Discussions about salary transparency in Finland heating up

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In our blog, we have written about Finnish salaries many times. Knowing what the ongoing salary level is for a particular job helps in job negotiations. It also helps in making sure you are treated fairly in your current job. 

Since there is no overarching practice of salary transparency in Finland, gaining that knowledge can be difficult. It’s particularly so for those just entering the Finnish job market.  

In this week’s blog, we’ll talk about salary transparency in Finland in the context of gender equality. We’ll also talk about the government’s reported attempt to make it easier for employees to access their coworkers’ salary data in suspected cases of gender-based wage discrimination.

Gender equality and salary transparency in Finland

In Finland, increasing information about salaries is seen as a way to decrease the existing salary gap between men and women. More and more that has started to include outright salary transparency. 

Currently, this gap is about 16 % in favor of men. It’s bigger than in Europe on average.

A lot of this has to do with the gender segregation of the Finnish labor market. We’ve written about this in some of our previous blogs. 

Taking this and other factors, such as the hours worked, into consideration we are left with the so-called unexplained pay gap between women and men. In 2018, this gap was approximately 6.7 % in favor of men. For those with an MBA, this was 11 %. For lawyers, the gap was 7.6 %, and for engineers (M.Sc.) it was 5 % in 2018.

In Finland, gender-based discrimination is forbidden based on the Act on Equality between Women and Men. In addition to forbidding discrimination, the law also includes tools to combat it. These tools include mandatory equality plans and pay surveys for employers above a certain size. We’ve discussed pay surveys here

Despite this legal framework, the reported pay gap between women and men has been decreasing extremely slowly. Recently, the European Trade Union Syndicate reported that if the rate of decrease continues at the usual pace, the gap in Finland will be closed in 2046.

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What’s been done to address wage inequality in Finland

In addition to the laws, Finland has tried to increase wage equality through tripartite collaboration. 

In this, central labor market organizations from both the employee and the employer side together with the Government try to find and agree on ways that would enhance wage equality in the Finnish labor market. Such collaboration has been going on since 2006.

In the most recent Equal Pay Programme for 2020-2023, the three collaboration partners agreed that labor market actors should increase employees’ knowledge of pay structures in general, what wages and salaries are based on, and how they can influence their pay.

They also agreed that they should increase the quality of equality plans and the associated pay surveys. 

In addition, they agreed to address the issue of gender segregation through different types of development projects. 

Despite this long tradition of collaboration, the wage gap has been closing quite slowly as we mentioned. Therefore there have been calls to add new tools into the toolbox. One of those suggested tools is increasing salary transparency in Finland specifically when employees suspect they are victims of gender-based wage discrimination. 

How can you know if you are a victim of gender-based wage discrimination?

In the public sector, the salaries of civil servants are already transparent. Therefore, in the public sector, it’s easy for employees to check that they are being paid the same for equal work. 

In contrast, salary information in the private sector isn’t public. Thus there’s no convenient way to check the equality of pay. Particularly since Finns in general frown upon openly talking about salaries.  

The Act on Equality between Women and Men, however, does provide a way. If an employee suspects that they are victims of gender-based wage discrimination, they can ask their employer for a written report on the reasons why their salary is what it is. 

Knowing why they make what they are making doesn’t, however, tell whether their salary is comparable to that of their opposite-sex coworkers in similar positions. To do such a comparison, they need to know what their coworkers are making. Currently, however, they don’t have access to that information directly and independently.

They can contact their shop steward and ask them to enquire after the salaries of those to whom they wish to compare their salaries. If those coworkers refuse to give that information voluntarily, the shop steward can contact the Ombudsman for Equality. The Ombudsman has the authority to access this information. They can provide if to the shop steward if there are justifiable grounds for the discrimination suspicion. 

This is a very complicated process. Thus those suspecting wage discrimination have used it rarely. Newspapers have now reported, however, that the government is planning on making the current process much more straightforward. This has created somewhat of a hoopla. 

Plans to increase salary transparency in wage discrimination cases in Finland

Helsingin Sanomat reported this week that the Ministry of Social Affairs and Health is planning on allowing a more direct access to coworkers’ salary data than currently possible. 

According to them, the Ministry has suggested to the tripartite working group working on pay equality that in the future employees would have the right to see their coworkers’ pay information if they suggest gender-based pay discrimination. 

The draft of the law which Helsingin Sanomat reports having seen says that if an employee requests information on coworkers’ pay based on a suspicion of gender-based wage discrimination, the employer would have to provide that information in writing without delay. 

In addition, shop stewards would have increased access to salary data in suspected cases of gender-based discrimination. They would also have this wider access if they want to ensure the scope of the legally mandated paysurvey.

Employer-side representatives have called these incomprehensible. They suggest that should this become law employers would be afraid to reward workers for a job well done. Such rewards would generate pay differences which then might generate accusations of discrimination. 

Employee organizations, in turn, have said they support increasing pay transparency. 

Here’s a short article about this in English on YLE webpages. It references the Helsingin Sanomat original article. 

The European Commission brings an interesting twist to this debate. In early March, the  Commission presented a proposal on pay transparency. If that goes through it would also necessitate changes in Finnish legislation.

Examples of employers that promote salary transparency

Although the highest employer side representative EK opposes the proposed changes to the law, several employers in Finland have voluntarily opened up their salary structures. 

One example of this is Vincit. They hold a so-called salary week once or twice a year during which they collect and publish salary information. Employees do this on a voluntary basis. 

Gofore uses a similar system of internal information sharing also. Futurice has also made it possible for employees to share their salary information voluntarily. Sharetribe is another company vouching for pay transparency.

At Fraktio, everyone knows each other’s salary from the CEO down. Personal starting salaries, as well as pay rises, are known to everyone. Fraktio has had this policy since its infancy 10 years ago which is remarkable in this context.

Some even tell openly online how they determine employees’ pay. Sysart, for example, has a tool that allows an applicant to assess how much they would earn at Sysart based on certain criteria.  

Codeo is another company that’s very open about the salaries they pay and how they determine those salaries

Luoto Company, instead, has created a completely different system that is based on partnership in the company

All of these companies are IT companies. This is a field that is competing for skilled employees. In this competition, such companies have seen the need to be good employers and great places to work. For them, promoting fairness in pay and associated salary transparency is then a part of conscious employer branding. Them leading the way in Finland is very much what tech companies are also doing globally.

We’ll be following this reported legislative change and as well as the whole wider issue of pay equality.

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