The European nation has now made it illegal for employers to adjust pay according to gender
A law that came to force January 1 has made Iceland the first country in the world to legalise equal pay.
Companies and government agencies that employ at least 25 workers now have to obtain a certification from government of that they are paying men and women equally, reported Al Jazeera. Violators will face hefty fines.
The new legislation was supported by Iceland's centre-right government, as well as the opposition. Iceland’s parliament is almost equally composed of men and women.
"I think that now people are starting to realise that this is a systematic problem that we have to tackle with new methods," said Dagny Osk Aradottir Pind, a board member of the Icelandic Women's Rights Association.
"We have had legislation saying that pay should be equal for men and women for decades now but we still have a pay gap."
This gap has existed even as Iceland has consistently been ranked by the World Economic Forum as the most gender-equal country in the world for the past nine years.
The WEF’s Global Gender Gap Report, which began in 2006 uses indicators like economic opportunity, political empowerment and health and survival to gauge a country’s gender-equality level.
In the past decade, Iceland has closed around 10% of its gap – it is one of the fastest-improving countries in the world. It plans to completely eradicate its gender gap in two years.
The island country in the North Atlantic Ocean has a population of approximately 323,000 and an economy driven by tourism and fisheries.
"Women have been talking about this for decades and I really feel that we have managed to raise awareness, and we have managed to get to the point that people realise that the legislation we have had in place is not working, and we need to do something more," Aradottir Pind said.
"The [new] legislation is basically a mechanism that companies and organisations ... evaluate every job that's being done, and then they get a certification after they confirm the process if they are paying men and women equally."
Following Iceland’s good showing in the WEF report are Norway, Finland, Rwanda and Sweden.
At the other end of the spectrum, the gender gap is widest in Yemen among 144 countries evaluated in the report.