3rd Oct 2023


Eight years until EU fixes equal pay for women?

  • Wednesday is International Women's Day (Photo: Pexels)
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Same company. Same working hours. Same duties. Same profile. One might expect the result to be 'same pay', but the reality is different.

The latest Eurostat figures show that women still earn on average 13 percent less per hour than men. The difference is even more evident in countries such as Latvia and Estonia, where the gap is above 20 percent, but almost non-existent in some others, such as Luxembourg.

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According to the Organisation for Economic Cooperation and Development (OECD) analysis, pay transparency rules are an important tool to combat gender inequality, as male and female workers become aware of the differences between them within the same company.

If you don't know what your work, or that of your colleagues, is worth, you are not in a position to demand more than what you are offered. Especially when the person is young and has no knowledge of how the labour market or salary brackets work. That's what happened to Anna.

When she and her colleague Louis were both offered a job at the publishing company where they did their summer internships, the contracts naturally did not state there was a difference in pay compared to her colleague of €4,000 a year. She only knew because a few days earlier he had signed those conditions, and he himself told Anna to share the information with the company at the risk of future retaliation. A few days later, she got the same wage.

Until now, there has been no obligation at European level to regulate such pay transparency in member states, and it was left to the individual, or national governments, to undertake solutions to situations such as the one described.

"It is essential that we do not wait for every single member state to take this decision," said Evelyn Regner (S&D) to EUobserver, one of the leading MEPs of the directive on pay transparency. "With this directive, we ensure that they all take a step forward towards a more equal society already now," she added.

Last December, member states and the European Parliament reached an agreement on achieving more pay transparency. On 29 March, what should be a formal procedure in the parliament is expected. After that, the EU-27 will have three years to align their national regulations with the EU directive ("transpose", as the jargon goes).

With these new binding rules for the EU-27, both existing employees and those being recruited in companies with 100 or more employees will have access to sex-disaggregated data on pay conditions for each position.

In addition, if the pay gap is larger than five percent, the company will be required to carry out a pay assessment with workers' representatives in order to remedy the situation.

Other important milestones of this regulation are: the shift of the burden of proving non-discrimination from the employee to the employer, the possibility of compensation in case of discrimination, and a ban on a potential employer asking about a candidate's salary history.

The step has been historic and celebrated, but it also has room for improvement.

Up to eight years to be implemented

At current thresholds, once transposed, the directive would cover half of EU workers in companies with 50 or more employees, and 33 percent of those with 250 or more, according to pay transparency data.

Depending on the number of employees, the report on the situation in each company will vary. In the first phase, larger companies (250 employees and above) will report every year. Those employing 150 to 249 people, every three years. And the same timing will apply to those with 100 to 149 employees, but only five years after the transposition of the directive.

So in total, it may take up to eight years to see the directive implemented in these companies.

"Until then, it will only apply to companies with 150 employees or more, which means that the number of workers affected by the directive is very small," says Eugenia Rodríguez Palop, shadow rapporteur and MEP for The Left.

Parliament pushed "for more companies to make pay reporting and pay assessments, for stronger individual rights, for higher sanctions and so on," co-rapporteur Kira Marie Peter-Hansen (Greens) told EUobserver.

Their goal? To achieve implementation of the directive in companies with 50 employees and upwards, and to close the pay gap. The demand? 100 employees and upwards, an unjustified gap of a maximum of five percent, and the imposition of financial penalties in the case of non-compliance.

The directive is a great first step towards equality, but it will not eradicate the gender pay gap on its own, says a commentary by the European Policy Centre (EPC), an independent, not-for-profit think-tank.

"The overall impact of this directive in some low-paid sectors which are already dominated by women is potentially limited," it warns.

Several MEPs told EUobserver that analysing and studying the differences by employment sector will be the focus for tackling this gap in the years to come. A gap that hits sectors such as care services the hardest.

Some of the factors that need to be addressed to reduce this gap are structural. "Transparency in low-paid, female-dominated jobs is less of an issue than chronically low-wage levels and subsequent in-work poverty", the EPC's Laura Rayner and Danielle Brady noted.

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