EU agrees on pay transparency rules to fight gender pay gap
EU negotiators reached an agreement on Thursday (15 December) between the European Parliament and EU member states on a directive to make salaries more transparent in an effort to narrow the gender pay gap across the EU.
Despite the principle of equal pay for equal work being enshrined in the EU treaties, its enforcement remains limited: European women earn on average 13% less than men per hour.
“Equal work of men and women deserves equal pay and transparency is key to make sure this becomes a reality,” said Commissioner for Transparency Věra Jourová following Thursday’s agreement. “Today we are taking another step away from discrimination and one more step closer to equality.”
According to a study by the Organisation for Economic Cooperation and Development (OECD), pay transparency measures contribute to narrowing the gender pay gap, although this is mostly due to a “reduction in men’s wages, rather than an increase in women’s wages”.
Yet, the OECD maintains pay transparency rules remain “an important tool to combat gender inequality” showing workers and employers the presence and size of gender pay gaps.
Under the EU pay transparency rules, all job-seekers will have the right to receive information on the pay range of positions they apply for, while employees will have the right to access sex-disaggregated data to see whether their company pays men and women equally for the same work.
Moreover, employees will have access to the criteria used to define salary and pay rises. According to the proposal, these criteria will have to be objective and gender-neutral.
Meanwhile, employers will not be able to ask prospective employees about their previous pay, limiting the possibility of their salary history influencing the pay offered to candidates.
Employers with over 100 employees will have the duty to report the gender pay gap in their companies.
If the pay gap is higher than 5% without justifications, employers will also need to perform a pay assessment together with the workers’ representatives and take corrective measures.
Member states will need to set up penalties if the principle of equal pay is not respected, while workers will have the right to compensation if companies do not respect equal pay obligations.
During the negotiations, the European Parliament managed to expand the duty to disclose the pay gap to companies with more than 100 employees, while the original proposal only covered companies with over 250 employees.
The Parliament also pushed to make sure the agreement included intersectional discrimination and non-binary people in the scope of the directive, which co-rapporteur Kira Marie Peter-Hansen (Greens) defined ‘historic’.
“This directive will be written into the history books,” she said following the agreement reached by the negotiators.
EU ambassadors and the Parliament will now have to formally approve the agreement. Member states will then have three years to transpose the pay transparency requirements in their national law.