The unadjusted gender pay gap in Iceland was 9.1% in the year 2022 and 10.2% in the previous year. The gender pay gap increased with age and was 0.7% for employees aged 24 and younger, 8.8% for the age range 35-44 years old and 16.3% for 55–64 years old. There was a substantial difference in gender pay gap between economic activities. The biggest gap was in Financial and insurance activities, or 26.2%, and lowest in electricity, gas, steam, and air conditioning supply, 4.1%

The gender pay gap also varied greatly between occupational groups, with the biggest gap amongst technicians and associate professionals or 20.5%, and lowest among clerks or –0.5%. It should be noted that there are significant variations in gender compositions between economic activities and occupations. Gender segregated labour market is one of the main explanatory factors of unadjusted gender pay gap in Iceland, as stated in the paper Icelandic gender pay gap analysis 2008-2020 published in 2021. According to that paper, approximately 43% of women that were active in the labour force in 2019 worked in the public sector but only 15% of men. The unadjusted gender pay gap was 13.5% in the private sector, 9.1% in the central government and 6.1% among people working for the local government in 2021.

Proportionally more women in lower paying jobs than men
The total wage distribution for gender shows that proportionally more women have lower paying jobs, while proportionally more men are in the far-right tale of the distribution, which means more men are in the higher wage category. This is partly due to men working more overtime, which increases the average gross hourly pay, and partly due to gender segregated labour market. Unadjusted gender pay gap is a comparison of average pay, but salaries do not tend to be normally distributed and very high salaries (outlier) at the edge of the distribution will make the average higher. As it is more common for men to have very high salaries (outliers) the pay gap will be inflated.

The figure shows probability distribution. A probability density shows the probability that a variable takes a certain value and combined probabilities always equals one.

When comparing the results by subsets, a paradox can appear in comparison with the total results. For example, when comparing changes between the years 2021 and 2022, the unadjusted gender pay gap in the public sector decreased by 0.2 percentage points, and it decreased by 0.9 percentage points in the central government but stayed the same in the local sector. At the same time, the total unadjusted wage gap (all subsets combined) decreased from 10.2% to 9.1%, a decrease of 1.1 percentage points, or a greater decrease than for each group individually. This is explained by the fact that when the groups are combined, the wage distribution covers a longer span. Comparing the wage distribution of the genders, in total, the public sector, central- and local government employees gives a better picture.

The figure shows probability distribution by sectors. A probability density shows the probability that a variable takes a certain value and combined probabilities always equals one.

About unadjusted gender pay gap
The calculation of the unadjusted gender pay gap is according to Eurostat‘s methodology of the Structure of Earnings Survey (SES). The gender pay gap in unadjusted form represents the difference between average gross hourly earnings of males and of females as a percentage of average gross hourly earnings of males. The calculation is based on October each year and gross hourly earnings include all regular earnings, including overtime payments. Irregular payments are excluded. The more overtime work, the higher the gross hourly earnings. The gender pay gap indicator has been defined as unadjusted, i.e., not adjusted according to individual characteristics that may explain part of the earnings, such as education, years of employment, occupation, etc.

Dataset is based on the Icelandic Survey on Wages, Earnings and Labour Costs that covers about 65 thousand employees in 2021. The survey is a stratified sample survey of legal units with 10 or more employees and data are weighted according to the survey design. When comparing between years, changes in gender pay gap can be caused by changes in the composition of the sample or the composition of the labour market, for example fewer people were employed in 2021 than in 2019 due to the Covid-19 pandemic.


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