The Arctic country has passed legislation meaning companies and government agencies that employ more than 25 workers, will be forced to receive official certification from the government for their equal-pay policies.
The law came into effect in Monday and companies failing to demonstrate equal pay could be fined.
Dagny Osk Aradottir Pind, board member of the Icelandic Women’s Rights Association, told Al Jazeera: “It’s a mechanism to ensure women and men are being paid equally.
“We have had legislation saying that pay should be equal for men and women for decades now but we still have a pay gap.”
She added: “I think that now people are starting to realise that this is a systematic problem that we have to tackle with new methods.
“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.”
In Scotland, the gender pay gap in 2017 was 6.6 per cent - an increase of 0.3 per cent on the previous year’s data.
Since 1997, the gender pay gap in Scotland, based on full-time employees, has narrowed considerably from 18.4 per cent.
In November 2017, the SNP said it would support changing the law to require gender pay gap reporting for all companies with more than 150 employees as well as introducing fines for employers that fail to comply with the law.
The SNP said it would also call for a legislation change at Westminster so that any employer who loses an equal pay claim takes “appropriate action” on the results.
The statement came following an investigation in October 2017 that revealed women working at Holyrood are paid significantly less than men.
Statistics showed that the average woman’s salary at the Scottish Parliament is 11.1 per cent lower than the average man’s earnings.
The figures show that the overall gross rate of pay for men working at Holyrood is £17.86 an hour, almost £2 an hour more than the £15.87 average rate paid to women.