May 18. 2024. 3:28

The Daily

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To smash the glass ceiling, the EU needs pay transparency

While the EU likes to promote itself as a union of gender equality, in reality European women still face immense inequality, especially when it comes to the paycheck, argue Samira Rafaela and Sylvie Brunet from Renew Europe ahead of the vote on the Pay Transparency Directive in the European Parliament on Thursday (30 March).

The principle of equal pay for equal work has been part of the EU Treaties since 1957, but still women in the EU earn 13% less than men in comparable positions. It has a crushing long-term impact on the quality of women’s lives, particularly their pensions.

Yet, we do not talk about it enough. The issue of pay is still taboo in most countries, where it is considered rude to ask what someone is making. But without accurate information about the salaries of your co-workers or industry colleagues, how are you supposed to know if you are being underpaid?

This is where Pay Transparency, the new European directive, comes in. By making public and private companies’ information on workers’ pay available, employees will be able to compare, detect and address unjustified differences. The EU-wide directive will become a turning point in strengthening the principle of equal pay for the same work and work of equal value, proving the necessary mechanisms to fight against the unjustified gender pay gap.

It will include the right to information before and during employment for all job seekers and employees, transparent pay and career progression policies, as well as pay reporting. By putting companies’ salary practices under the spotlight, we are ending the taboo around comparing salaries and getting women to ask for what they are worth, ultimately helping to bridge the gap. Because when a woman knows how much her co-workers and industry colleagues are making, it will be easier for her to demand the same.

We have put tireless efforts to secure this directive that will now become law. A deal on this legislation was reached between the co-legislating EU institutions at the end of last year, and will today be endorsed by the European Parliament in a final step before being put into practice. It will make a real difference for European women. Especially since a large majority of EU countries do not even have a legal framework for pay transparency today.

Currently, only 10 EU states — Austria, Belgium, Denmark, Germany, Finland, France, Italy, Portugal, Sweden and Spain — have legal frameworks on pay transparency. But they are applied very differently in each country. For instance, France and Spain have full audits and reporting on the gender pay gap, while Germany only requires ad-hoc audits for some selected companies. By creating an EU-wide regulation, we set out common measures across the whole Union.

These measures are, amongst other things, the inclusion of non-binary people for the first time in EU legislation, a groundbreaking element that we are very proud to have included. In the same direction, we pushed to consider the protection of people with disabilities with strong provisions throughout the agreement. Another pioneering victory in this agreement is that it states a definition of intersectional discrimination, meaning that its importance should be considered when establishing compensation for the victims and penalties, and recognising the need to raise awareness of its existence.

Critics of transparency claim that it will burden companies greatly. But in the deal reached, the administrative burden on SMEs is limited through the offering of generous and specific support. There will also be a remedy period to allow companies to address any gender pay gap before triggering corrective actions.

In fact, it will also be beneficial for companies. It will make the hiring processes much more efficient – no more time-consuming interview processes to end up finding out that the salary offered was lower than expectations. In the long turn, it will create better matches in the labour market.

The Pay Transparency Directive is the first large initiative taken under the EU Gender Equality Strategy 2020-2025 and a needed step in the fight to end the gender pay gap. However, it is not the only required action.

For instance, the Women on Boards legislation, which seeks to increase the participation of European women on corporate boards, is also vital to end the gender pay gap. Because not only is it harder for women to access high-ranking positions, but the pay gap is also even more significant among high-paying occupations. Last year, the efforts of the Renew Europe group helped to unblock the ten long years of standstill in the Council. Achieving the targets will result in greater possibilities for women, more equal participation and an equal say in our economy.

But we are far from finished. We will keep on working until every woman across our Union has the same opportunities and possibilities as men.