What is the actual wage gap in Switzerland?
According to OECD data, Switzerland has a wage gap between man and women of 14.8%. The Swiss Federal Statistics Office, however, states a gap of 12%, while newspapers cite various sources claiming gaps between 7.7 and 23.2%*. Mercer data shows a very different picture: When looking at our Total Rewards Survey (TRS) data from 2019 which contains Swiss compensation data of over 350 organizations and more than eighty thousand incumbents, we only find a total wage gap of 1.43%.
Why are there so many different figures regarding this topic (gender pay gap vs equal pay)
The topic lacks a common definition. Some sources report on the gender pay gap, while others refer to equal pay, which should be differentiated. The gender pay gap looks at the overall average pay of women vs. the average pay of men independent of their roles, whereas equal pay looks at the differences between woman and men for the same or similar positions within an organization (see graph below). Reporting the first does include a potential unequal distribution of men and women in the organization and hence can lead to a bigger gap. While topics such as glass ceilings and promotion opportunities are very important to look into, a wage gap analysis should reduce the gap to the part that cannot be explained and may be due to pay inequities. Hence, Mercer looks at Equal Pay to capture pay differences that might be explained by different scopes of roles.
Why does TRS data have a much smaller gap than the general market?
Different analyses use different data sets. While the overall gap in Switzerland might be bigger, Mercer typically looks at data from organizations that have a somewhat organized approach to pay and a system such as a grading structures and pay bands in place. Typically, such organizations also perform regular benchmarking exercises to stay competitive and cost effective at the same time. We see that HR professionals in such organizations are more aware of biases leading to pay gaps than SMEs with no standardized HR processes. When rewards are treated with professionalism, there is less room for inequality.
What our data says about the existing gap
The Mercer TRS data finds little discrepancies in the gender equity when comparing women and men in the same position. When looking at the distribution of salary by position classes split by gender, the median and the average of women and men are quite comparable. However, when looking deeper into the data we see two things. First, an average of one position class difference between men and women. Meaning that over all organizations we looked that, men are one position class higher than women. This finding is more of an equal opportunity issue than an equal pay issue, and linked to career opportunities (glass ceiling) or performance bias leading to vertical promotions amongst others.
Second, although the overall gap is small, when looking at the extremes of the distribution, namely the 10th and 90th percentiles, the differences between compensation of women and men are stronger. Within each position class we see that in the top 10% earners and the lowest 10% earners, men are more likely to have a higher wage than their female peers, hence the wage gap is higher and up to 7% on those areas of pay distributions.
What the law says and what needs to be done
The Swiss Council and Council of State agreed to changes to the Gender Equality Act (GEA) which is designed to promote actual equality of men and women. The amendments were adopted on August 21st, 2019.The latest revisions, which entered into force on July 1st, 2020, require Swiss employers with 100 or more employees to carry out periodic gender pay analyses/reviews no later than June 30th, 2021. The results will need to be audited by a third party, no later than one year after the analysis has been completed. Employers must then disclose their gender pay report to their employees or employee representatives, no later than one year after they have received the audit report. Publicly listed companies have to publish this information in their annual report. The analysis must be conducted every 4 years, unless the results of the analysis have shown that the employers are considered pay equal, and as such are exempt.
How Mercer can help
Mercer supports companies in achieving compliance with local analysis requirements and helps them identify the root causes of any equal pay gaps. Mercer also helps clients in drafting local disclosure requirements and developing a consistent communication strategy across the organization.
In addition, Mercer supports companies in defining and implementing corrective measures that can be monitored on a regular basis and helps to prepare companies for any audit requirements.
1. Regulatory Analysis
Mercer’s global network of local consultants supports clients in conducting analysis using compliant methodologies to meet local regulatory requirements in Switzerland, Germany, Austria and around the world.
2. Global Pay Equity Analysis
Mercer offers a Swiss compliant analysis methods which suits private organizations’ needs and can be individualized and applied consistently across other jurisdictions, to help identify the root causes of any pay gaps. The analysis will not only show the magnitude of a potential gap but will provide a report with detailed measures and outlier analysis.
3. Recommendations & Corrective Measures
Based on deep dive analysis, appropriate corrective measures can be defined. Deep dive analysis can help companies understand where they may need to adjust their compensation reviews, addressing any gaps identified.
4. Regulatory Disclosure
Mercer supports clients in defining an effective communication strategy to meet local regulatory requirements and deliver a consistent message across the organization and to stakeholders.
5. Change Communication
Any communication strategy should consider the different analyses to ensure a complete story is being communicated. Such a communication strategy reflects the regulatory required analyses and deep dive analyses, and can only be effective if the root causes of the issue have been understood.
Mercer can support companies in preparing their analyses to meet audit requirements, where applicable.