EU takes next step to make companies report gender pay gap

COMPANIES in the European Union (EU) will have to come clean on gender pay gaps, under new rules that would also ban them from asking prospective employees about salaries they earned in previous jobs.

The European Parliament on Thursday (Mar 30) voted to support a new directive that would oblige firms with at least 100 staff to disclose information that will make it easier to compare employee salaries. 

“Not only do we finally have binding measures to tackle the gender pay gap, but also all citizens of the EU are empowered, recognised and protected against pay discrimination,” Samira Rafaela, of the parliament’s women’s rights and gender equality committee, said in a statement. 

As a next step, the EU’s members states must formally approve the new rules before they can come into force 20 days after their publication in the EU Official Journal, which is expected in May.

Thursday’s votes follows an EU political agreement reached in June 2022, on a law that would require listed companies to move towards 40 per cent female representation in non-executive director positions by 2026.

Meanwhile, progress towards gender pay parity has slowed across the region, which means that women in some European countries could be waiting until at least the turn of the century for equal pay. Currently, women in the EU earn 13 per cent less than their male colleagues on average, according to Eurostat.

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While female employees are paid less in every EU member state, there are large variations between individual countries. Luxembourg has the smallest gap with 0.7 per cent, while Latvian women receive on average 22.3 per cent less than their male colleagues, the largest gap in the bloc.

Under the new rules, vacancy notices and job titles will have to be gender neutral and recruitment processes must be led in a non-discriminatory manner throughout the bloc. Employers will also have to provide information about the initial pay level or its range in the vacancy notice or before the job interview.

Companies will have to send information on the gender pay gap to their respective national authorities, and can also publish such information on their websites. If pay reporting shows a gender pay gap of at least 5 per cent, employers will have to conduct a joint pay assessment in cooperation with their workers’ representatives. Member states will have to put in place penalties, such as fines, for companies that infringe the rules. BLOOMBERG