Social Europe

politics, economy and employment & labour

  • Themes
    • European digital sphere
    • Recovery and resilience
  • Publications
    • Books
    • Dossiers
    • Occasional Papers
    • Research Essays
    • Brexit Paper Series
  • Podcast
  • Videos
  • Newsletter

Ten Points About Pay Transparency In Europe’s Companies

Christine Aumayr-Pintar 20th February 2018

Christine Aumayr-Pintar

Christine Aumayr-Pintar

Measures to promote gender pay transparency haven’t been delivered yet in half of Europe – making EU level legislative action to speed up implementation an option. Here’s what we know about the measures from countries that have been early adopters.

The aim of overcoming differences in pay between men and women has been in the DNA of the EU ever since its foundation. All Member States have agreed that equal work or work of equal value between men and women shall be paid the same. The latest – and most concrete – initiative at EU level to reduce the gender pay gap was the Commission’s 2014 Recommendation (2014/124/EU). Here it suggested that every Member State ought to adopt (or adapt) at least one out of four measures ensuring greater transparency of pay:

  • the individual right to request pay information
  • compulsory company level gender pay reports for companies with more than 50 employees
  • more analytical gender pay audits for larger companies
  • to ‘encourage’ social partners to take the matter into account in their collective bargaining.

Only half of the Member States followed the Recommendation

This did generate movement in some parts of Europe: Germany introduced the right to request information on pay for 14 million employees and also, along with other countries such as the UK and Lithuania, the obligation on companies to carry out gender pay reports. Ireland, the Netherlands and Italy have also ‘advanced drafts’ of such legislation in the pipeline or desk-drawer. Yet, the overall degree of implementation of this Recommendation has been poor. In more than half of the Member States (!) virtually nothing has happened, leading the Commission to start reflecting about using the legislative stick: In its Action plan 2017-2019 on tackling the gender pay gap, the EC announced it would ‘assess the possibility of targeted amendments to the Gender Equality Recast Directive by looking at the need for and possibility of making some or all of the measures on pay transparency […] binding’.

First experiences with gender pay transparency

We have looked at first experiences with gender pay reports and audits – from first mover countries which already had evaluated the use of these measures with evidence-based research: Austria, Denmark, Finland and Sweden. The following ten points can be distilled from the research – and beyond:

  1. Simpler versions of pay reporting requirements didn’t pose major obstacles for companies.
  2. But reports and auditing requirements only became meaningful when they added more complex and thorough data, including various components of pay beyond basic salaries and extra information, such as length of working experience or tenure of the employees.
  3. Rolling the measures out can be bumpy at the beginning (see UK experience here). Phased approaches in which companies of decreasing size are added in seem to work.
  4. Clarity from the legislator as to who is required to compile the reports, what they should contain, who shall be involved at company level , what template could be used, what should be done with them and what are the consequences if they are not compiled, makes everyone’s life easier.
  5. Larger companies find it easier to implement them. Support measures should therefore be specifically focused on medium-sized companies.
  6. In order to avoid making such reports a bureaucratic accounting exercise, joint compilation, discussion and agreed follow-up between management and employee representatives is a recipe for success.
  7. They work best when there is a genuine interest and openness among company level actors to look into the data – next to a supportive environment of social partners and governments.
  8. Gender pay reports are unknown and unnoticed by the general public, according to Eurobarometer.
  9. But the public would be supportive of introducing them – irrespective of the level of the gender pay gap in their country: About two-thirds of Europeans said in a special Eurobarometer that they would be supportive.

Support for public pay reports and level of gender pay gap in 2017

Our job is keeping you informed!


Subscribe to our free newsletter and stay up to date with the latest Social Europe content.


We will never send you spam and you can unsubscribe anytime.

Thank you!

Please check your inbox and click on the link in the confirmation email to complete your newsletter subscription.

.
Note: GPG = gender pay gap. Recent gender pay gap data for Greece is not available. Vertical axis: percentage of respondents being ‘strongly’ or ‘somewhat’ in favour on the question: ‘Would you be in favour of or against publishing the average wages per job type earned in the organisation or company where you work by each sex? (%)’; Horizontal axis: unadjusted gender pay gap, hourly earnings, full-time – figures from 2015 or most recent data available.
Source: Author’s depiction based on European Commission (2017b), Eurobarometer 456 and Eurostat, [earn_gr_gpgr2].
  1. Pay transparency can be a two-edged sword, though, as Todd Zenger argued: In environments where performance is hard to measure, combined with commonly observed overestimation of one’s own performance, transparency reports can do more harm than good. Increased fairness with more equal, yet compressed, pay can lead to general dissatisfaction and resignations among high performers.

In my view the ‘European variant’ of pay reports and audits, in which employee representatives are, ideally, closely involved in the compilation, analysis and follow-up can help to soften the sharpness of the second edge of the sword: When employees have confidence that the issue of fairness and equal pay for equal work is regularly monitored and addressed on their behalf, they don’t need to know exactly or even on average how much their peers are earning, leaving still sufficient room for companies to reward performance. So the most important lesson learnt from the first mover countries is to ensure that employee representatives are available, sufficiently resourced, trained and involved throughout the whole process.

See also: Eurofound (2017), Developments in working life in Europe 2016: EurWORK annual review, Publications Office of the European Union, Luxembourg, Chapter 6 on pay inequalities: Evidence, debate and policies.

This column is sponsored by Eurofound.
minimum wages
Christine Aumayr-Pintar

Christine Aumayr-Pintar is a research manager in the working-life unit at Eurofound. She works on industrial relations and working conditions, focusing on pay setting, minimum wages, gender pay transparency, industrial action and social dialogue.

Home ・ Politics ・ Ten Points About Pay Transparency In Europe’s Companies

Most Popular Posts

schools,Sweden,Swedish,voucher,choice Sweden’s schools: Milton Friedman’s wet dreamLisa Pelling
world order,Russia,China,Europe,United States,US The coming world orderMarc Saxer
south working,remote work ‘South working’: the future of remote workAntonio Aloisi and Luisa Corazza
Russia,Putin,assets,oligarchs Seizing the assets of Russian oligarchsBranko Milanovic
Russians,support,war,Ukraine Why do Russians support the war against Ukraine?Svetlana Erpyleva

Most Recent Posts

trade,values,Russia,Ukraine,globalisation Peace and trade—a new perspectiveGustav Horn
biodiversity,COP15,China,climate COP15: negotiations must come out of the shadowsSandrine Maljean-Dubois
reproductive rights,abortion,hungary,eastern europe,united states,us,poland The uneven battlefield of reproductive rightsAndrea Pető
LNG,EIB,liquefied natural gas,European Investment Bank Ukraine is no reason to invest in gasXavier Sol
schools,Sweden,Swedish,voucher,choice Sweden’s schools: Milton Friedman’s wet dreamLisa Pelling

Other Social Europe Publications

The transatlantic relationship
Women and the coronavirus crisis
RE No. 12: Why No Economic Democracy in Sweden?
US election 2020
Corporate taxation in a globalised era

Foundation for European Progressive Studies Advertisement

EU Care Atlas: a new interactive data map showing how care deficits affect the gender earnings gap in the EU

Browse through the EU Care Atlas, a new interactive data map to help uncover what the statistics are often hiding: how care deficits directly feed into the gender earnings gap.

While attention is often focused on the gender pay gap (13%), the EU Care Atlas brings to light the more worrisome and complex picture of women’s economic inequalities. The pay gap is just one of three main elements that explain the overall earnings gap, which is estimated at 36.7%. The EU Care Atlas illustrates the urgent need to look beyond the pay gap and understand the interplay between the overall earnings gap and care imbalances.


BROWSE THROUGH THE MAP

Hans Böckler Stiftung Advertisement

Towards a new Minimum Wage Policy in Germany and Europe: WSI minimum wage report 2022

The past year has seen a much higher political profile for the issue of minimum wages, not only in Germany, which has seen fresh initiatives to tackle low pay, but also in those many other countries in Europe that have embarked on substantial and sustained increases in statutory minimum wages. One key benchmark in determining what should count as an adequate minimum wage is the threshold of 60 per cent of the median wage, a ratio that has also played a role in the European Commission's proposals for an EU-level policy on minimum wages. This year's WSI Minimum Wage Report highlights the feasibility of achieving minimum wages that meet this criterion, given the political will. And with an increase to 12 euro per hour planned for autumn 2022, Germany might now find itself promoted from laggard to minimum-wage trailblazer.


FREE DOWNLOAD

ETUI advertisement

Bilan social / Social policy in the EU: state of play 2021 and perspectives

The new edition of the Bilan social 2021, co-produced by the European Social Observatory (OSE) and the European Trade Union Institute (ETUI), reveals that while EU social policy-making took a blow in 2020, 2021 was guided by the re-emerging social aspirations of the European Commission and the launch of several important initiatives. Against the background of Covid-19, climate change and the debate on the future of Europe, the French presidency of the Council of the EU and the von der Leyen commission must now be closely scrutinised by EU citizens and social stakeholders.


AVAILABLE HERE

Eurofound advertisement

Living and working in Europe 2021

The Covid-19 pandemic continued to be a defining force in 2021, and Eurofound continued its work of examining and recording the many and diverse impacts across the EU. Living and working in Europe 2021 provides a snapshot of the changes to employment, work and living conditions in Europe. It also summarises the agency’s findings on issues such as gender equality in employment, wealth inequality and labour shortages. These will have a significant bearing on recovery from the pandemic, resilience in the face of the war in Ukraine and a successful transition to a green and digital future.


AVAILABLE HERE

About Social Europe

Our Mission

Article Submission

Membership

Advertisements

Legal Disclosure

Privacy Policy

Copyright

Social Europe ISSN 2628-7641

Social Europe Archives

Search Social Europe

Themes Archive

Politics Archive

Economy Archive

Society Archive

Ecology Archive

Follow us on social media

Follow us on Facebook

Follow us on Twitter

Follow us on LinkedIn

Follow us on YouTube