Eurofound Research

Pay gaps between men and women – that is, when women earn less than men for doing the same work or work of equal value, or when the set-up of pay structures and career progression disadvantages one gender over another ‒ can arise for a variety of reasons, including direct and indirect discrimination. They can also stem from an undervaluation of work traditionally carried out by women. The Pay Transparency Directive goes some way towards addressing this by requiring companies to ensure that their pay structures are based on objective, gender-neutral job evaluation that supports the implementation of the work of equal value principle. It also encourages the social partners to take pay equity for the same or equivalent jobs into account in collective bargaining. This article reflects on this principle and how social partners can support its implementation.

Introduction

The principle that workers shall – irrespective of their gender – receive the same pay not only for the same type of work but also for performing work considered to be ‘of equal value’ has been an established part of the European Treaties since 1957.1 Furthermore, the Pay Transparency Directive ‒ currently undergoing transposition ‒ aims to ensure better implementation of the principle of equal pay, targeting individual employers responsible for bias-free wage setting for their employees. Key to wage setting in the EU are collective agreements, which cover approximately 60% of employees and thus represent a potentially powerful mechanism for advancing gender pay equity. How collective bargaining can support implementation of the equal pay principle – and which factors are limiting its potential in this regard ‒ is analysed and reflected upon in this article and in Eurofound's research report 'Equal value, equal pay: Concepts, mechanisms and implementation towards gender pay equity' and working paper 'The practical implementation of the work of equal value principle: Case studies'.

What does the Pay Transparency Directive say about work of equal value and collective bargaining?

Regarding the principle of equal pay for the same work or work of equal value, the directive includes several tangible measures, among them the following:

  • Member States must ensure that the concept of work of equal value in their national legislation is applied through four objective factors, in line with the case law of the Court of Justice of the European Union ‒ skills, effort, responsibility and working conditions ‒ and that employers are supported and guided in its application (Article 4).
  • Company pay structures must adhere to the principle of equal pay, based on non-discriminatory, objective and gender-neutral job classifications (recital 26, Article 4(4)).
  • The principle of equal pay is presented as an integral part of several pay transparency measures, including pay transparency prior to employment (Article 5) and in relation to the right to information (Article 7), reporting on pay gaps by ‘categories of workers’ (Article 9(1)(g)) and in joint pay assessments (Article 10).

The directive also explicitly recognises the role of collective bargaining in implementing measures to tackle pay discrimination and the latter’s adverse impact on the valuation of jobs predominantly carried out by workers of one sex (Article 13). Recital 45 further emphasises that social partners should ‘pay particular attention to matters of equal pay in collective bargaining’. Member States are encouraged to promote social partner engagement through measures that stimulate collective bargaining rights and support the development of gender-neutral job evaluation systems. Article 19 (and recital 29) regulates the choice of comparators in cases of alleged pay discrimination and establishes that such comparisons can be extended beyond individual employers to encompass any ‘single source establishing pay conditions’ that can rectify unequal treatment. This can include collective agreements covering multiple employers. This provision acknowledges that wage-setting mechanisms often transcend organisational boundaries and that the comparison can be invoked in case of alleged pay discrimination.

What is a gender-neutral pay structure?

While separate pay scales for men and women would constitute straightforward discrimination, having a single pay scale for all workers is not sufficient on its own, either. For a pay structure to fulfil the requirements of the directive it must be set up (or reviewed) on the basis of ‘objective’ and ‘gender-neutral’ criteria. In other words, each job position (irrespective of the worker holding it) must be evaluated according to the same set of criteria.2 This evaluation either assigns each job a specific ‘value’ or produces an overall ranking of jobs. Depending on the weighting of criteria used for the evaluation, different jobs are then grouped into ‘categories of equal value’ and the ensuing pay structure is set up so that jobs within the same category are entitled (in principle) to the same pay. There are, of course, justified exceptions that companies can consider ‒ such as how they reward experience, i.e. ‘seniority’, or individual performance – providing they still meet the criteria of gender neutrality and objectivity. Applying a gender lens in this process ensures that factors relating to jobs traditionally performed by women are not overlooked but appropriately considered, valued ‘correctly’ in terms of the work of equal value principle and remunerated accordingly. How this can be done and what needs to be considered are discussed in detail in Eurofound's research report and working paper.