eligibility requirements. Are there restrictions which impact negatively on women? For example, are any of these limited to employees working over a minimum number of hours?

- Can these requirements be justified objectively?

<> Grading

** Jobs predominantly occupied by women are graded lower than jobs predominantly occupied by men.

- Review the method of grading. Was it devised for the current jobs? Is it adapted from a scheme used in a different organisation? What was the method used to determine job size? Some methods, eg felt-fair or whole job comparison, are potentially more discriminatory than others, eg analytical job evaluation.

- Are separate grading schemes used for jobs predominantly done by women and those predominantly done by men? If so, why, and is this difference objectively justified?

** Some jobs held mainly by men are in higher grades because of 'recruitment and retention' problems.

- Check that there is genuine evidence of a current 'recruitment and retention' problem.

- Check that the whole of the difference in pay is attributable to market pressure. If not, investigate the reasons for the rest of the difference.

- Consider amending the grading/pay structure so that the 'labour market' element of pay is 'transparent'.

** Red circling, for example, where salary is protected when a job has been downgraded, is mainly applied to male employees.

- Check the criteria for red circling. Why do they favour male jobs? Can this be justified objectively?

- Investigate whether other criteria that are more equitable could be used.

- Ensure the difference in pay is phased out as soon as possible so that unequal pay is not unnecessarily perpetuated.

<> Job evaluation method of grading

** An analytical job evaluation scheme has resulted in jobs predominantly done by women being graded lower than those predominantly done by men.

- Check that all features of the scheme's design and implementation took full account of the need to avoid sex bias. Was the job information collected consistently and accurately? Do the factors and weighting favour characteristics typical of jobs dominated by one sex? If so, is this justified objectively? Was training in the avoidance of sex bias given to those responsible for implementing the scheme?

** Jobs that have been evaluated as the same have widely differing salaries to the detriment of jobs largely held by women.

- Investigate the possible causes, for example, how were the jobs assimilated to the evaluated structure?

- Are different pay scales in use?

- Could elements like additional skills payments or performance pay awards be responsible?

- What part do market rate or productivity considerations play? Can the cause of the difference be justified objectively?

An Equal Pay Policy

Equal pay is an important part of equality at work because pay is the most direct way an organisation values the contribution made by employees. An Equal Pay Policy is an important way of showing commitment to achieving equal pay free of sex bias. The Policy should set out clear objectives that enable priorities for action to be identified and an effective programme to achieve them to be implemented.

It is good employment practice for employees to understand how their rate of pay is determined. Information about priorities and proposed action could be communicated to employees as part of the process of informing them about how the pay systems affect them individually. This will serve to assure employees that any sex bias in the payment system is being addressed.

Experience shows that the effectiveness of any Equal Pay Policy depends on the following:

• Commitment to the policy by senior management.
• Recognition by all staff involved in decisions about pay that they share responsibility for the proper implementation of the policy.
• Effective training in identifying sex discrimination in pay for all staff who take decisions about the pay and grading of other employees.
• Moving beyond a statement of intent to include a provision for a review of the payment system and periodic monitoring to ensure continuing effectiveness.
• Information given to employees about the review and any plan of action drawn up as a result.

Suggested Equal pay statement

"This organisation supports the principle of equal opportunities in employment and believes as part of that principle that male and female staff should receive equal pay for the same or broadly similar work, for work rated as equivalent and for work of equal value.

We understand that a right to equal pay between men and women free of sex bias is a fundamental principle of employment law and is conferred by South African legislation.

We believe it is in our company's interest and good business practice that pay is awarded fairly and equitably.

We recognise that in order to achieve equal pay for employees doing equal work we should operate a pay system which is transparent, based on objective criteria and free from sex bias.

Action to implement policy

In order to put our commitment to equal pay into practice we will:

• examine our existing and future pay practices for all our employees including those in non-standard employment and those who are absent on pregnancy and maternity leave.
• carry out regular monitoring of the impact of our practices.
• inform employees of how these practices work and how their own pay is arrived at.
• provide training and guidance for managers and supervisory staff involved in decisions about pay and benefits.
• discuss and agree the equal pay policy with employees, trade unions or staff representatives where appropriate.

We intend through the above action to avoid unfair discrimination, to reward fairly the skills, experience and potential of all staff and thereby to increase efficiency, productivity and competitiveness and enhance the organisation's reputation and image".

Principles for implementing an equal pay policy

Principles – Discretionary payments

Where discretionary payments are made they should be available to men and women workers on the same basis.

• Criteria for making the payments should be transparent.
• Criteria used to determine the level of the payment should be objective.
• The same criteria should be used for female and male-dominated occupations and for full and part-time positions.
• The criteria should be applied in the same way for female and male-dominated groups (e.g. either individual or group-based assessment should be applied across the board).

Principles – Payment of Allowances

Where allowances are paid they should be available to men and women workers on the same basis.

• Criteria for making the payments should be transparent.
• Allowances for unpleasant work or conditions (work disability allowances) should be paid to all employees in all jobs involving unpleasant work or conditions.
• Allowances for specific tasks or responsibilities should be paid to all whose tasks or responsibilities
• are comparably demanding, skilful, productive etc.
• Location allowances should be paid to all employees working at that location.
• In rectifying a pattern of allowances favouring male-dominated jobs, care needs to be taken to avoid exacerbating male/female earnings differentials. Incorporating allowances into ordinary pay for all purposes (e.g. for superannuation) is likely to have this effect.

Principles – Performance, merit and bonus payments

Performance, merit and bonus payments should be available to all workers in all classifications on an equal basis.

• Criteria for assessing performance should be transparent.
• Ensure that criteria used can be validly measured. It is difficult to identify valid measures to assess qualities such as potential, enthusiasm, or commitment. Criteria should be related to critical success factors for the organisation.
• Criteria should be applied fairly and uniformly.
• There should be a proportional and consistent relationship between the rating awarded and the performance pay or bonus allocated.
• Criteria should be based on non-discriminatory factors and be directly related to the inherent requirements of the job. Examples of factors which may be discriminatory include willingness to work long hours over and above those required or ability to travel at short notice where these are not inherent requirements of the job, and subjective application of concepts such as ‘zeal’ or ‘enthusiasm’.
• Appraisers who are formally trained in basic appraisal techniques, objective setting and sources of bias in performance evaluation, including the implications of their actions under anti-discrimination and industrial laws, are less likely to discriminate inadvertently.
• Appraisers need to be familiar with the work to be assessed.
• A formal appeals mechanism outside the regular grievance procedure will assist in monitoring the extent to which the process is meeting its objectives and may help pinpoint bias in the operation. In small organisations an avenue of review should be available.

Principles – Part-time work

All conditions and benefits available to full-time workers should also be available to part-time workers on a pro-rata basis. This includes:

• base rate of pay;
• allowances;
• all discretionary payments;
• service increments;
• superannuation payments;
• all forms of leave - sick, compassionate, family, training etc;
• all other benefits, such as cheap housing loans, cars etc.

Principles – Market rates

• The market within which employees’ work is to be situated should be explicitly defined.
• The means by which the market is to be surveyed should be accurate, unbiased and valid.
• Market surveys should be fairly and directly applied if this is to be used as a rationale for pay rates.
• The proportion of pay based on market value, individual performance, and other assessed job value (e.g. through skills analysis, job evaluation, grading etc.) should be specified.
• If discrimination is present in market rates for particular occupations because of a history of occupational sex segregation, action should be taken to remove the discriminatory barriers and develop and implement a non-discriminatory job and work evaluation process. A history of sex segregation through discriminatory exclusion can be evidence of discrimination in current pay rates.

Principles – Non-discriminatory job evaluation

A non-discriminatory system:

• uses criteria which reasonably reflect the range of skills used by your organisation’s entire workforce (male and female);
• makes explicit the types and levels of all skills required in the organisation, including any language, literacy, self-management and interpersonal skills;
• recognises the demands of specialist technical and professional jobs whether or not they involve supervision of people or management of significant budgets or other material resources;
• recognises co-ordination as well as supervision as an indicator of skill and responsibility;
• recognises communicating to inform, coach or support as well as communicating to persuade or negotiate;
• recognises skills gained through work and life experience as well as formal training;
• avoids language which is vague, ambiguous or subjective in criteria used;
• provides for objective means of determining skill (e.g. competency-based assessment) as opposed to reliance on time served in the job or reference to such subjective concepts as the incumbent’s ‘reputation’;
• accurately and completely describes jobs;
• results in a coherent job hierarchy, where job classifications and levels are linked with pay and differences correspond to real and identifiable differences in skills, job requirements, responsibilities etc.;
• sets a proportional and non-discriminatory relationship between job value and reward.

Principles – Non-discriminatory job evaluation

A non-discriminatory system should not:

• value the skills and responsibilities more likely to be found in male-dominated jobs more highly than those found in female-dominated jobs, if this is not reasonable according to objective evidence;
• be arranged in such a way that the skills and demands typical of women’s jobs are absent from high-scoring criteria and clustered under low-scoring criteria;
• fail to acknowledge high levels of responsibility in low-paid, typically female jobs (e.g. receptionist work in a crisis centre);
• ‘double-count’ the same job characteristics (e.g. supervision);
• measure responsibility solely in terms of the degree of supervision of the occupant’s work (e.g. a job with little formal autonomy may carry heavy social responsibilities).
• artificially maintain existing relativities between male- and female-dominated jobs if this is not reasonable according to objective evidence.