EU Pay Transparency: Companies will have to disclose how they pay employees

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Women in the EU continue to be paid less than men. Not only because they tend to work in lower-paid jobs, but also for the same work in the same sector, women are paid less on average than their male colleagues. Most of the time, women don’t even know how much they are paid less because the wages are not publicly visible. This is now to change: The EU Pay Transparency Directive obliges companies to disclose how they pay their employees. This is to uncover and prevent a possible pay gap between men and women.

On 30 March, the EU Parliament adopted new directives in the fight against salary differences between men and women. The regulations oblige EU companies to be transparent about salaries. In future, all salaries paid by a company must be disclosed. This will allow workers to compare their salaries and identify differences. 

In the EU, women still earn on average 13 per cent less per hour than men. However, the gender pay gap varies greatly from country to country: while it is less than 4 per cent in Slovenia, Romania and Luxembourg, the pay gap is highest in Estonia and Latvia, at around 22 per cent. Austria and Germany are right behind with 18.9 and 18.1 percent respectively.

Gender pay gap has mainly structural causes

The gender pay gap has mainly structural causes, as women in the EU are more often employed part-time and are less likely to hold management positions. On the other hand, they do unpaid care work more often. Professions in which more women tend to work than men, such as nursing, are also less well paid. But even if one disregards these structural causes, the gender pay gap remains: In Germany, for example, women with comparable qualifications in the same industry earn on average six percent less than their male colleagues.

Companies with more than 100 employees must disclose salaries

The pay gap between women and men is to be closed with the new pay transparency guidelines. The guidelines stipulate that all salaries in a company must be disclosed. Companies with more than 100 employees where the pay gap between women and men exceeds 5 percent will have to find a solution on how to equalise salaries in the future.

The EU Pay Transparency guidelines prohibit recruiters from asking applicants about their current salary. This is to prevent salary discrepancies from arising in the first place.

Social partners are to play an increased role in enforcing the guidelines. Companies that do not comply with the wage transparency guidelines will be fined. This is the only way to ensure compliance with the rules, emphasises the chief negotiator of the S&D group, Evelyn Regner.

EU Pay Transparency Directive: “Transparency of crucial importance”

Regner, member of the Committee on Women’s Rights and Gender Equality and Vice-President of the European Parliament, identifies in a dispatch the crucial importance of transparency for an equal society:

“Without it, it is simply impossible to take action against wage discrimination. “With the new EU rules, workers – and women in particular – will be better equipped to assert their right to equal pay for the same work or work of equal value as men.”

According to Regner, all workers will be able to share information about their pay internally and externally. “This means an effective ban on non-disclosure clauses.” It is also crucial, she said, that it is not women who have to go to court to prove wage discrimination, but companies who have to prove the opposite.

Wage discrimination is a systematic problem, not an individual one. Therefore, it should also be tackled systematically.

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