A Big Step for Equal Wages

“A blow has been struck for a fairer and more just pay structure between men and women, something we have been striving to achieve since 1997,” says Birgir Björn Sigurjonsson, Director of Human Resources for the City of Reykjavik.

The issue of job evaluation is nothing new. People have tried to find a usable system in the past, without much success. According to Sigurjonsson, this is perhaps because the system was simplified to such an extent that it became watered down. What’s more, the system also failed to gain the backing of both employees and the unions. A British system has now been adopted for municipal activities, which can easily be implemented and produces good results.

It was drawn up under the auspices of a collaborative effort between employers and unions in the UK and has won a number of plaudits amongst the labour market parties in Reykjavik municipality. Representatives of these parties are currently sitting on an evaluation committee.

During the next few months, levels of pay will be evaluated, comparing current wages with those demanded. Some groups will get most, if not all, of their wage demands met. Others will not be so lucky. By 2005, all differences in pay should be eliminated.

“It’s a sort of moral obligation,” says Sigurjonsson.

The change in the wage system also creates new opportunities to correct differences and to develop a more considered and planned system. Wage levels must not be set on a purely arbitrary basis in the future.

“There will now be a ‘wages tariff’ for all employees. We have forced it on them,” says Sigurjonsson with a wry smile.

The main part of a wage is described as the ‘functional wage’ and it is that which is based on systematic job evaluation. But there must also be economic incentives for personal expediency and desire to develop. A separate and less significant part of pay deals with expertise and consists of four grades. All employees must have their own skills and development plan. Those that follow the plan are rewarded with a higher wage. Municipal institutions will also get the opportunity to reward those employees management considers to be particularly suitable for specific jobs by paying them a higher wage.

But, according to Sigurjonsson, it isn’t a popular measure. There is considerable hesitancy on the part of unit managers to evaluate the performance of employees. The new system also allows for a results related component, which can be paid over short periods of time, although this can never be more than 10 percent. A market supplement can also be added on in order to be able to retain a specific person.

“It’s a defence mechanism designed to prevent losing someone to another employer, and it also has a limited time frame. As with the other measures, this supplement is designed to be gender neutral. We don’t want to disguise wage differences by calling it the ‘market wage’,” says Sigurjonsson.

The new agreement covers 50 percent of Reykjavik municipality employees, particularly office workers and blue collar workers. This will have a significant impact elsewhere as Reykjavik municipality is the second biggest employer in Iceland.