Equal Pay in Denmark: An Analysis of the New Maternity Leave Act and Wage Formation on the Danish Labor Market

Abstract

Studies have shown that women's absence from the labor market during maternity leave has an impact on wage formation. The Danish maternity leave act, which came into effect on the 2nd of August 2022, increased the degree of equal distribution of the non-transferable leave among parents. The thesis examines whether and what impact the new maternity leave act will have on wage formation in the Danish labor market.
A legal review of the concept of gender equality and the act on gender equality was conducted to clarify the legal position on equal pay between men and women in the Danish labor market. The principle of equal treatment was examined with a focus on how it protects men and women against gender-based discrimination and differential treatment. The evolution of the principle of equal pay was then explained, including the issue of assessing work of equal value, and past judgments and decisions were reviewed to determine the comparative basis required during the assessment and what factors can be considered in the overall assessment of work of equal value.
An economic analysis of the Danish labor market was conducted to examine the reasons behind the gender pay gap utilizing statistics and reports and applying a range of labor market economic theories. After defining the concept of remuneration, the Danish gender-segregated labor market was examined to clarify the pay gap between men and women. Drawing from this observation, several factors influencing wage formation between men and women were deduced from labor market economic theories.
From an integrated perspective, a comparative analysis of the Icelandic and Swedish maternity leave acts and their impact on the labor market was conducted to examine the effects of the EU parental leave directive and the new maternity leave act on wage formation in the Danish labor market. Subsequently, the legal policy produced several proposals on how maternity leave and acts on equal pay should be formulated to maximize gender pay equality in the Danish labor market.
The thesis concludes that equal pay principles require men and women to receive equal pay for the same work or work of equal value, considering factors such as job nature, education, and work conditions. The gender pay gap is influenced by education level, labor market absence, gender-segregated employment, job hierarchy, mobility, gender roles, family responsibilities, and labor market discrimination. The new maternity leave act effective from the 2nd of August 2022, will reduce women's absence from the labor market, a significant pay gap contributor. Further measures are needed for equal pay. The thesis proposes three suggestions: equal distribution of non-transferable parental leave, a ban on employers reducing an employee's salary due to maternity leave and specifying relevant qualifications and factors when assessing work of equal value.