EU Adopts Pay Transparency Directive to Narrow Gender Pay Gap

Vivian Acquah, CDE® • Apr 10, 2023

The European Union has taken a bold step to address the persistent gender pay gap within the union. During a plenary session on March 30th, the majority in the European Parliament voted in favor of adopting the EU's pay transparency directive.

The directive aims to make salaries more transparent and obliges companies with more than 100 employees to report and fix their wage disparities. The hope is that this will result in narrowing the EU gender pay gap, which currently stands at 12.7%. In this article, I will explore the implications of this directive and why CDOs, CHROs and HR+ DEI professionals must pay attention.

The pay transparency directive is set to make a significant difference in addressing the gender pay gap within the European Union. Companies with more than 100 employees must report the pay gap between male and female employees. If the pay gap exceeds 5% without justification, corrective measures must be taken. The directive aims to make employers more accountable for their wage practices and ensure that women and men are paid equally.

This change is not only impactful for women but for everyone! The gender pay gap can directly impact employees' morale and motivation at work. When employees feel like they are not being paid what they are worth, it can lead to a lack of motivation to perform to their potential. Therefore, addressing the pay gap is not just about fairness but also about creating a positive work environment.

Employers will also be required to share sex-disaggregated data on salary, making it easier for employees to compare their salaries to others. Knowing the criteria used to define salary and pay raises will give employees more understanding of their pay structure. These changes ensure that salaries are gender-neutral and that all genders are treated fairly.

Transparency plays a crucial role in creating a gender-equal workplace. The pay transparency directive will not only ensure salaries are gender-equal, but it will also help address other issues, such as promotion opportunities, which can contribute to the gender pay gap. In addition, making salaries transparent will allow employees to have a better understanding of their worth within the company and ask for more if they believe they are being underpaid.

Conclusion

The EU's pay transparency directive is a step in the right direction to address the persistent gender pay gap within the union. Companies with more than 100 employees will now be held accountable for their wage practices and must ensure that they are gender-neutral. In addition, employees will have access to sex-disaggregated salary data and know the criteria used to define pay structures. This move towards transparency is significant in creating a gender-equal workplace and creating a more positive work environment.

CHROs and HR managers need to take notice of this change and implement the necessary measures to ensure that the gender pay gap is addressed within their companies.

About Vivian Acquah, CDE®

As an inclusive Workplace Wellness Advocate and Certified Diversity Executive, Vivian Acquah CDE® advises managers on how to keep their team members engaged, energized, and safe in a sustainable manner.

Vivian makes topics related to workplace wellness and DEI accessible to everyone. She provides people with the right tools at the right time to embrace inclusive changes, motivates them to think consciously, and inspires action.

Vivian’s mission is to help make the world a better place by creating thriving workplaces for EVERYONE. This is a promise not only to Vivian’s son, Orlando, and his generation but also to future generations.

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Disclaimer: Content on this blog is authored by multiple sources. While we do make every attempt to proofread and fact-check, unless authored our staff, the views expressed do not necessarily reflect those of The Society for Diversity and the Institute for Diversity Certification.