Iceland is aiming to eliminate the gender pay gap by the beginning of the next decade.
It's now illegal to pay a woman less than a man in Iceland, but it's taken 40 years of protests.
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The managing director of the Icelandic Women's Rights Association said: "The Equal Pay Standard is not a cure-all". Anyone who can't justify their salary compensation for employees will be met with fines.
For the past nine years, Iceland has been ranked by the World Economic Forum as the world's most gender-equal nation.
Iceland is the most gender-equal country in the world.
The new legislation was approved by the country's parliament, which is comprised of roughly 50 percent women. On the World Economic Forum's 2017 Global Gender Gap Index, Iceland ranks first among 144 countries, followed by Norway, Finland and Sweden.
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However, globally the gap is much wider, with women earning an average of $12,000 (£8,840) in 2017, compared with $21,000 for men, the figures showed.
Companies will now face fines if it is found that men are being paid more than women doing the same job.
The law came into effect on Monday and applies to all companies and organizations with at least 25 full-time employees.
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"Iceland is one of several countries that have stepped up their contributions to groups that work on behalf of women's reproductive and sexual health, such as the U.N. Population Fund and She Decides". And while the Equal Pay Act of 1963 prohibits discrimination based on sex, the wording of the act allows for employers to take advantage of loopholes that have led to the persisting wage gap.