Time to act on pay transparency

The pandemic provides no excuse for inaction by the European Commission on gender pay transparency. It should be the incentive.

Women are still paid 14.1 per cent less than men per hour on average across the European Union, despite decades of efforts to promote equal pay. The gender pay gap has narrowed very little over the last decade, pointing to the need for further action.

The political guidelines advanced by the president of the European Commission, Ursula von der Leyen, associated with her election in July 2019, and the EU Gender Equality Strategy 2020-2025 pledged to propose binding pay-transparency measures during 2020, aimed at strengthening the principle of equal pay for women and men. These would seek to ensure that information on pay levels within enterprises was available when necessary for workers—typically women—to prove pay discrimination.

A proposal has not yet emerged, however, and it is unclear whether the commission will persist with the initiative. This could be a missed opportunity—particularly in the context of Covid-19.

The pandemic has drawn attention to the poor remuneration of female-dominated, frontline occupations. It is also likely to have significant adverse effects on gender equality, including the gender pay gap. Pay transparency and other measures are urgently needed, to ensure workers do not lose the benefit of hard-won advances towards gender equality.

EU framework

The EU equal-pay framework implements the principle of equal pay for men and women for equal work or work of equal value, as set out in article 157(1) of the Treaty on the Functioning of the European Union. This principle is expressed in article 4 of the Gender Equality Directive (2006/54/EU).

Article 4 prohibits direct and indirect discrimination on grounds of sex with regard to pay, for the same work or work to which equal value is attributed. It also provides that job-evaluation and classification systems, where these are used by employers, should be non-discriminatory.

The framework contributes to eliminating pay discrimination, one of the underlying causes of the gender pay gap. It also helps address the cultural undervaluation of work performed predominantly by women, such as care work. This phenomenon is reflected in gender-biased job-evaluation schemes, which overlook or undervalue skills and tasks associated with such work.

The mooted initiative on pay transparency stems from concerns identified by the commission (in 2013 and 2020) regarding the effectiveness of the equal-pay framework. They include lack of clarity over the concept of ‘work of equal value’, lack of transparency in pay systems—including lack of information on pay disaggregated by gender—and procedural obstacles, such as long and costly judicial proceedings.

These issues make it more difficult for workers and other stakeholders to take action against pay inequality. The commission’s Recommendation on pay transparency from 2014, intended to address them, has had limited uptake and success—prompting plans to introduce binding measures.

New measures

A robust proposal for binding pay-transparency measures should take the 2014 recommendation as a starting point, but should go further. Among other things, it should clarify the concept of ‘work of equal value’, as otherwise workers might still be unable to identify a suitable comparator. In this regard, it could refer to objective criteria such as ‘skill, effort, responsibility and working conditions’ and further sub-factors.

Detailed guidance is needed on how to determine the value of work and to ensure that job-evaluation schemes are not gender-biased. In addition, the use of job-evaluation schemes free from bias should be actively promoted. This would enhance transparency in pay scales and go some way to addressing the undervaluation of work typically performed by women.

In line with the recommendation, the proposal should include a right to request information on pay, pay reporting and audit obligations. The reporting and audit obligations should have wide coverage and be subject to follow-up mechanisms to ensure effectiveness. Pay-secrecy clauses should be prohibited.

Trade unions should be able to bargain collectively on the issue of equal pay, and equality bodies and unions should be able to take action against pay discrimination on behalf of workers.

‘Additional burdens’

Without explanation, the pay-transparency initiative has disappeared from the legislative calendar. It is supported by trade unions, a European Parliament resolution and the European Economic and Social Committee—but strongly opposed by employers.

Employers have argued that the legislation would introduce additional burdens on businesses, particularly small-and-medium enterprises. This concern may have prompted the commission to delay amid the pandemic.

The reporting and audit obligations might impose some additional administrative and financial burdens but it is not clear that these would be significant. And there could be appropriate exceptions for SMEs, particularly at the smaller end.

Focusing on the burdens also occludes the benefits of gender equality. The impact assessment accompanying the 2014 recommendation found that the benefits of binding pay-transparency measures clearly outweighed the costs.

Incentive to act

Binding measures are in any event unavoidable, if issues of implementation of the equal-pay framework are to be addressed effectively anytime soon. The pandemic, far from offering an excuse, provides an additional incentive to act now.

Public attention has been drawn to the fact that work performed by workers in female-dominated essential services—such as healthcare, where women make up 76 per cent of workers across the EU—is undervalued and underpaid. And the pandemic is disproportionately affecting women in various ways.

They may be exposed to increased incidence of domestic violence. They are particularly affected by job losses and cuts in working hours, because some of the hardest-hit sectors—such as tourism and hospitality—are feminised.

Women are taking on a greater share of the increased (unpaid) care work in the household as a result of lockdown measures. Aside from affecting mental wellbeing and performance at work, this could lead some women to reduce their working hours or to leave the labour market altogether.

That could entrench the already unequal distribution of unpaid domestic care between men and women, which significantly affects women’s labour-market participation and is one of the root causes of the pay gap. Among other things, this is due to the fact that some women work in part-time or temporary positions, often less well-paid, to accommodate care responsibilities.

These effects are likely to have repercussions for women’s health, their economic independence and the pay gap. It is therefore time for more, not less, action to promote gender equality and to close the gap.

Significant efforts

Binding pay-transparency measures constitute only one small part of the necessary action. Closing the gender gap will not be possible without significant efforts to ensure equal distribution of unpaid care work.

A comprehensive strategy to combat gender inequalities must include investment in care services, with a particular focus on improving the remuneration and working conditions of care workers, the vast majority of whom are women. It must embrace effective family-friendly policies, such as adequately remunerated parental, paternity and carers’ leave and a right to flexible working arrangements and telework. In this regard, EU member states should go beyond the minimum requirements of the Work-Life Balance Directive (2019/1158/EU).

A focus on care work, gender equality and overall gender mainstreaming should be integral to recovery strategies. The commission guidance in late January on resilience and recovery plans is a step in the right direction, though it does not make explicit the links between care work, care systems and gender equality.

The pandemic provides an opportunity for Europe to invest in gender equality. It must seize it—or risk decades of progress being undone.