29th Nov 2023

Firms will have to reveal and close gender pay-gap

  • If workers take legal action against their companies over the pay gap, the burden of proof will be on the firms — according to the new rules (Photo: Becca Tapert, Unsplash)
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Employers will no longer be able to hide behind secret contracts to disguise how much less they pay women than men for the same work, according to a new legislation adopted by the European Parliament on Thursday (30 March).

In the EU, on average, women earn 13 percent less per hour, according to data by Eurostat, with significant differences between countries: in Latvia, the gender-gap is over 20 percent, and in Luxembourg it is almost invisible. The reasons for the gap are rooted indiscrimination against women and gender bias.

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Danish MEP Kira Marie Peter-Hansen, from the Greens — one of the lawmakers in charge of the file — called it a "historical, essential piece of legislation", and the "best-known tool for closing the gender pay gap".

"With this directive we have secured the right to information for Europe for all our citizens," the Dutch liberal MEP Samira Rafaela, the other top lawmaker on the file, said.

"We will have the binding legislation to tackle pay discrimination in all our member states," she argued, adding that "if we had let it up to the market, the gender pay gap would only correct itself by 2086".

EU commissioner for equality Helena Dalli said she hopes the pay transparency legislation, which was first proposed by the executive in 2020, will trigger a "cultural change" in companies.

The legislation, which was adopted by 427 votes to 79 against and 76 abstentions, is set to require employers to provide information on average pay levels, broken down by gender, for all workers performing the same job.

This will allow workers to identify and challenge any pay discrimination. If workers take legal action, the burden of proof will be on the companies.

"We abolish pay secrecy contract, we strengthen workers rights, and workers individual rights to information," MEP Peter-Hansen said.

Firms with more than 100 workers will have to publish this information, and fix the pay gap.

Member states will have three years to put the new rules into force, instead of the standard two years. Dalli argued it is to give companies more time to put non-discriminatory pay structures in place.

The European Trade Union Confederation (ETUC) said that those three years will cost female workers: every year without action would cost women an average of €4,256 in lost wages.

"For far too long, the economy has been organised with men in mind, women were not the norm. You can see it in the representation of women in leadership positions, in the pay gap, in the pension gap," MEP Rafaela told the plenary on Thursday.

"There is a structural problem here and we can't just smash the glass ceiling, we need to rebuild the entire house," she said, adding that the pay gap legislation does that.

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