EWL in the media

Brussels wants binding pay transparency to bridge gender gap

EWL’s Senior Policy & Advocacy Coordinator Mary Collins comments on the upcoming new rules by the European Commission to strengthen pay transparency and address the gender pay gap.

Paola Tamma, 25 Feb 2021

This article was originally published on POLITICO Europe.

The European Commission wants to end payslip differences due to gender-based discrimination in the EU, and it’s planning to present binding rules to that end.

The idea is to give employees access to pay information broken down by type of work and employees’ sex to empower workers and force employers to redress unwarranted pay differences for comparable jobs.

Binding rules on pay transparency were one of the flagship policies announced by Commission President Ursula von der Leyen — the first woman at the helm of the EU executive — who promised to deliver it within herfirst 100 days in office. The Commission is seeking to roll out the proposal on March 4 — almost exactly a year late.

In a draft of the proposal, seen by POLITICO, the Commission notes that the EU’s gender pay gap — defined as the difference in what men and women earn for performing equal work — remains high at 14.1 percent on average in the EU, and that “pay transparency allows workers to detect and prove possible discrimination based on sex.”

Currently, only 10 EU countries — Austria, Belgium, Denmark, Germany, Spain, Finland, France, Italy, Portugal and Sweden— have adopted legal frameworks on pay transparency. Two more — Ireland and the Netherlands — are thinking of adopting them.

Evidence on the impact of such policies is limited, but one research paper found that in Denmark, a 2006 pay transparency bill narrowed the gender pay gap by 13 percent. At the current pace, estimates predict that it would take over 250 years to completely close the earning gap between men and women.

“We still have a very large and life-long gender pay gap,” said Mary Collins, senior policy and advocacy coordinator at the European Women’s Lobby, an umbrella organization of women’s associations. “We need to be able to tackle it at the sources and pay transparency is one way forward.”

She added that while targeting women, such legislation benefits the wider workforce. "The system [to determine pay] is going to be much more visible and therefore it is going to be a tool for everybody," Collins said.

“We still have a very large and life-long gender pay gap. We need to be able to tackle it at the sources and pay transparency is one way forward.”

The Commission’s draft proposal includes a number of obligations for companies. It would give any employee the right to demand information from their employer on how their salary compares to the average pay level of workers performing the same or comparable job, broken down by sex. It also would prohibit prospective employers to ask candidates about their current earnings, and gives job seekers a right to know salary expectations when heading into an interview.

EU countries will have to establish tools classifying the value of work according to criteria such as skills, education, type of task and on-the-job performance. These in turn should help employers design gender-neutral pay-setting systems.

In companies with more than 250 people, it would require employers to provide detailed yearly information on the gender pay gap. However, EU governments may decide to centrally collect the information from employers “to limit the possible burden [of] pay reporting,” the Commission writes.

If this exercise shows a gender pay gap larger than 5 percent for workers doing the same tasks, employers have to carry out a "joint pay assessment" in cooperation with workers’ representatives and redress any unwarranted pay differences, according to the proposal.

Reporting requirements

Crucially, the proposal also would shift the burden of proof onto employers if employees suspect there is gender pay gap; it also would strengthen rights to compensation for victims of gender-based discrimination.

There are numerous versions of the draft proposal, and the text may change before it is formally adopted.

Unions, who have long been calling for binding rules in this area, welcome the Commission’s proposal but warn of possible loopholes. The idea that EU countries can centrally collect information on pay, as opposed to employers doing so, “on the one hand gives a right, on the other hand removes it in practice,” said Esther Lynch, deputy general secretary of the European Trade Union Confederation. They also call for greater powers for trade unions to bargain for equal pay.

On the other hand, employers reject the idea that greater transparency will solve the gender pay gap, which they argue “is due to a number of root causes, in particular gender stereotypes and segregation on labor markets,” said BusinessEurope, a large business lobby.

“The source is really transparency of pay because it gives women access to information, the possibility of going to the courts ... While all that is behind the scenes, it’s really hard to do that”

Employers push back on binding pay reporting requirements, which they feel would result in too heavy a burden. They also resist the idea of shifting the burden of proof on employers, fearing it would result in a proliferation of lawsuits.

They also argue that gender-based discrimination is not a frequent grievance from employees, an argument that’s flatly rejected by women’s groups and unions, which they say is a vicious cycle.

“The source is really transparency of pay because it gives women access to information, the possibility of going to the courts ... While all that is behind the scenes, it’s really hard to do that,” said Collins at the European Women’s Lobby.

This article is part of POLITICO’s new coverage of Competition and Industrial Policy. This coverage includes the must read Fair Play newsletter every weekday morning. Email pro@politico.eu to request a complimentary trial.

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