The European Union’s Fight Against the Gender Pay Gap

March 29, 2021
Lucca Victorelli

In the EU, women are less present in the labor market as opposed to men. Based on 2019 data for the EU27, the employment gap between men and women stood at 11.7%. While 79% of men in the EU were employed, only 67.3% of women were employed. Women also earned 14.1% less per hour than men. Overall, this number increases to 36.7% when taking into account yearly earnings for the average man and woman (European Commission (a)). Within the member states, we see a stark contrast in the gender pay gap. This statistic ranges from less than 5% pay difference in Luxembourg, Romania, and Italy to over 20% difference in Estonia and Latvia (Eurostat 2021).

The European Commission highlights multiple key factors which lead to the resulting inequality in women’s pay (per hour on average) as compared to men within the EU. These factors fall under the categories of sectoral segregation, work-life balance, work position, and discrimination (European Commission (a)). The first of these denotes the lack of women represented in higher-paying jobs, such as the STEM (science, technology, engineering, and mathematics) sector. The second, that of the ‘work-life balance’, refers to the tendency of women to spend less hours than men in paid work, but more hours than men in unpaid work. The European Union’s aims to address this issue by promoting a balance in parental leave. The third factor is work position hierarchy, in which women are consistently absent in top positions within companies, representing less than 10% of CEOs in top companies. Furthermore, female managers earned 23% less than their male counterparts in similar positions (European Commission (a)). Finally, despite including the principle of anti-discrimination on grounds of sex in the Treaty on the Functioning of the European Union (1957), discrimination still plays a role in promoting inequality (European Commission (b)).

Since 2014, the European Commission has been promoting the strengthening of work transparency. The aim is to clarify to employees the reasons for their pay and allow them to compare their pay with that of other employees performing similar work (European Commission (c)). Essentially, transparency would make it difficult for companies to maintain pay gaps, as they would have to disclose all employee wages. The EU Action Plan of 2017-2019 on tackling the gender pay gap was also used to highlight 24 individual action points. These measures seek to tackle all four of the previous factors which lead to the gender pay gap (European Commission (c)). As recently as March of 2021, Commission President Ursula von der Leyen has brought up new measures to allow for EU organs to monitor pay transparency and ensure ‘equal opportunities and equal treatment of men and women in matters of employment and occupation, including the principle of equal pay for equal work’ (European Commission (b)).

Multiple directives have also been released by the European Commission to lessen the impacts of the factors that are culpable for an unequal gender pay. The Work-Life Balance Directive of April 2017 was responsible for promoting the idea that men and women should manage both their private and work life in equal ways. Additionally, the Women-On-Boards Directive aimed to improve the number of women among non-executive directors on corporate boards (European Commission (b)).

The European Union has also established an ‘Equal Pay Day’ to raise awareness through activities designed to demonstrate the negative consequences of a large pay gap between men and women. While the European Union celebrates this on November 10, many EU member states also have their own national Equal Pay Days (European Commission (d)). The significance of this date is that women earn 14.1% less than men on average amounting to about two months of salary. November 10th signifies the hypothetical day when women stop getting paid for their work until the end of the year, whereas men are still being paid (European Commission (b)).

The economic consequences of the worldwide COVID-19 pandemic have called attention to the disproportionate impact on women. Recent studies and experts on the issue have shown this to be true. The United Nations describes how ‘compounded economic impacts’ are especially endured by women, who in general earn less and hold positions of lesser safety than men (United Nations 2020). This is primarily due to the factors previously presented which are the main causes of the gender pay gap that we see today. The fact that women are expected to work at home to raise families and the reality that women occupy positions of lower privilege make them more vulnerable to the negative economic effects of the pandemic. Looking at the impact of COVID-19 through this lens, the European Commission has published a drafted law that would force companies with over 250 employees to publicly release annual statistics on their employees’ salaries. Commission President, Ursula von der Leyen, states that “women must know whether their employers treat them fairly. And when this is not the case, they must have the power to fight back and get what they deserve” (Pronczuk 2021). A company pay transparency report would also display the proportion of men and women who fall under each salary bracket. The same would be done for smaller companies, though only upon request by an employee, and not to the public (Collins 2021). Employers would also not be allowed to inquire about prospective employee’s pay when hiring them. The path to this draft becoming a reality would require a majority vote by the European Parliament and a unanimous agreement among all 27 member states’ governments (Collins 2021).

With the implementation of these rules, seeking compensation for pay discrepancies will become easier. Moreover, employees will be able to see if they are being paid fairly among all other employees. They will also be able to negotiate a higher wage if they feel like they are paid an unjust amount (Pronczuk 2021). Repercussions will amount to fines aimed at companies which do not comply with the rules described in the law. These punishments would be established and undertaken by the national governments (Pronczuk 2021). It is important to also note that many member states already have similar laws in place. Sweden, Austria, Denmark and Finland already demand that companies report any gender pay differences (White & Nardelli 2021). Others, like Italy and Germany, have also introduced laws that promote pay transparency (Pronczuk 2021).

Some, however, are not so enthused by the proposal. Markus J. Beyrer of BusinessEurope praises the initiative but minimizes its strength as a holistic solution to the problem of gender pay inequality in the labor market. Instead of complicating companies’ human resources departments with ‘administrative burdens’ and ‘undue litigation’, proposals should seek to “address the root causes of inequalities, especially gender stereotypes, labor market segregation and insufficient provision of child care” (Pronczuk 2021). Despite these critiques, it certainly looks as though the European Union is doing its best to tackle the issues at hand. This has been demonstrated by their initiative to publish directives to level out the work-life balance among men and women and promote women employment to sectors in which they are historically underrepresented. All of these actions are undertaken especially in the face of a pandemic which has impacted women to a greater magnitude.

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