Despite 90% of Europeans finding it unacceptable for women to be paid less than men, the gender pay gap in the European Union (EU) remains significant, with only a 4 percentage point decrease over the past decade. To address this issue, the EU has adopted a new pay transparency directive aimed at closing the gap further. However, overcoming unconscious bias, negotiation differences, and the influence of new technologies like artificial intelligence will be key challenges in achieving pay equality.

Understanding the Gender Pay Gap

  • The gender pay gap refers to the difference in average gross hourly earnings between male and female workers.
  • It covers all workers within a country, sector, or organization, differing from the right to equal pay for equal work or work of equal value.

Causes of the Gender Pay Gap

Complex and interrelated factors contribute to the gender pay gap, including:

  • Unequal division of paid and unpaid work.
  • Conscious and unconscious biases and gender stereotypes influencing career choices.
  • Concentration of women in low-paid jobs.
  • Differences in pay negotiation styles and information asymmetries.

The Pay Transparency Directive

  • The EU’s new directive aims to improve accessibility to pay information and support the enforcement of pay rights.
  • It includes individual and collective measures, such as:
    • Workers’ right to obtain pay information about colleagues doing equal work.
    • Ensuring job candidates are informed about pay levels and not asked about pay history.
    • Employers disclosing gender pay gaps, bonuses, and proportion of women in various earning brackets.
    • Comparisons of gender pay gaps by job category and internal disclosure of pay gap information.
    • Avoiding the disclosure of sensitive personal data and ensuring reasonable costs for employers.

The Potential Impact of the Directive

  • Pay transparency measures alone cannot address all causes of the gender pay gap but can help reduce information asymmetries and identify pay discrimination.
  • Studies on similar transparency measures have shown promising results:
    • Danish legislation reduced the gender pay gap by 13%.
    • The UK saw an 18% reduction in the pay gap following the adoption of pay transparency legislation.
    • Canadian universities experienced a 20%-40% reduction in the gender pay gap after implementing public salary disclosure.

Factors Enhancing Pay Transparency

  • Publicly disclosing pay information, strong enforcement systems, and high union scrutiny have proven effective in reducing the gender pay gap.
  • The new EU directive incorporates many of these factors, making it a powerful step towards combatting pay inequality.

While pay transparency alone cannot eliminate the complex drivers of the gender pay gap, the EU’s Pay Transparency Directive represents a significant move towards closing the gap. By focusing on transparency and enforcement mechanisms, this directive aims to reduce information asymmetries, empower workers, and address pay discrimination. It serves as an important tool in the ongoing efforts to achieve pay equality between men and women.