On Thursday 4 March, the European Commission unveiled its proposal for a directive aimed at introducing binding European standards on wage transparency. Standards that it hopes will “strengthen the application of the principle of equal pay for equal work or work of equal value between men and women”.
The text presented differs slightly from the preliminary draft detailed earlier in our columns (see EUROPE 12664/1), but the main measures have, for the most part, remained unchanged.
In particular, the provision concerning the obligation to provide a job applicant with information on the level of remuneration for a position has been maintained as it stands. Similarly, the provision giving workers the right to obtain information on the average pay levels of their colleagues doing the same work or work of equal value.
There is also still a requirement that enterprises with at least 250 employees publish information on the pay gap between their female and male workers each year and provide, internally only, information on the pay gap between female and male workers doing the same work or work of equal value.
However, the clarification that this information should also include “bonuses, beyond the ordinary basic salary” has been struck.
It should be noted that the Commission has furthermore waived the requirement for States to attribute the amounts recovered through the fines provided for in the Directive to equality bodies.
“Inadequate tools” for trade unions
A battery of measures welcomed by the European Trade Union Confederation (ETUC), which however regretted that the proposal was “let down by inadequate tools to make it work in practice”.
The organisation regrets, first of all, that the directive limits pay audits to organisations with more than 250 employees.
It also criticises the reference only to “workers’ representatives” rather than trade unions, and fears that this could lead to the mobilisation of “fake unions” set up by employers, or even employers themselves choosing “workers’ representatives”. Representatives to whom the Commission confers, inter alia, the possibility of acting on behalf of employees in judicial or administrative proceedings.
Finally, the ETUC finds it problematic that the proposal gives employers the possibility to define themselves which jobs can be compared in terms of equal pay for work of equal value.
“The Directive will reduce secrecy on pay and shine a light on pay inequality. But it handcuffs women and unions who want to turn that into equal pay”, said ETUC Deputy General Secretary Esther Lynch.
How much does it cost companies?
The proposal is also met with scepticism on the part of businesses, which had already expressed their reluctance to the Commission, particularly in the context of the public consultation phases. Assuring the institution of their willingness to act to put an end to pay inequalities, many had however pointed to risks in terms of personal data protection and increased administrative burdens.
The Commission stressed to the press on Thursday that its proposal took account of the difficult situation in which many employers currently find themselves, particularly in the private sector. In particular, it will offer flexibility for SMEs.
“I am aware that presenting this proposal at a time of crisis and economic uncertainty may seem unwelcome to some. But we have carefully analysed the potential impact of this proposal”, insisted Commissioner Helena Dalli.
Providing pay data should cost between €379 and €890 a year for companies with more than 250 employees, according to the Commission.
Markus Beyrer, Director General of the employers’ organisation BusinessEurope, stressed that the proposal should not “complicate human resources management with excessive administrative burdens and open the way to undue litigation”.
He further considered that the final text should “respect national social partners’ competences for wage-setting” and allow for pay to be determined “according to individual performance and fully respect the confidentiality of individual pay”.
Negotiations to come
The text is now in the hands of the European Parliament and the Member States, some of which have so far been slow to move discussions on this kind of dossier forward. The proposal for a directive on gender equality in boards of directors has thus been blocked in the Council of the EU since 2013.
“We see a rather limited appetite from some Member States. Surprisingly, some Member States have already introduced measures in their legal framework”, noted the Vice-President of the Commission for Values and Transparency, Vera Jourova.
“I hope that this proposal will not meet with the same fate as other proposals we are still working on”, said Commissioner Dalli. Both, however, wished to be confident, saying they believed “in the need to put rules in place”.
On the parliamentary side, the project is not expected to meet too much resistance. Discussions are still ongoing to determine which parliamentary committee – the Committee on Employment and Social Affairs (EMPL) or the Committee on Women’s Rights and Gender Equality (FEMM) – will take the lead in legislative work on the issue, a European source told EUROPE.
Some within the institution would prefer to see it entrusted to the EMPL Committee “so that the question of equal pay is treated above all through the prism of defending a fundamental right in the sphere of employment”. The scenario of working in a joint committee has not, for the time being, been ruled out.
To view the proposal: https://bit.ly/3sTbuXN (Original version in French by Agathe Cherki)