Theory of Change for
Achieving Equal Pay for Work of Equal Value.

Theory of Change: Expected Outcomes and Impact

Specifically, by addressing the drivers of the gender pay gap through targeted interventions and comprehensive approach, key stakeholders including governments, employers, unions, civil society organizations, international agencies, and academia can drive systemic change leading to the following major expected outcomes:

1. Narrowing of the Gender Pay Gap: As proactive measures are adopted, sectors with the largest pay disparities will see a significant reduction in the gender pay gap. This progress will contribute to broader efforts to reduce gender-based discrimination in the workplace.
2. Increased Awareness and Accountability: As more employers and governments adopt transparent pay structures, pay discrimination will become easier to identify and rectify. Increased accountability will encourage employers to prioritize pay equity in their business practices.
3. Broader Social and Economic Benefits: Closing the gender pay gap will result in positive societal impacts, including poverty reduction, increased female workforce participation, and economic growth. Pay equity is not only a matter of justice, but also a key driver of inclusive and sustainable economic development.

The Business and Social Case for Closing the Gender Pay Gap:

• US$7 Trillion Boost: Advancing gender parity in the workforce could add up to US$7 trillion to the global economy.
• +20% GDP per Capita: Full gender parity in employment and pay could raise GDP per capita globally by 20%.
• US$2 Trillion Business Growth: Gender parity in business growth alone could increase global GDP by US$2 trillion.
• Social Impact: Reducing the gender pay gap helps lower poverty, boosts women’s workforce participation, and supports inclusive growth.

 

The Challenge

According to the International Labour Organization (ILO), the global gender pay gap remains significant.

On average, women earn about 20% less than men. This disparity varies widely across different countries and regions. In low- and lower-middle-income countries, the gender disparity in labour income is even more pronounced, with women earning 33 cents and 29 cents for each dollar earned by men, respectively. Likewise, Nordic countries, while globally progressive on gender equality, still experience gender pay gap and occupational segregation, with women concentrated in lower-paid public sector jobs like healthcare and education.

Women in marginalized groups—whether racialized, disabled, or from the LGBTQI+ community—experience compounded barriers, resulting in an even wider pay gap. The effects of these disparities are long-lasting, impacting women’s financial stability, lifetime earnings, and retirement security, thus perpetuating broader social inequities. The gender pay gap is one of the clearest manifestations of gender inequality in the workplace.

Driver 1: Undervaluing Women’s Work

The gender pay gap is reflected in how the market values and rewards certain types of work over others. Since their entry into the paid labour market, women and men have been clustered in different sectors and job classes and that work has been valued differently.

Women’s work has been erroneously categorized as merely an extension of their unpaid domestic roles, inherently tied to caregiving and household management and less deserving of esteem, and by extension, compensation. A US-based longitudinal study10 covering the period 1950 to 2000 found that as women entered occupations in large numbers, those jobs began paying less even after controlling for education, work experience, skills, race and geography, whereas jobs increased in pay and prestige when they attracted more men.

Solution in Action: Gender Neutral Job Evaluation Systems in Ontario, Canada

Gender neutral job evaluation systems are emerging as a tool to identify and correct the systemic undervaluation of work performed primarily by women. Gender neutral job evaluations ensure objective comparison of all job classes, regardless of the gender of the person performing the job, by focusing on skills, effort, responsibility, and working conditions to determine the value the job class provides to an organization. Job classes are then compared and pay adjustments made if female dominated job classes doing the work of comparable male job classes are underpaid. Through comparison of job values, employers can determine if bias is present in compensation, and when implemented, ultimately ensures equal pay for work of equal value.

The Government of Ontario, Canada was one of the first governments globally to introduce pay equity legislation that applied to both the public and private sectors with its Pay Equity Act, effective January 1988.

The Government has created two gender neutral job evaluation systems: “Job-to- Job Comparison” and “Proportional Value Comparison” methods, which enable employers to evaluate and rate job classes regardless of the gender of the persons doing the work.

Impact

According to Statistics Canada, since the introduction of its Pay Equity Legislation the mean hourly gender pay gap has closed 11% in Ontario from 24% in 1988 to 13% in 2024. Gender neutral job evaluation systems enable employers to remove sex-based discrimination from their compensation practices since the market is unable to untangle societal ideas about women’s value from the value of the work they perform.

These tools seek to remove systemic biases in the way labour markets have historically categorized and valued “women’s work” and “men’s work” by highlighting the comparable worth.

Key Enablers: Pay Equity Legislation, Gender-Neutral Job Evaluation Systems, Job-to-Job and Proportional Value Comparison

 

Driver 2: Lower Level of Women’s Participation in Labour Market

Despite notable advancements in education and political participation, women’s participation in the labour market globally remains low, with deeply entrenched gender norms and societal stereotypes continuing to shape employment patterns. These norms often relegate “women’s work” to lower-paid, less secure roles. This, along with fewer opportunities for women in high-paying sectors, directly impacts their overall participation in the workforce.

Despite entering the labour market in larger numbers, globally, women continue to have lower levels of participation, be overwhelmingly concentrated in lower-paying sectors and face a limited ability to advance in the workforce. For example, a 2023 UN Women study that looked into a stark situation across ten countries in East and Southern Africa found that on an hourly basis, women earn, on average, 81 cents for every dollar earned by men. This disparity extends even further when looking at monthly earnings, where women earn only 72 cents for every dollar earned by men due to fewer paid working hours.

Despite entering the labour market in larger numbers, globally, women continue to have lower levels of participation

Solution in Action: Gender Equality Policies in Japan

Addressing the low level of women’s participation in the labour market requires targeted efforts to reduce women’s underrepresentation and foster greater gender diversity in higher-paying sectors. One such example comes from Japan, where women are more likely to work part-time or in temporary positions whereas men dominate full-time, higher-paying roles. In 2013, the Japanese government launched the “Womenomics” initiative. This policy strategy was designed based on research indicating that increasing women’s participation in the formal labour force would both help address Japan’s aging workforce and boost economic growth. Key measures included expanding childcare and amending tax exemptions for dependent spouses. The reform aimed to increase the employment rate for women aged 25–44 from 68% in 2012 to 73% by 2020.

Impact 

The reforms under the “Womenomics” initiative exceeded expectations. By 2020, the employment rate for women aged 25–54 reached 78.7%, surpassing the original target. This increase in female participation also led to greater representation of women in higher-paying sectors. As a result, Japan’s median annual gender pay gap narrowed from 26.6% in 2013 to 22% in 2023.

Key Enablers: “Womenomics” initiative, Expanding childcare options, Eliminating tax deductions for dependent spouses, Policy strategy to increase women’s participation in formal labour force.

Driver 3: Educational and Occupational Segregation

Globally, the labour-market remains gender segregated with women largely overrepresented in industries that are valued less in the labour market such as caregiving and retail, whereas men dominate higher-valued and higher-paying sectors like technology, engineering, and finance.

Educational disparities, though narrowing globally, continue to play a significant role in the gender pay gap. In many countries, women may have fewer opportunities to access higher education or training, especially in lucrative fields such as science, technology, engineering and math (STEM). This gap results in fewer opportunities for women in higher-paying sectors and limits their career advancement. In Sub-Saharan Africa, for example, gender disparities persist, with only 36% of girls completing lower secondary education compared with 42% of boys, limiting women’s access to higher-paying jobs and perpetuating the gender pay gap19. Globally, countries with the lowest secondary education enrolment parity, such as Chad (66.7%), Democratic Republic of the Congo (68.3%), and Guinea (73.2%) continue to face significant gender disparities in education enrolment at all levels.

Educational gender gap results in fewer opportunities for women in higher-paying sectors and limits their career advancement

Solution in Action: Luxembourg’s STEM Outreach and Digital Empowerment Initiatives

An effective approach to combating both educational and occupational segregation is expanding access to quality education and vocational training for women and girls in high-paying fields like STEM. In Luxembourg, several targeted initiatives contribute to this goal, notably Women in Digital Empowerment (WIDE), which since 2013 has provided digital skills training, coding workshops, mentoring, and networking opportunities in partnership with schools, tech companies, and government institutions. Complementary initiatives such as Girls in Tech and Girls Exploring Math further encourage early engagement with STEM subjects and challenge gender stereotypes in digital careers.

Luxembourg’s average annual growth rate of female ICT specialists between 2014 and 2024 ranked third in the EU, at 11.6%. In 2024, ICT specialists made up 8.0% of Luxembourg’s workforce, surpassing the EU average of 5.0%. That same year, 17.4% of ICT roles in the country were held by women. These figures confirm a steady increase from previous years and highlight Luxembourg’s sustained efforts to close gender gaps in technical fields.

Impact

Luxembourg has made exceptional progress toward gender pay equality. The country maintained a negative unadjusted gender pay gap of –0.9% in 202424, meaning that women earned slightly more per hour than men on average, making Luxembourg the only EU member state to record such a reversal for two consecutive years. This achievement underscores the potential long-term impact of increased gender representation in high-paying and high-growth sectors like ICT.

Key Enablers: “Girls in Tech”, “Girls Exploring Math”, “Women in Digital Empowerment (WIDE)”, Hands-on digital skills training.

Driver 4: Discrimination

Biases, both conscious and unconscious, continue to shape decisions across the workplace lifecycle, affecting recruitment, promotions, and pay. Women, particularly racialized women, women living with disabilities, and LGBTQI+ individuals, are less likely to be promoted to leadership roles and are often paid less than men for work of comparable value.

The ILO’s Women in Business and Management report highlights a gap in women’s representation at senior and executive management levels and on boards. This gap persists even when women have surpassed men in tertiary education attainment. Similarly, ILO’s “The gender gap in employment: What’s holding women back?” resource emphasizes that systemic barriers continue to keep women out of the workforce, noting a global labour force participation rate for women of about 47% versus 72% for men.

Intersectionality
The gender pay gap is wider for women who also face discrimination based on race, ethnicity, disability, or sexual orientation. These intersecting identities create compounded disadvantages that restrict advancement and reduce earnings. For instance, OECD research shows that women of colour face greater barriers to leadership and are often underrepresented in higher-paying roles. In the United States, Pew Research Center data from 2022 revealed that when comparing the median hourly wage, White women earned 83 cents, while Black women earned 70, and Hispanic women earned only 65 cents for every dollar earned by White men. Similarly, in Brazil, women of African descent earn less than both White women and men, underscoring the role of systemic racial and gender discrimination.

Solution in Action: Australia’s Intersectional Approach

To effectively reduce gender disparities in hiring, promotion, and pay, employers must implement bias training for decision-makers and adopt transparent recruitment and advancement policies. These efforts should be complemented by tailored interventions that account for intersecting forms of discrimination, such as race, disability, and sexual orientation, to ensure equitable outcomes for all women, particularly those from marginalized communities. For example, Australia has implemented a comprehensive approach to tackle bias in employment and address systemic inequities. Under the Workplace Gender Equality Act (2012), private companies and the Commonwealth public sector are required to report to the Workplace Gender Equality Agency on the gender pay gap. In 2025, Jobs and Skills Australia introduced a Gender Framework that explicitly includes intersectional analysis as a core principle. In parallel, the Australian Public Service Commission introduced its Inclusive Leadership Program in 2015 that includes unconscious bias training for all public servants to ensure that hiring and promotion decisions are made based on merit.

The gender pay gap in the Australian Public Service has been reduced as a result of higher base salaries caused by higher presentation of women at higher classification levels and a steady proportion of women at lower classification levels, a greater proportion of employees with central agency experience, and a greater proportion of women with ongoing employment.

Impact

This combined approach has contributed to measurable progress. Within the Australian Public Service, more women are now represented in senior leadership, and the gender pay gap reached its lowest-ever level in 2023 at 4.5%. Nationally, the broader gender pay gap has fallen from 13.8% in 2012 to its historic lowest at 11.5% in 2024. These interventions demonstrate that addressing both bias and intersectional discrimination together can lead to tangible improvements in pay equity and representation.

Key Enablers: Workplace Gender Equality Act (2012), Gender Framework introduced by Jobs and Skills Australia, Inclusive Leadership Program, Unconscious bias training for all public servants.

Driver 5: The Care Penalty

Women disproportionately shoulder caregiving responsibilities, whether for children, the elderly, or family members with disabilities, resulting in career interruptions or limited availability for fulltime employment. This widens women’s lifetime earnings gap and contributes to what is often called a “motherhood penalty”, a documented phenomenon where earnings decline after childbirth, negatively affecting women’s lifetime income. Globally, caregiving remains not only highly gendered but also undervalued: the ILO estimates that 16.4 billion hours of unpaid care work are performed daily, equivalent to US$11 trillion or 9% of global GDP. Women aged 15 and older spend an average of 3.2x more time than men on unpaid care work—rising to 4.7x more in some regions—restricting their access to education, employment, and political participation. These imbalances in caregiving not only drive pay gaps but also reinforce broader economic vulnerabilities for women.

ILO estimates that 16.4 billion hours of unpaid care work are performed daily, equivalent to US$11 trillion or 9% of global GDP

Solution in Action: New Zealand’s Family-Friendly Workplace Policies

New Zealand was a pioneer in offering paid parental leave, which has continued to evolve over the years. As of 2025, the country offers 26 weeks of paid parental leave, up to a maximum of $788.66 gross a week (prorated for those who earn less than this amount). This policy allows the birthing parent to transfer payments to the primary caregiver (spouse or partner, or another person who takes permanent primary responsibility for the child). In the event of a miscarriage or stillbirth the birthing parent is still entitled to 26 weeks of parental leave providing they meet the criteria. For babies born prior to 36 weeks’ gestation the primary caregiver may be eligible for additional preterm baby payments for a period of up to 13 weeks.

Under New Zealand’s Employment Relations Act (2000), employees have the right to request flexible working arrangements, which includes part-time hours, job sharing, and working from a different location. According to New Zealand’s Ministry for Women42, flexible work practices help close the gender pay gap by removing barriers to flexible options at all levels, and the career penalty often associated with working flexibly.

New Zealand has also focused on improving the affordability and accessibility of childcare, a critical issue that disproportionately affects women. In 2024 the government introduced a family boost childcare payment to help eligible households pay for the cost of early childhood education. Eligible families can claim up to 25% of the weekly childcare fees, or a maximum of $975 every 3 months.

Impact

A study by the New Zealand Institute of Economic Research (NZIER) found that the introduction of paid parental leave and flexible working hours contributed to a significant increase in women’s labour force participation. From 2000 to 2025, New Zealand’s women workforce participation rate45 rose from 56.7% to 66.6%, which is among the highest in the OECD. The gender pay gap in the country decreased from 7.2% in 2000 to 4.2% in 2024, which is influenced by women’s labour force participation rates.

Key Enablers: 26 weeks of paid parental leave, Employment Relations Act (2000), Flexible working arrangements, Family Boost childcare payment.

Driver 6: Lack of Pay Transparency

The absence of transparent pay structures allows discriminatory pay practices to persist unnoticed. Many women remain unaware that they are being paid less than their male colleagues for work of equal value, making it difficult to challenge these inequities. The ILO highlights that pay transparency measures can help reduce the gender pay gap by promoting accountability and ensuring pay differences are based on objective criteria rather than gender.

Many women remain unaware that they are being paid less than their male colleagues for work of equal value, making it difficult to challenge these inequities.

Solution in Action: Binding Pay Transparency Legislation including in the European Union

Over half of OECD countries (21 of 38) now require private sector employers to analyse their pay data and report gender-disaggregated pay information to stakeholders like workers, workers’ representatives, the government, and/or the public. Pay transparency policies, when effectively designed, play a significant role in reducing gender pay gap by holding employers accountable and empowering employees with critical pay information. Some OECD countries, like Canada and France, have implemented comprehensive reporting frameworks that require organizations to analyze pay disparities regularly, disclose results, and take corrective actions where necessary.

European Union’s Pay Transparency Directive (Directive (EU) 2023/970)48 introduced in 2021 and adopted in 2023, requires companies to disclose gender pay gap information, conduct pay assessments and develop action plans to address disparities. Countries like Sweden, Denmark, and Finland already enforce similar requirements, including mandatory equality action plans and penalties for non-compliance.

Imposing binding pay-transparency measures at the EU level was estimated to produce an additional €132 billion per year across the EU as a whole

Impact

While it is early to fully assess the EU directive’s impact, evidence-to-date shows significant reductions in gender pay gaps where such legislation exists. For example, according to a 2023 global survey by the University of Copenhagen49, Denmark saw a 13% reduction in the mean hourly gender pay gap; Canada’s university sector reported a 30% to 50% reduction; the UK saw a 1.6 percentage points decrease; and Switzerland reported a 3.5% drop in the unexplained mean hourly gender pay gap in firms with 50 or more employees.
The economic ramifications of this could be profound: imposing binding pay- transparency measures at the EU level was estimated to produce an additional €132 billion per year across the EU as a whole. Other outcomes associated with this trend would be making better use of women’s skills and improved productivity.

Key Enablers: Pay Transparency Directive (Directive (EU) 2023/970), Gender disaggregated pay information, Mandatory equality action plans, Penalties for non-compliance.

 

Driver 7: Inadequate Level of Unionization and Collective Bargaining

Research from the OECD and ILO confirms that workers covered by collective agreements tend to earn higher wages and have a higher likelihood of achieving pay equity. According to the OECD, collective bargaining can help reduce pay inequality and ensure fairer pay distribution51. The ILO also highlights that collective agreements often lead to better pay and working conditions, contributing to greater pay equity52. Sectors with predominantly female workers, such as caregiving and retail, are less likely to have strong union representation. This limits collective bargaining power for fair pay and improved working conditions, which are critical for addressing pay disparities.

Where strong union presence exists, the impact is clear. In Sweden, for example, trade unions play a pivotal role in negotiating gender-equal pay agreements, contributing to one of the world’s lowest median annual gender pay gaps at around 7% in 2023. Similarly, in South Africa, the South African Commercial, Catering and Allied Workers Union has helped reduce pay gaps in retail and hospitality by negotiating standardized
pay scales and improved conditions for women.

On the contrary, low unionization rates among domestic workers globally, most of whom are women, leave workers underpaid and unprotected, and reinforce persistent pay disparities in informal and care-based labour. These examples demonstrate that expanding union coverage and promoting inclusive collective bargaining practices are vital to closing the gender pay gap, particularly in female-dominated sectors where vulnerabilities are greatest.

Solution in Action: Spain’s Social Dialogue and Collective Bargaining

Social dialogue between employers, workers’ organizations, and governments plays a critical role in promoting fair pay and pay transparency. Collective bargaining agreements that prioritize gender equity have been effective in sectors with strong union representation. Spain’s social dialogue framework has played a key role in advancing gender pay equity. In 2020, the Spanish government passed a Royal Decree requiring companies with more than 50 employees to negotiate gender equality plans with trade unions. These plans must include measures to close pay gaps, promote work-life balance, and increase women’s representation in leadership positions.

Impact

This legal framework has had a measurable impact. Between 2018 and 2023, Spain’s median annual gender pay gap decreased from 8.6% to 6.6%, indicating the effectiveness of collective bargaining in addressing gender disparities in the workplace. The presence of strong unions, combined with government support for inclusive bargaining processes, has contributed to these positive outcomes, benefiting women across a variety of sectors.

Key Enablers: Social dialogue between employers, workers’ organizations, and governments, Collective bargaining agreements that prioritize gender equity, Royal Decree (2020), Gender equality plans negotiated with trade unions.

 

Role of Stakeholders in Addressing the Gender Pay Gap

Governments

Governments have the primary responsibility for setting the legal and policy frameworks that enable progress toward gender pay equity. Their roles include:

• Enact and enforce pay equity legislation.
• Establish standards on pay transparency and inclusive hiring.
• Monitor compliance, conduct audits, and publicly report pay data.
• Implement public education campaigns to challenge gender stereotypes and biases.
• Provide financial incentives and resources for employers to adopt equitable practices.
• Ensure access to family-friendly workplace policies such as paid parental leave, affordable childcare and eldercare.
• Support collective bargaining frameworks and promote union representation.

Iceland’s Equal Pay Certification
Background: Iceland has been a global leader in gender equality and was the first country to require companies to prove they pay men and women equally. Implemented in 2018, the Equal Pay Certification law mandates that companies with 25 or more employees obtain certification to ensure they are not discriminating based on gender.
Intervention: The law requires companies to undergo regular audits and obtain certification from an accredited auditor. The certification process involves evaluating job roles, comparing salaries, and ensuring that any pay differences are justified by factors other than gender. The Equal Pay Certification system requires companies to demonstrate that they pay men and women equally for work of equal value or face fines.
Outcome: This proactive approach has helped Iceland reduce the mean hourly gender pay gap to 9.3%. The certification process has increased transparency and accountability, encouraging companies to proactively address pay disparities. Iceland’s approach has been praised for its effectiveness and has inspired similar initiatives in other countries.

Employers and Employers’ Organizations

Employers are on the frontlines of implementation. Their responsibilities span across the employment lifecycle:

• Conduct regular gender pay audits and implement gender-neutral job evaluations.
• Ensure pay transparency and maintain objective, fair compensation structures.
• Foster inclusive organizational cultures that promote diversity in hiring, promotion, and leadership.
• Implement training on unconscious bias and equitable decision-making processes.
• Provide flexible work arrangements and support for caregivers.
• Support union engagement and collective bargaining efforts focused on gender equity.

Trade Unions and Workers’ Organizations

Trade unions play a crucial advocacy and enforcement role:

• Negotiate collective agreements that prioritize equal pay for work of equal value.
• Campaign for pay equity and challenge discriminatory practices in the workplace.
• Educate workers on their rights and support grievance procedures.
• Push for increased unionization in sectors with large share of women workers, such as domestic work and retail.

Civil Society and Advocacy Groups

These groups raise awareness and drive systemic change:

• Conduct campaigns and public education efforts to spotlight gender-based pay disparities.
• Represent and amplify the voices of marginalized workers.
• Collaborate with stakeholders to co-develop inclusive pay equity strategies.
• Advocate for intersectional approaches that address com- pounded forms of discrimination.

International Agencies

International agencies offer technical, financial, and policy support:

• Institutions like the ILO, UN Women, and OECD provide guidelines, benchmarks, and platforms for policy dialogue.
• Support the Equal Pay International Coalition (EPIC) and other initiatives that promote global cooperation.
• Conduct research and disseminate international best practices.

Equal Pay International Coalition (EPIC)
EPIC, a multi-stakeholder initiative led by the ILO, UN Women, and the OECD, aims to accelerate progress toward pay equity. Through advocacy, research, and capacity-building initiatives, EPIC has brought attention to the gender pay gap
at both global and local levels, and has helped countries develop national strategies to address pay disparities.

Educational Institutions

Educational institutions are foundational actors in shaping career paths and societal norms:

• Promote gender-equitable education and remove barriers to entry in high-paying fields like STEM.
• Offer scholarships, mentorship, and targeted programs to encourage women in underrepresented careers
• Partner with industries to provide internships and real-world experience.

Academia

Academia provides the data
and research required for evidence- based policy:

• Study pay disparities, their root causes, and the effectiveness of interventions.
• Inform legislative reform and employer practice with empirical findings.
• Contribute to
  public discourse and raise awareness through published studies.

Professor Goldin’s Research
Professor Claudia Goldin of Harvard University has extensively studied the gender pay gap, demonstrating how occupational choices and societal norms contribute to pay disparities. Her research, which earned her the Nobel Prize in
Economics, highlights the importance of addressing “greedy jobs” and caregiving responsibilities to achieve gender equity.

Technology Providers and Data Platforms

Digital tools can help monitor and enforce equity:

• Platforms like Logib (Switzerland) and applications such as PayParity, Pequity, and PayAnalytics allow employers to analyze and correct pay disparities.
• These tools facilitate employee access to comparative salary data, promoting transparency and accountability.

Technology and Data Tools
Technology can be a powerful tool in closing the gender pay gap. Data-driven tools and platforms that allow employees to compare salaries across gender lines help to expose and address pay inequalities. Technological solutions can help organizations monitor pay practices and ensure compliance with pay equity laws.

A holistic, multi-stakeholder approach is essential to eliminate the gender pay gap. Each actor must assume its role with urgency and commitment, leveraging legislation, policy, research, innovation, and activism to ensure that equal pay for work of equal value becomes a reality for all.

 

Conclusion: 

Achieving equal pay for work of equal value is not just a legal requirement, but a moral and economic imperative. By addressing the drivers of the gender pay gap and implementing strategic interventions, ideally enacted together where possible, we can create a more equitable and prosperous society for all. Stand- alone measures are often insufficient and must reinforce each other to be truly effective.

Governments, employers, trade unions, civil society, and international agencies must work collaboratively to close the gender pay gap and ensure that women receive fair compensation for their contributions to the workforce. Through targeted actions, transparent policies, and a commitment to equality, we can move closer to a world where equal pay
is the norm, not the exception.