To reduce the salary gap between women and men, a directive provides for greater transparency on salaries. Its impact on businesses will be even greater.
Since its creation, the European Union (EU) has made equality between the citizens of the Member States one of its central objectives. Despite this noble goal, women active in the labor market are still considered, in terms of remuneration (and not only), as second-class citizens compared to men. Indeed according to Eurostat, in 2022, the gender gap in employment within the EU27 reached 12.7% in favor of men, with a maximum difference of 21.3% in Estonia, a minimum of 4 .3% in Italy, and only Luxembourg stands out, showing a difference of 0.7% in favor of women.
In order to find a solution to this discrimination which persists among almost all Member States, the European Union published, on May 17, 2023, Directive 2023/970 of May 10, 2023. This aims to strengthen the application of the principle of equal pay between women and men for equivalent work, based on pay transparency measures and specific law enforcement mechanisms.
Greater transparency
Employers will therefore have to inform candidates of salaries or salary ranges in job offers or before interviews, without being able to ask external candidates for their salary history. Workers will have access to data on pay gaps by gender and objective criteria for salary progression. Companies with more than 250 employees will have to publish their pay gaps every year, while those with 100 to 250 employees will do so every three years. If an unjustified discrepancy of more than 5% is detected, a joint assessment must be carried out. In addition, the directive also strengthens recourse to justice: employers will have to prove their compliance in the event of a dispute, and sanctions will include dissuasive fines. Finally, it integrates the fight against intersectoral discrimination and takes into account the needs of disabled workers.
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This directive, which must be transposed by the Member States within three years, once applied, will contribute to modifying the “macho” culture which characterizes society in a good part of the Member States. However, companies will need to prepare well in advance of its application because, beyond the complexities linked to higher administrative and employer costs, information transparency could also generate external and internal consequences.
The impact on the employer brand
We can hypothesize, without fear of contradiction, that in today’s hyperconnected world, information relating to salary levels will certainly also be disseminated outside organizations. Among the external consequences, the revelation of significant or unjustified pay gaps between men and women could harm the reputation of the organization, affecting its employer brand and its attractiveness for talents, especially for new generations who legitimately seem more sensitive on this important subject. In addition, this increased transparency could fuel competition between companies to attract and retain talent, therefore generating an increase in resources intended for payroll.
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Among the internal consequences, the discovery of salary gaps between women and men could generate a loss of confidence in the company on the part of female employees who could therefore turn to another employer capable of guaranteeing equal logic between women and men. . Furthermore, in addition to legal risks and possible sanctions, the adaptation of salary policies, aimed at reducing the pay gap between men and women, can generate significant salary costs, particularly in the event of retroactive adjustments, to which add high administrative costs for setting up monitoring, data collection and reporting systems, particularly for companies without robust mechanisms.
Where will the comparison end?
More generally, the natural and legitimate tendency of human beings to compare themselves to their colleagues would probably not stop at the comparison between the sexes, but could affect people working in the same division, in the same organizational unit , or even exercising a function of the same level. Companies must therefore prepare to face demands that any employee could make, regardless of their gender, which could generate additional employer costs.
This directive could represent an opportunity according to another logic. Beyond the objectives aimed at reducing or better aligning salary levels between women and men in the 27 Member States, and therefore determining a change towards a more inclusive and respectful culture for women, this directive could also contribute to establish a new order in the way wealth is distributed within organizations through salaries. And this, especially in large companies, where those who work at the top of the organization can obtain scandalous remuneration 500 times higher than those who work at the bottom of the ladder (as the case of Stellantis teaches us), so that in the 1960s, the ratio between the highest and lowest paid was 1 to 30.
Necessary support
Even if this directive pursues more than legitimate and necessary objectives, the effectiveness of its action will require time and resources to support companies so that they can contribute effectively to achieving the necessary equal economic treatment between women and men. The intrinsic risk, especially in countries furthest from an egalitarian culture, is that of carrying out the task from a formal point of view without really aligning substantially with the institutional objective of this directive.
So that the society of the different member countries can effectively achieve the desired level of civility in the treatment of its citizens in the workplace (example: Luxembourg), regardless of their gender, it is necessary for companies to be supported in the process. transparency of salary information and that the various States ensure the proper application of the directive. Normality will thus be achieved on the day, which we hope will not be far away, when, faced with the capacity of companies to pay women and men equally, these organizations will be perceived as the norm and not, in Brechtian terms, as “heroes from a cursed land”.
