The gender pay gap in Finland still exists despite the government’s attempts to close it

The Finnish society is committed to gender equality. According to the Global Gender Gap Report 2022, Finland is ranked high in the second spot (after Iceland). The country’s women usually work full-time and have equal access to education and healthcare as men. Does it mean there’s no gender pay gap in Finland? Sadly, the answer is no.

Understanding the Work Scenario in Finland

Before we talk about Finland’s gender pay gap, it pays to understand the work scenario in the country. The nation’s employment rates for men and women have been pretty similar for a long time. In 2020, the men-women employment rate stood at 72.5% and 70.7% respectively. Compared to women, men have longer working weeks and their jobs come with more uncertainty.

Historically, Finland holds the cherished place of being the first country in the world to extend rights related to voting and contesting for elections to all its men and women in 1906. It was also the first country to elect 19 women to its 200-seat Parliament in 1907. The success of this country is greatly connected to its work to ensure gender equality and the improvements it made in the status of the nation’s women.

Finnish Legislation Related to Equal Pay

According to the European Commission, Finland’s gender pay gap was 16.7% in 2020. This made the country achieve the 20th rank amongst the 25 EU nations examined. However, the pay gap between the genders was more than in the other Nordic and EU countries.

In 2021, the country closed the gap slightly and had its average pay gap standing at 16%. Consequently, it got ranked at the 38th position in an OECD pay equality ranking, which was still much lower in the ranking table compared to its Nordic peers.

To date, Finnish legislation lacks any specific laws on transparency related to wages. However, equal pay is strongly anchored in the Finnish constitution and multiple places in the legislation. For instance, since 1995, companies with 30+ employees have been under the binding equality plans of the Equality Act.

To protect people against discrimination based on their origin, age, nationality, religion, language, belief system, trade union or political activity, opinion, health, family relationships, sexual orientation, disability, or other personal characteristics, there’s the Non-Discrimination Act. The Equality Act too prohibits direct and indirect gender discrimination.

The legal provisions related to working life in Finland as laid down in the Employment Contract Act specify the equal treatment of all employees. An important aspect of this Act refers to the rules for returning from parental leave.

Though an Equal Pay Programme was implemented from 2016 to 2019, it ended in March 2019. Whether it will be continued or not is presently being discussed between the stakeholders, including the politicians and organisations handling labour and management. The Equal Pay Programme aims to bring the gender pay gap in Finland down to 12% by 2025. But its implementation has run into troubled waters as all parties concerned couldn’t reach a consensus.

Plans to amend the Equality Act were suspended earlier this year after the concerned parties failed to agree on the bill’s content, and said the matter of workers’ right to pay information was predominantly controversial.

Reasons Behind the Gender Pay Gap in Finland

According to Statista, the average monthly earnings of men in Finland stood at 4,000 Euros in 2021, while the figure for women was lower and stood at 3,367 Euros. This gap in the average monthly earnings of the genders indicates why it needs to be closed.

Image courtesy: Statista

Though the past decade saw the average monthly earnings increase for both men and women in Finland, the gender pay gap still exists though some sources mention it has slowly decreased over the years.

Some of the top reasons contributing to the gender pay gap in Finland are:

  • Management and supervisory positions are mostly held by men. Past studies show men in almost every sector being promoted more often and getting better pay as a consequence. This trend ends at the apex, where less than 6% of women are among the CEOs. A 2019 Yle investigation also found that women on average hold just 20% of spots on the management teams of Finland’s top 40 companies. In Finland, women managers are inclined to work in human resources and communications but rarely in managing director or business management roles.
  • Women have to handle crucial but unpaid tasks. Often, they take charge of household work and childcare. Even the responsibility of caring for elderly relatives falls on them much more than their male counterparts. Some surveys put the average at 22 hours per week (almost 4 hours each day!) that working women spend on unpaid household and care activities, while men spend just 9 hours. This inequality gets reflected in the labour market where more than 1 in 3 women decrease their paid hours to part-time, while just 1 in 10 men does the same.
  • Women in Finland tend to spend long periods away from the labour market, which could be due tohousehold and care duties or childbirth. Such career interruptions, which are more often than men, adversely affect their hourly pay, and even their future earnings and pensions. Some reports put women’s average pension in Finland at just 79% of the pension earned by their male counterparts.

Due to all these factors, pay discriminations continue to contribute to Finland’s gender pay gap.

Wrapping Up

Though the Finnish government has unsuccessfully tried to implement new laws (amendment to the Equality Act, for instance) to close the gender pay gap, what’s needed more is for employers to realise the problem and take adequate steps.

Unless they dig deeper to realise where the gender pay gap is creating a rift amongst employees, they won’t be able to take remedial measures for equal and fair pay. This could soon translate into losing their top talents, who will invariably leave for organisations that offer them better pay and a fair and equitable work environment.

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