COMMISSION STAFF WORKING DOCUMENT IMPACT ASSESSMENT Accompanying the document Proposal for a DIRECTIVE OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL to strengthen the application of the principle of equal pay for equal work or work of equal value between men and women through pay transparency and enforcement mechanisms
Date: 2021-03-04
Institutions: Directorate-General for Justice and Consumers, European Commission
Subjects: EU employment policy, economic discrimination, equal pay, equal treatment, gender equality, remuneration of work, sexual discrimination, working conditions

EN 

  EN 

   EUROPEAN COMMISSION  Brussels, 4.3.2021  SWD(2021) 41 final  COMMISSION STAFF WORKING DOCUMENT  IMPACT ASSESSMENT  Accompanying the document Proposal for a  DIRECTIVE OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL to strengthen the application of the principle of equal pay for equal work or work of equal value between men and women through pay transparency and enforcement mechanisms                   {COM(2021) 93 final} - {SEC(2021) 101 final} - {SWD(2021) 42 final}  
 
 
Contents 

GLOSSARY ........................................................................................................................ 3 
1. 
INTRODUCTION: POLITICAL AND LEGAL CONTEXT ............................... 4 
2.  PROBLEM DEFINITION .......................................................................................... 6 
2.1.  What is the problem? ......................................................................................... 6 
2.2.  What are the problem drivers? ........................................................................ 14 
2.3.  Why is it a problem? ........................................................................................ 17 
2.4.  How will the problem evolve? ........................................................................ 19 
3.  WHY SHOULD THE EU ACT? .............................................................................. 21 
3.1.  Legal basis ....................................................................................................... 21 
3.2.  Subsidiarity: Necessity of EU action ............................................................... 21 
3.3.  Subsidiarity: Added value of EU action .......................................................... 23 
4.  OBJECTIVES: WHAT IS TO BE ACHIEVED? ..................................................... 24 
4.1.  General objectives ........................................................................................... 24 
4.2.  Specific objectives ........................................................................................... 24 
4.3.  What is the baseline from which options are assessed? .................................. 24 
5.  SME TEST ................................................................................................................ 26 
6.  DESCRIPTION OF THE POLICY OPTIONS FOR EU LEVEL ACTION ............ 28 
6.1.  Options discarded at an early stage ................................................................. 28 
6.2.  Option 0: Status Quo ....................................................................................... 29 
6.3.  Option  1:  Legislative  action  to  create  transparency  for  individual 

workers ............................................................................................................ 29 
6.4.  Option 2: Legislative action to create transparency at employer level............ 31 
6.5.   Option 3: Legislative action to facilitate the application of and enforce 

the existing legal framework ........................................................................... 34 
6.6. Overview of the policy options .......................................................................... 38 
7.  WHAT ARE THE IMPACTS OF THE POLICY OPTIONS? ................................. 39 
7.1.  Option 0: Status Quo ....................................................................................... 39 
7.2.  Option  1:  Legislative  action  to  create  transparency  for  individual 

workers ............................................................................................................ 39 
7.3.  Option 2: Legislative action to create transparency at employer level............ 46 
7.4.   Option 3: Legislative action to facilitate and enforce the existing legal 

framework ........................................................................................................ 60 
8.  HOW DO THE OPTIONS COMPARE / PREFERRED OPTION .......................... 67 
8.1.  Effectiveness .................................................................................................... 67 
8.2.  Efficiency ........................................................................................................ 69 
8.3.  Coherence ........................................................................................................ 71 
8.4. Comparison of options ....................................................................................... 72 

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8.5.  Possible combination of options ...................................................................... 73 
8.6.  Preferred Package ............................................................................................ 74 
8.7.  Hypothetical  scenario  of  the  potential  economic  impact  of  the 

preferred package of measures ........................................................................ 75 
8.8.  Choice of legal instrument ............................................................................... 78 

9.  HOW  WILL  ACTUAL 

IMPACTS  BE  MONITORED  AND 

EVALUATED? ......................................................................................................... 79 
BIBLIOGRAPHY ............................................................................................................. 82 
ANNEXES ........................................................................................................................ 92 
Annex 1: Procedural information .............................................................................. 93 
Annex 2: Stakeholder consultation .......................................................................... 103 
Annex 3: Who is affected and how?........................................................................ 112 
Annex 4: Analytical methods .................................................................................. 119 
Annex 5: Initiative specific annex ........................................................................... 139 
Annex 6: Intervention logic ..................................................................................... 167 
Annex 7: Subsidiarity grid ...................................................................................... 168 
Annex 8: Job evaluation systems ............................................................................ 174 

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Term or 
acronym 

GLOSSARY 

Meaning or definition 

CJEU  

Court of Justice of the European Union  

COVID-19   Severe acute respiratory syndrome coronavirus disease 2019 

DG JUST   Directorate-General for Justice and Consumers of the European Commission 

ECSR 

EIGE  

European Committee of Social Rights of the Council of Europe 

European Institute for Gender Equality  

ETUC  

European Trade Union Confederation  

FTE  

FRA 

Full-Time Employment  

European Union Agency for Fundamental Rights 

GDPR  

General Data Protection Regulation 

GPG  

ILO  

Gender Pay Gap  

International Labour Organisation  

ISCED  

International Standard Classification of Education   

ISCO-08  

International Standard Classification of Occupations  

JRC 

LFS  

NACE  

Joint Research Center  

Labour Force Survey  

Statistical Classification of Economic Activities in the European Community 
(Nomenclature statistique des Activités économiques dans la Communauté Européenne)  

NFRD 

Non-Financial Reporting Directive 

RSB  

SCM  

SES  

Regulatory Scrutiny Board  

Standard Cost Model  

Structure of Earnings Survey  

SMEs  

Small and Medium Enterprises  

STEM  

Science, Technology, Engineering and Math  

TFEU  

Treaty on the Functioning of the European Union 

3 

 
 
 
 
1. 

Introduction: Political and legal context 

The right to equal pay between women and men for equal work or work of equal value 
has been a founding principle of the European Union since the Treaty of Rome in 1957. 
The  requirement  to  ensure  equal  pay  is  set  out  in  Article  157  TFEU  and  in  Directive 
2006/54/EC1  (the  ‘Recast  Directive’),  as  complemented  in  2014  by  a  Commission 
Recommendation on Pay Transparency2 (the ‘2014 Recommendation’). Despite this legal 
framework,  the  effective  implementation  and  enforcement  of  this  principle  in  practice 
remains a major challenge in the European Union. In 2019, the European Committee of 
Social Rights  identified the lack of pay transparency  as one of the key obstacles to  the 
implementation of the principle of equal pay3.  

The European Parliament  has repeatedly  called for more  action at EU level  to  enhance 
the application of the equal pay provisions4. Also the Council has asked for action both 
on  the  side  of  Member  States  and  on  the  side  of  the  Commission.  In  June  2019,  the 
Council  called  on  the  Commission  to  develop  concrete  measures  to  increase  pay 
transparency.  

The European Pillar of social rights includes gender equality and the right to equal pay 
among its 20 principles5. The EU Action Plan for 2017-2019 on tackling the gender pay 
gap6  specified  that  the  Commission  will  assess  the  opportunities  for  improving  pay 
transparency.  Following  European  Commission’s  President  von  der  Leyen’s 
announcement  in  her  political  guidelines7  to  introduce  binding  pay  transparency 

1  European  Parliament  and  the  Council,  Directive  on  the  implementation  of  the  principle  of  equal 
opportunities and equal treatment of women and men in matters of employment and occupation (recast), 
2006.  The  directive  consolidated  the  existing  directives  on  gender  equality  in  the  field  of  employment, 
incorporating CJEU case-law: Directive75/117/EEC on equal pay; Directive 86/378/EEC, as amended by 
Directive 96/97/EC, on equal treatment in occupational social security schemes; Directive 76/207/EEC, as 
amended  by  Directive  2002/73/EC,  on  equal  treatment  of  women  and  men;  Directive  97/80/EC,  as 
amended by Directive 98/52/EC, on the burden of proof in cases of discrimination based on sex. 
2 European Commission, Recommendation on strengthening the principle of equal pay between women and 
men through transparency, 2014. 
3 See also Commission evaluations and implementation reports referred to in footnote 11;  The European 
Committee of Social Rights (ECSR) monitoring of commitments under the European Social Charter (the 
Council of Europe treaty that guarantees fundamental social and economic rights) showed in 2019 that out 
of 15 countries (Belgium, Bulgaria, Croatia, Cyprus, Czechia, Finland, France, Greece, Ireland, Italy, the 
Netherlands, Norway, Portugal, Slovenia and Sweden), 14 are not compliant with set standards in the field 
of  equal  pay:  (1)  recognising    the  right  to  equal  pay  for  equal  work  or  work  of  equal  value  in  the 
legislation;  (2)  ensuring  access  to  effective  remedies  for  victims  of  pay  discrimination;  (3)  ensuring  and 
guaranteeing  pay  transparency  and  enabling  pay  comparisons;  and  (4)  maintaining  effective  equality 
bodies and relevant institutions in order to ensure equal pay in practice. Sweden was the only country to be 
found to be complaint with the European Social Charter.  
4 In its recent report, the Parliament underlines that pay transparency is crucial in counteracting unfair wage 
differentials and discrimination and urges the swift adoption of these measures. See: European Parliament, 
Employment and social policies of the euro area, 2020. 
5 The Pillar of Social Rights is about delivering new and more effective rights for citizens, built upon 20 
key principles.  
6 European Commission, EU Action Plan 2017-2019: tackling the gender pay gap, 2017, COM (2017)678 
final. See also the related Report on the implementation of the EU Action Plan 2017-2019 on tackling the 
gender pay gap, 2020, COM(2020) 101 final. 
7 See A Union that strives for more: My agenda for Europe  – Political Guidelines for the next European 
Commission 2019-2024, 2019. 

4 

 
                                                           
measures,  the  Commission  reaffirmed  its  commitment  to  present  this  initiative  in  the 
Gender Equality Strategy 2020-20258.  

The  present  initiative  follows  on  the  Commission’s  evaluation9  of  the  relevant  legal 
provisions (the ‘2020 evaluation’) and previous Commission work10. These assessments 
concluded that there was limited progress on enforcing the right to equal pay in Member 
States  and  evidenced,  in  particular,  vastly  distinct  and  largely  inefficient  systems 
operating  in  most  Member  States  –  making  equal  pay  an  inert  legal  provision.  The 
evaluation pointed to a number of problems deterring victims of pay discrimination from 
enforcing  their  right  and  deemed  to  require  further  action:  despite  the  2014 
Recommendation, a very limited number of countries put forward measures to improve 
transparency  in  pay  setting  systems  within  organisations;  key  legal  definitions  and 
concepts are not applied uniformly in practice and are insufficiently implemented across 
national legislations; victims have difficulties to claim their rights.  

This initiative aims at tackling the persisting inadequate implementation and enforcement 
of the fundamental right to equal pay and ensuring the respect of this right across the EU 
by  establishing  transparency  on  pay.  It  is  part  of  a  broader  package  of  measures  and 
initiatives  that  focus  on  tackling  the  root  causes  of  the  gender  pay  gap,  such  as  the 
adoption  and  implementation  of  the  Work-Life  Balance  Directive  2019/1158,  sectoral 
initiatives  fighting  stereotypes  and  ensuring  better  gender  balance,  and  the  proposed 
Directive  on  improving  gender  balance  on  company  boards  of  large  EU  listed 
companies11. In addition, the initiative is coherent with the initiative aimed at increasing 
reporting by companies of relevant non-financial information.12 It is also consistent with 
and  supported  by  the  EU  Minimum  Wage  initiative13  and  the  sustainable  corporate 
governance initiative14. 

the  Pay  Transparency  Recommendation  (SWD(2014)  59  final);  Report  on 

8 COM(2020)152 final. 
9 SWD(2020)50 final.  
10  Implementation  report  on  Directive  2006/54/EC  (SWD(2013)  512  final;  Impact  Assessment 
the 
accompanying 
implementation  of  Commission  Recommendation  on  strengthening  the  principle  of  equal  pay  between 
women and men through transparency (COM(2017) 671 final). 
11 European Parliament and the Council, Proposal for a Directive on improving the gender balance among 
non-executive directors of companies listed on stock exchanges and related measures, 2012. 
12 The present initiative would require certain employers to make information regarding the gender pay gap 
publicly available. Some of these employers may also be covered by the forthcoming revision of the Non-
Financial  Reporting  Directive  2014/95/EU  (NFRD).  The  publication  of  information  pursuant  to  both 
initiatives pursues different objectives; while the Pay Transparency initiative aims  at allowing workers to 
enforce  their  individual  right  to  equal  pay,  the  NFRD  aims  at  meeting  the  needs  of  investors  and  other 
stakeholders to appreciate the risks and social and environmental impacts of investments and companies’ 
operations respectively. Both initiatives will be aligned so that any public reporting on the gender pay gap 
pursuant  to  the  Pay  Transparency  Directive  by  companies  subject  to  the  NFRD  would  be  taken  into 
account in the future standards for non-financial reporting under the NFRD. 
13  The  minimum  wage  initiative  aims  at  improving  the  adequacy  of  minimum  wages.  This  will  have  a 
beneficial effect in addressing the gender pay gap in particular at the lower end of the wage distribution, 
including of women who represent a relevant share of total low paid workers. See COM(2020) 682 final. 
14 See https://ec.europa.eu/info/law/better-regulation/have-your-say/initiatives/12548-Sustainable-
corporate-governance  

5 

 
                                                           
While  addressing  the  implementation  of  the  principle  of  equal  pay  through  pay 
transparency,  this  initiative  takes  into  account  different  features  of  national  social 
dialogue and collective bargaining systems as well as the autonomy of social partners and 
their  contractual  freedom.  It  also  recognises  the  important  role  of  social  partners  in 
addressing gender pay inequalities, including through pay transparency. 

2. 

Problem definition 

2.1.  What is the problem? 

The problem tackled in this initiative is the failure to realise in the European Union the 
fundamental right  to equal  pay for the same  work or work of equal value, despite 
this right  being enshrined in EU law for more than 60  years. The information and data 
presented in the 2020 evaluation15 and in this chapter show that this failure persists16.  

The  failure  to  realise  the  right  to  equal  pay  means  that  women  and  men  may  still  be 
discriminated either directly or on the basis of pay structures that do not value the work 
of women and men equally, i.e. according to objective and gender-neutral criteria.  

In  many  cases,  discrimination  or  bias  is  the  result  not  of  deliberate  discriminatory 
behaviour but rather of a failure to grasp, both by workers and employers, what it means 
in practice to pay men and women equally for the same work or for work of equal value. 
17 This might not be straightforward, especially when it comes to ‘work of equal value’ 
since it must first be assessed what is the value of the jobs concerned and second whether 
the pay received by men and women for jobs of same value is not discriminatory on the 
basis of sex18. It is important to stress at the outset that under the current state of the law 
in  the  EU,  the  concept  of  ‘work  of  equal  value’  only  applies  to  different  occupations 
defined as of equal value in the same organisation. 

A number of legal cases illustrate the matter at stake. For instance, in a landmark case in 
Belgium  regarding  equal  pay  for  the  same  work,  a  female  researcher  in  the  European 
Trade Union Institute did not receive the same automatic promotion going with seniority 
as her male counterparts. The Labour Court of Appeal of Brussels found the employer’s 
pay  system  opaque  and,  referring  to  the  CJEU’s  decision  in  Case  109/88  Danfoss19, 
concluded that there had been gender-based pay discrimination.20 

15 SWD(2020)50. 
16 See e.g. European Paliament, ‘European Added Value Assessment on the application of the principle of 
equal  pay  for  men  and  womenfor  equal  work  of  equal  value’,  EAVA  4/2013,  9:  ‘[…]  no  matter  how  we 
evaluate the data, the pay gap remains, […]. In other words, […], pay discrimination is a real and persistent 
problem that continues to be detrimental to European (and not only European) women and their families.’. 
17 See Oelz M. et al., ILO Equal Pay: An Introductory Guide, 2013, page iii: ‘While the principle of equal 
remuneration  for  men  and  women  for  work  of  equal  value,  often  referred  to  as  “equal  pay”,  has  been 
widely endorsed, what it actually entails and how it is applied in practice has proved difficult to grasp.’. 
18 Work of equal value is therefore a somehow more difficult concept whose complexity is recognised also 
by  the  International  Labour  Organisation  (ILO)  who  introduced  it  with  the  Equal  Remuneration 
Convention (No. 100) in 1951. 
19  In  its  preliminary  ruling  on  the  Danfoss  case,  the  CJEU  found  that  ‘where  an  undertaking  applies  a 
system of pay which is totally lacking in transparency, it is for the employer to prove that his practice in the 
matter  of  wages  is  not  discriminatory,  if  a  female  worker  establishes,  in  relation  to  a  relatively  large 

6 

 
                                                           
 
In  another  case,  the  French  Supreme  Court  was  faced  with  an  equal  pay  claim  from  a 
female mushroom packer comparing her work with more highly paid male packers21. The 
Court noted that it was clear that women packers were systematically paid less than their 
male equivalents and that the employer could not produce any objective reasons for such 
difference between men and women doing the same work. 

A UK landmark case from 2018 concerned the right to equal pay for work of equal value. 
In this case, about 30,000 claimants, mostly women working in ASDA supermarkets as 
shop-floor  staff,  brought  equal  pay  claims  against  their  employer  on  the  basis  of 
comparisons  with  the  pay  of  male  workers  employed  at  depots  as  part  of  ASDA's 
distribution operation. The Court of Appeal of England and Wales held that the women 
were  discriminated  as  the  work  of  the  shop-floor  staff  should  be  considered  of  equal 
value as the work in the distribution center.22  

It was only possible for the claimants in the above cases to claim their right because they 
had  the  necessary  information  on  the  average  pay  levels  of  their  male  colleagues  and 
because,  in  the  UK  case,  they  were  able  to  group  their  30,000  claims.  Landmark  cases 
like these only show a small top of a possible iceberg. Many women in the EU having 
salaries  below  those  of  their  male  colleagues  doing  the  same  work  or  work  of  equal 
value,  do  not  necessarily  know  about  it  as  they  do  not  have  the  necessary  information 
about average pay levels. This means they cannot enforce their right to equal pay. Lack 
of  transparency  thus  hinders  uncovering  pay  discrimination  and  allows  discriminatory 
pay structures to remain in place. 

Gender pay discrimination and the gender pay gap 

Individual pay discrimination and systemic bias in pay structures are only one of the root 
causes23  of  the  gender  pay  gap,  besides  other  causes  such  as  horizontal  and  vertical 
segregation.  The  gender  pay  gap  accumulates  to  and  remains  at  14%  in  the  European 
Union overall.24 

From a policy perspective, it would be useful to know in which sectors/occupations/types 
of  employment  gender-based  pay  discrimination  is  more  widespread  or  whether  pay 
discrimination  affects  some  groups  of  workers  more  than  others  (e.g.  among  specific 

number  of  employees,  that  the  average  pay  for  women  is  less  than  that  for  men.’  (Case  109/88  Danfoss 
[1989] ECR 3199, at paragraph 16). 
20 Cour Trav. Bruxelles, 19.10.2004 (Chr.D.S., 2005, 16, obs. J. Jacqmain). 
21 Case No. 95-41694 of 12 February 1997. See Burri, S., National cases and good practices on equal pay, 
2019, for other examples. 
22 England and Wales Court of Appeal (Civil Division),  Asda Stores Ltd v Brierley  & Ors, 2019. [2019] 
ICR 1118, [2019] WLR(D) 56, [2019] EWCA Civ 44, [2019] IRLR 335, [2019] 2 CMLR 18, [2019] 4 All 
ER 450. Available at: https://www.bailii.org/ew/cases/EWCA/Civ/2019/44.html.  
23 See Annex  5, section 2 below – on the other root causes, in particular sectoral segregation. 
24 The ILO Global Wage Report 2018/19 shows not only that a persisting feature of labour markets around 
the  world  is  that  women  earn  on  average  less  than  men  do,  but  more  importantly  that,  though  in  many 
countries  women  are  more  highly  educated  than  men  within  the  same  occupational  categories,  they 
nonetheless earn lower wages. This illustrates the fact that women tend to have lower wage returns for their 
education  than  men,  even  when  they  work  in  the  same  occupational  category.  See  International  Labour 
Organisation, 2018, p.xvii.  

7 

 
                                                                                                                                                                            
contract types or age groups). However, precisely quantifying the overall size of gender-
based pay discrimination at that level is not possible as of today.  

Indications on the existence of the problem of pay discrimination and gender bias in pay 
settings can be derived from available EU statistics on the gender pay gap at aggregate 
national  level  (e.g.  the  Structure  of  Earnings  survey  (SES)  or  other  national  data)  and 
from the analysis of the related SES micro-data.  

The ‘unadjusted’25 gender pay gap can be decomposed into two parts. A first component, 
the  ‘statistically  explained’  part,  is  the  gap  between  male  and  female  average  earnings 
due to the differences in the average characteristics (sector of activity, age, occupation, 
full time versus part time, etc.)26 of male and female employees.  

The second, residual component measures the difference between the financial returns to 
men and women with identical characteristics. It depends on any other factor for which 
no observable variable  was  available, measurable or omitted from  the analysis, such as 
includes  gender  pay 
pay  discrimination.  This  second, 
discrimination and accounts for 2/3 of the gender pay gap in the EU Member States.27 It 
is also the highest portion of the national pay gap in 21 out of 24 countries analysed in 
the support study28.  

‘unexplained  part’ 

The  same  study  shows  that  the  relevance  of  the  unexplained  part  is  confirmed  also  at 
sectoral  level.  The  unexplained  part,  including  pay  discrimination,  is  the  largest  factor 
responsible  for  gender  pay  differences  at  sectoral  level.  It  is  more  important  than  the 
‘occupation’  factor,  which  is  the  second  largest  cause.  In  other  words,  even  when 
excluding  the  statistical  impact  on  the  difference  in  pay  related  to  working  in  different 
sectors and occupations (i.e. women work in sectors and occupations which are generally 
less paid), the analysis of pay gap data still points to a potential problem with respect of 
equal pay (see Annex 5.2). This finding does not necessarily apply to all employers. The 
only  way  to  ascertain  whether  pay  discrimination  actually  exists  is  to  recalculate  the 
unexplained  gender  pay  gap  at  organisational/employer  level  and  verify  whether  these 
differences subsist and why. 

Moreover, as explained above, under the current case law of the Court of Justice of the 
European  Union,  workers  can  enforce  their  right  to  equal  pay  only  in  comparison  to 
workers  within  the  establishment  in  which  they  work  or,  beyond  such  establishment, 
when  the  wage  setting  is  derived  from  a  single  source  (e.g.  a  parent  company  in  a 

25 It is called ‘unadjusted’ because it does not correct for national differences in individual characteristics 
of employed women and men. It is defined as the the difference between the average gross hourly earnings 
of women and men expressed as a percentage of the average gross hourly earnings of men. See Eurostat, 
Gender pay gap statistics, 2018, for details. This indicator refers to the national averages and the weighted 
EU average. The same concept can be computed also at employer level with their specific earnings data. 
26 Note that the fact that these differences can be linked to objective factors does not necessarily mean that 
they are  free from gender bias. For instance, the choice of education, occupation and work  pattern might 
have  been  constrained  by  (unconscious)  gender  bias.  These  issues  are,  however,  out  of  the  scope  of  this 
initiative.  
27 Eurostat, 2018, table 3, ex. 4, p. 16. 
28  Micro-data  for  the  SES  database  are  available  with  different  granularity  for  the  MS,  therefore  the 
computations could be carried out only for 24 countries. See Annex 4 for details.  

8 

 
                                                           
corporate  group)  setting  the  working  conditions  including  pay.29  As  a  result,  the 
occurrence and  the  extent of pay discrimination can only be measured at employer 
level by comparing categories of workers doing the same work or work of equal value as 
defined by a given employer. 

Other  relevant  indications  of  possible  pay  discrimination  to  be  further  explored  at 
employer  level,  which  the  statistical  analysis  from  the  support  study  evidences  at 
aggregate level, include: 

  Pay  penalties  in  hourly  pay30  for  part-time  jobs  (compared  to  full-time).  Since 
part-time  jobs  are  predominantly  held  by  women31,  this  indicates  indirect 
discrimination:  even  if  penalties  apply  in  a  gender-neutral  way,  in  practice  they 
put  women  at  a  particular  disadvantage  as  regards  pay.  At  employer  level,  it 
should be checked whether this difference is justified by some factor that cannot 
be captured at  aggregate level  (e.g. in  case part-time is  coupled with  exemption 
from  some  specific  tasks  performed  instead  by  the  full-time  employees  in  the 
same category). 

  The pay gap is higher in managerial occupations and among graduate workers. 
The  reason  for  this  may  be  that  women  in  such  positions  are  not  aware  of  the 
value of their work and do not request, negotiate or obtain their wages in the same 
way as men do. The peaks in high-pay occupation statistics highlight how much 
wage  negotiation  processes  influence  the  gendered  pay.  At  employer  level,  one 
should check whether the difference persists  when everything else is  equal  (e.g. 
task performed, level of responsibilities, quality of deliverables etc.). 

in 

the  same  sector  and  with  otherwise 

  Women  earn  less  and  work  in  lower  paid  occupations  than  men  do,  even  if 
working 
identical  observable 
characteristics;  this  holds  true  for  70  out  of  72  investigated  sectors  (see  Annex 
5.2). This puts into question the notion that women ‘have a preference’ for lower 
paid  occupations  and  raises  instead  concerns  that  they  are  to  some  extent 
constrained  into  undervalued  female-dominated  occupations,  and  not  only 
sectors. At employer level, one can verify whether this is the case by looking into 
job  descriptions/definitions  versus  attributed  responsibilities.  In  other  words, 
checking  whether  e.g.  the  tasks  performed  are  identical  (‘same  work’),  but 
labelled differently, or require skills that are not properly recognised and valued 
(e.g. social skills) because of gender bias (‘equal value’). 

29 Case C-320/00 Lawrence, ECLI:EU:C:2002:498. 
30  In  the  spirit  of  the  Directive  2006/54/EC,  assuming  all  characteristics  being  equal,  part-time  workers 
should have lower monthly earnings, not lower hourly pay. 
31 Around 30% of women (15-64) – as compared to only 5% of men – in the EU are working part-time due 
to care responsabilities. Source: Eurostat, LFS, data code lfsa_epgar. 

9 

 
                                                           
in 

  With regard to irregular payments (i.e. fringe benefits32), women have a lower 
job-related  cash  benefits,  with  particularly  pronounced 
participation 
participation gender gaps in SE and NO and the UK. Moreover, these payments 
drop sharply in women’s late careers in terms of payment receipts (cash and in-
kind  benefits)  compared  to  men.  For  those  who  receive  them,  gender  gaps  in 
monetary fringe benefits are much higher than gender gaps in (regular) wages. 
In 22 countries, the magnitude is 1.5 to 10 times higher for fringe gaps than for 
wage gaps. A large review of research found that employers systematically under-
reward women performing relatively similarly to or better than men.33 Again, the 
possible reasons for these differences might be found at employer level. 

To  sum  up,  differences  in  pay  by  gender  drawn  from  available  statistics,  both  at  EU, 
national  and  sectoral  level  tend  to  indicate  pay  discrimination.  These  same  differences 
might or might not turn out to be perfectly legitimate from an equal pay perspective when 
verified  at  an  individual  employer  level.  Nevertheless,  in  countries  where  pay 
transparency  measures  have  been  introduced,  an  important  number  of  employers 
discovered  that  pay  differences  could  not  be  explained  from  an  equal  pay  perspective 
(see below). 

Empirical evidence of pay discrimination 

The empirical analyses also show indications that pay discrimination takes place even in 
countries  with  the  highest  gender  equality  ratings.34  Evidence  from  countries  that 
introduced pay transparency measures suggest that the latter allowed gender bias in pay 
to come to light (see box below).  

After  pay  audits  were  introduced in  Sweden,  over  40%  of  (surveyed)  employers  identified  and 
corrected unjustified wage differences between women and men.35 In Iceland, a survey among 76 
employers  credited  with  the  Equal  pay  standard  certification  revealed  that  the  results  of  wage 
analyses prompted corrections in salaries of staff and of groups, as well as changes of job titles or 
reviews  of  perks  and  bonuses.36  According  to  a  preliminary  reporting  on  the  evaluation  of  the 
Transparency  Act  in  Germany  (Federal  Republic  of  Germany,  2019),  43%  of  the  employers 
surveyed  had  reviewed  their  pay  structures  as  a  result  of  assessments  under  the  Transparency 
Act.37 In France, the first phase of the implementation of the Equality Index showed that: (i) 1 out 

32 These include only cash fringe benefits. SES data includes information on in-kind benefits only for five 
MS plus NO and UK. The findings on participation of women and men in such benefits are mixed. In all 
countries but one, the magnitude of in-kind benefits was much lower than that of cash benefits. 
33  Joshi,  Aparna  et  al.,  ‘When  can  women  close  the  gap?  A  meta-analytic  test  of  sex  differences  in 
performance and rewards’, Academy of Management Journal, 2014, carried out a meta-analysis of nearly 
two hundred studies conducted across hundreds of thousands of employees between 1985 and 2013 on the 
differences in performance evaluations and organizational rewards such as salary, bonuses and promotions 
between male and female workers. 
34 Iceland ranks  first in the  Global Gender Gap Index 2020 of the  World Economic  Forum.  Finland and 
Sweden are 3rd and 4th in the world, repectively.  
35 See Jamstalldhetsfeministern, The Milion Study (Miljongranskningen), 2008.  
36  See  European  Commission,  The  EU  Mutual  Learning  Programme  in  Gender  Equality  Equal  Pay  - 
Summary Report, 2019.  
37  See  Bundesministerium  für  Familie,  Senioren,  Frauen  und  Jugend,  Bericht  der  Bundesregierung  zur 
Wirksamkeit des Gesetzes zur Förderung der Entgelttransparenz zwischen Frauen und Männern, 2019.   

10 

 
                                                           
of 3 employers did not respect the legal obligation to grant the statutory salary increase to women 
returning  from  maternity  leave  in  undertakings  of  over  1,000  workers  which  scored  below 
75/100;  whilst  (ii)  1  out  of  5  employers  did  not  respect  this  legal  obligation  in  undertakings 
between  250  and  1,000  workers  which  scored  below  75/100.38  Without  transparency  measures 
such as the Equality Index, workers and employers would not have been aware of unjustified pay 
differences and no further action would have been taken. Finally, the Institute for Public Policy 
Research reports that although equal pay cases made up 11% of all labour court cases in the UK 
in 2017, ‘many more cases on unequal pay go unchallenged’. 39 

Public perception of gender pay discrimination 

Results  of  recent  surveys  on  pay  discrimination  show  a  non  negligible  perception  of 
gender pay discrimination. The majority of respondents (60%) in the public consultation 
carried out for this impact assessment, though not a representative sample, reported that 
they have experienced gender pay discrimination directly or know someone who has. In 
addition, a significant number of respondents (39%) think that women and men are not 
paid  equally  in  their  organisation.  This  corresponds  to  data  gathered  in  surveys  on 
discrimination  more generally.40 For instance, over a third (35%) of respondents  across 
the  EU  think  discrimination  based  on  gender  is  widespread  in  their  country  –  ranging 
from  over  50%  in  France  to  16%  in  Bulgaria41.  When  asked  about  gender  equality  in 
their  company,  only  half  of  respondents  in  the  EU  believe  that  female  and  male 
employees are paid the same for equivalent positions by their employer  – ranging from 
68% in the Netherlands to 30% in Czechia42. 

A  study  in  Belgium  found  that  three  in  four  women  workers  have  faced  at  least  one  form  of 
discrimination, prejudice or issue at work in relation to their pregnancy or maternity; 12% have 
been  discriminated  in  terms  of  pay  or  career43.  A  survey  conducted  in  Ireland  showed  that 
‘women are almost twice as likely as men to experience discrimination at work, in terms of pay 
and promotion’44.  

38  See  Ministère  du  travail,  Index  de  l’égalité  professionnelle  entre  les  femmes  et  les  hommes  -  Point 
d’étape de son déploiement auprès des entreprises de plus de 250 salariés, Dossier de Presse 17 Septembre 
2019. 
39  Institute  for  Public  Policy  Research,  The  Fair  Pay  Report,  How  pay  transparency  can  help  tackle 
inequalities,  2018,  p.  9  (there  were  a  total  of  22,531  equal  pay  cases  before  HM  Courts  and  Tribunals 
Service and Employment Tribunal in 2018). 
40  European  Commission,  Special  Eurobarometer  465:  Gender  Equality,  2017.  Public  consultations 
launched  by  the  Commission  on  discrimination,  in  particular  discrimination  based  on  sex  including  in 
regard to pay, attracted an impressive interest by citizens and other stakeholder groups. For instance, the 
public consultation on a legislative initiative on strengthening the principle of equal pay between women 
and men through pay transparency, the public consultation on the gender equality Strategy 2020-2024, and 
the public consultation on the evaluation of the provisions in the Directive 2006/54/EC implementing the 
Treaty principle on 'equal pay' received 559, 1335 and 386 answers, respectively. Overall, citizens’ views 
converge on gender equality matters, whilst employers tend to engage less with the problem. 
41 European Commission, Special Eurobarometer 493: Discrimination in the EU, 2019. 
42 European Commission, Special Eurobarometer 465, Gender Equality, 2017. 
43 See Institute for Equality between Women and Men,  Grossesse au travail. Expériences de candidates, 
d'employées et de travailleuses indépendantes en Belgique, 2017.   
44  See  ESRI,  Who  experiences  discrimination  in  Ireland?  Evidence  from  the  QNHS  Equality  Modules, 
2017. 

11 

 
                                                           
Legal cases 

Successful legal cases45 equally point to gender pay discrimination. The number of cases 
concerning  pay  discrimination  is  extensive  in  the  UK46  and  France47,  whilst  being 
relatively  rare  in  other  countries.  However,  case  law  statistics  most  probably  do  not 
accurately reflect  the size of the problem.  In many cases, workers  are not  aware of the 
fact that they are underpaid on the basis of sex (lack of transparency). In addition, several 
Member States reported, in the targeted consultation, that these numbers are also under-
representative  due  to  procedural  obstacles  in  claimants’  access  to  justice  and  to  the 
prevalence  of  out  of  court  settlements48.  Among  trade  unions,  the  large  majority  of 
respondents  highlighted that it is ‘difficult’ for their members to enforce equal pay rights 
in their country for various reasons while one third of employer associations identify that 
there  is  difficulty  in  assessing  work  of  equal  value  without  otherwise  reporting 
difficulties to any significant level (See Annex 2). 

Other circumstantial evidence 

In practice, gender norms in the workplace, in particular on work valuation, have been 
shown  to  result  in  labour  market  discrimination  against  women49,  and  therefore  in 
differences  in  pay,  in  various  ways.  Not  all  skills  relevant  for  today’s  modern  service 
economy  are  valued  in  more  traditional  job  valuations.  For  instance,  an  analysis  of  the 
retail sector in France50 showed that occupational skills such as having a sense of human 
relations and ability to serve with care, skills that are highly relevant in retail, are mostly 
considered as innate and are therefore not valued in the evaluation of the position of retail 

45 For instance, in  October 2019, a French retired woman has received 161,000 euros in compensation for 
unequal  pay  compared  to  a  male  colleague  during  her  41-year  career  (Labour  Tribunal  of  Nantes).  (Le 
Figaro, Elle obtient 161.000 euros aux prud’hommes pour avoir été moins payée qu’un collègue masculin, 
23/10/2019.) In Malta, a female employee was found to be receiving some 6,000  euros per year less than 
her  male  colleagues.  (Times  of  Malta,  Woman  finds  male  colleagues  are  paid  €500  more  per  month  - 
investigation proves her right, 24/01/2018). See Burri, S., National cases and good practices on equal pay, 
2019 for further examples. 
46 In the UK, the number of legal cases and the size of the settlements point to widespread discriminatory 
pay practices (O’Reilly, J. et al., ‘Equal Pay as a Moving Target: International perspectives on forty-years 
of  addressing  the  gender  pay  gap’,  Cambridge  Journal  of Economics,  Volume  39,  Issue  2,  March  2015; 
Deakin, S. et al., ‘Are litigation and collective bargaining complements or substitutes for achieving gender 
equality? A study of the British Equal Pay Act’, Cambridge Journal of Economics, 2015). The analysis of 
a number of equal pay cases carried out for the UK Impact assessment before introducing pay transparency 
measures in 2014 revealed that employers are often still  not able to show any clear rationale  for the pay 
rates that they offer individuals. From a sample of 41 successful equal pay cases over the last decade, less 
than  a  quarter  appeared  to  have  a  gender-neutral  salary  structure.  The  situation  may  be  expected  to 
gradually improve as a result of the mandatory pay transparency measure in the UK. 
47 The targeted consultation received replies from only 10 Member States, which indicated no case (LT, SI) 
up to a large number of cases (FR: 9,508 in 2019, a six-fold increase in 3 years – from 1605 in 2016).  
48 CZ, DE, DK, FR, IT, MT, RO, SI, SE. 
49 See for example Murphy E., Oesch D., The Feminisation of Occupations and Change in Wages: A Panel 
Analysis of Britain, Germany, and Switzerland, 2015, pp. 1 and 20-21, ‘wage disparities between male and 
female occupations are, to some extent, rooted in unequal gender norms that accord higher value to male 
work effort, and thus imply labor-market discrimination against women’;  Auspurg K., Hinz T., Sauer C., 
‘Why  Should  Women  Get  Less?  Evidence  on  the  Gender  Pay  Gap  from  Multifactorial  Survey 
Experiments’, American Sociological Review, 82(1), 2017, p. 203. 
50  A-F.  Bender,  F.  Pigeyre,  ‘Job  evaluation  and  pay  equity:  stakes  and  methods’,  Conference  EURAM, 
2014.  

12 

 
                                                           
workers.  Also,  the  estimation  of  potential  productivity  of  prospective  workers  that 
employers  must  make  in  order  to  take  decisions  at  hiring/evaluation  point51  can  be 
influenced,  consciously  or  unconsciously,  by  gender  bias;  lacking  specific  information, 
employers  may  tend  to  rely  on  gender  biased  assumptions  or  experiences52.  A  bias 
towards  more  critical  review  of  women,  particularly  as  for  personality  aspects,53  is 
especially prevalent for jobs traditionally held by men and has obvious consequences in 
self-perpetuating  differences  in  pay.  A  gender  bias  has  also  been  evidenced  in 
wage/rise/bonus  negotiations,  showing  that  the  frequency  and  outcomes  of  pay 
negotiations  are  not  gender-neutral.54  Gender  norms  influence  both  women  employees 
(who  tend  to  negotiate  less55  and  have  lower  expectations  as  to  salary  level56)  and 
employers  (e.g.  expecting  that  women  will  accept  lower  pay  offers  than  men;  or 
perceiving their request differently).  

Impact of intersectional discrimination 

Finally,  it  is  worth  mentioning  that  the  problem  of  pay  discrimination  is  likely  to  be 
more  profound  for  women 
incurring  also  other  types  of  discrimination 
(intersectionality), for instance for women with a minority racial or ethnic background 
or a disability.57 Other groups are also more likely to be affected by pay discrimination 
such as single parents (of which 85% are women)58 and LGBTIQ people59.  

51  See  Annex  5  for  a  short  discussion  on  the  relation  between  employers  rational  (profit  maximising) 
behaviour and discrimination. 
52 Expectations about the traits and capabilities of women and men may produce biased evaluations of their 
respective  competencies.  Men  can  be  seen  as  a  good  match  for  high-status  roles  such  as  leadership  and 
women as more adept for interpersonal roles such as nurse or teacher  – see literature quoted in Brosi, P.; 
Schwarzmüller, T.; Welpe, I., Ensuring equal pay and equal access to employment through gender-neutral 
job evaluation and classification, 2015. Morevoer, there might be an underlying assumption that men are 
the  sole/main  ‘bread  earners’  in  the  family,  provided  for  through  their  salary,  and  women  are 
secondary/complementary earners, whose salary does not require financing an entire family and therefore 
somehow less relevant. 
53  An  example  is  the  ‘abrasiveness  trap’,  studied  by  Snyder,  K.,  ‘The  abrasiveness  trap:  High-achieving 
men and women are described differently in reviews’, Fortune, 2014. 
54 For instance, a 2012 study (Leibbrandt,  A.; List J.A., ‘Do women avoid salary negotiations? Evidence 
from a large-scale  natural field experiment’,  Management Science, 2012  – published in  2015) found that 
women were less likely to negotiate their salary. However, when researchers explicitly told all job seekers 
that  pay  was  negotiable,  this  ‘negotiation  gap’  disappeared  completely.  For  an  overview  of  research  on 
how  salary  transparency  affects  gender  pay  differences,  see  Chamberlain,  A.,  ‘Is  Salary  Transparency 
More Than a Trend?’, Glassdoor Economic Research Report, 2015. 
55 See e.g. Babcock et al., ‘Nice girls don't ask – Women negotiate less than men – and everyone pays the 
price’, Harvard business review, 2003. 57% of men against only 7% of women negotiated. 
56 Auspurg K., Hinz T., Sauer C., ‘Why Should Women Get Less? Evidence on the Gender Pay Gap from 
Multifactorial  Survey  Experiments’,  American  Sociological  Review,  82(1),  2017,  179–210;  Davison,  H., 
‘The Paradox of the Contented Female Worker: Why Are Women Satisfied with Lower Pay?’, Employee 
Responsibilities and Rights Journal, 2014. 
57 See AAUW, Black Women & the Pay Gap. Available at: https://www.aauw.org/resources/article/black-
women-and-the-pay-gap/.  
58 See EIGE, ‘Poverty, gender and lone parents’, EU Review of the implementation of the Beijing Platform 
for Action, 2016. 
59  European  Union  Agency  for  Fundamental  Rights,  EU  LGBT  survey  -  European  Union  lesbian,  gay, 
bisexual and transgender survey, 2014, ‘25% of the respondents who had a paid job during the previous 
five  years  said  they  experienced  unequal  treatment  with  respect  to  employment  conditions  or  benefits  in 
this  period  because  of  having  a  same  sex  partner.  […]  Of  those  transgender  respondents  who  were 

13 

 
                                                           
 
Lack of data on the extent of pay discrimination 

It is hard, at aggregate level, to know whether differences observed on the labour market 
(e.g. in terms of salary level, bonuses, promotions) result from employers’ discriminatory 
behaviour  or  from  gender-biased  pay  setting  practices  as  opposed  to  legitimate 
differences  stemming  from  objective  factors,  e.g.  different  rewarding  of  merit60. 
Discriminatory  behaviour  is  rarely  openly  stated;  the  reasons  for  differential  treatment 
are  often  only  in  the  mind  (consciously  or  unconsciously)  of  the  perpetrators  and  their 
victims61  or  they  are  hidden  in  pay  structures  which  have  not  been  evaluated  for  many 
years.  It  is  therefore  difficult  to  provide  specific  and  extended  data  about  pay 
discrimination under today’s rules. Promoting and realising pay transparency at employer 
level  will  increase  the  amount  of  data  available  and  may  thus  enable  to  fine-tune  the 
statistical  analysis of the gender pay  gap, providing a better understanding of the share 
which is justified by objective factors and the share which is not justified objectively, and 
thus likely to be linked to gender pay discrimination. 

2.2.  What are the problem drivers? 

The  intervention  logic  (see  Annex  6)  depicts  the  two  key  problem  drivers,  namely  i)  a 
market  failure  linked  to  the  asymmetry  of  pay  information  at  employer  level  and 
persisting  gender bias in pay setting mechanisms and valuation  of women’s work, ii) a 
regulatory  failure  linked  to  an  inconsistent  and  inadequate  application  of  key  legal 
concepts,  in  particular  the  concept  of  ‘work  of  equal  value’,  and  procedural  obstacles 
such  as  a  lack  of  proper  remedies  and  an  insufficient  victims’  support.  Both  of  these 
drivers  leave  room  for  pay  discrimination  to  appear  at  individual  but  also  at  employer 
level. 

1)  Market failure - asymmetries of information on pay and persisting bias in pay 

Pay  discrimination  can  be  viewed  as  a  market  failure  caused  by  information 
asymmetries between worker and employer about market wages. 

This  asymmetry  creates  a  problem  for  individual  workers,  as  they  do  not  have  the 
information necessary to understand the relative value of their work62 compared to that of 
their  colleagues  of  opposite  sex  and  therefore  to  detect  sex-based  pay  discrimination 
when  they  negotiate  wages63.  In  many  instances,  the  information  may  simply  not  be 
available, due to a lack of transparency in wages and wage setting.  

The  problem  of  information  asymmetry  may  be  reinforced  because  of  other  factors. 
Workers may be reluctant to ask for such information because of fear of victimisation, or 

employed  in  the  previous  five  years,  around  a  third  (35%)  experienced  this  type  of  unequal  treatment  at 
work  during  this  period,  compared  with  ca  one  in  four  lesbian  (26%),  gay  (24%)  or  bisexual  (20%  of 
bisexual women and 23% of bisexual men) respondents’, p. 32. 
60 See Annex 8 of European Commission, Evaluation SWD(2020)50 on the difficulties of measurement of 
pay discrimination and other types of discrimination more in general. 
61    European  Agency  for  Fundamental  rights,  Handbook  on European  non-discrimination  law,  2011,  pp. 
123- 124. 
62  One  third  of  employees  in  the  EU  are  unaware  of  the  salaries  of  their  immediate  colleagues 
(Eurobarometer 465). 
63 Trotter, R.G. et al., ‘The new age of pay transparency’, Business Horizons, 2017. 

14 

 
                                                                                                                                                                            
because  of  a  prohibition  or  cultural  reticence  to  discuss  salary  levels.  Moreover,  their 
own  expectations64  on  pay  can  be  gender-biased  (i.e.  stemming  from  gender  norms65). 
This  might  happen  because  women  tend  to  compare  their  salaries  to  other  women’s 
salaries66 and might therefore simply not be aware of a gender wage inequality in their 
occupation67. Furthermore, people tend to compare themselves with workers belonging to 
the same job  category but  do not  normally question whether the occupation is  possibly 
only labelled differently or is of equal value to their own. Pay differences may therefore 
look justified while they are not (i.e. they cannot be justified by objective, gender-neutral 
factors).  Finally,  as  indicated  above,  gender  norms  might  also  discourage  women  from 
self-advocacy68,  lower  the  likelihood  that  they  negotiate  salary  offers69  and  raises70  or 
lessen the results of such negotiations71 in comparison to those of their male colleagues72. 
Lack  of  pay  transparency  contributes  to  pay  discrimination  remaining  hidden  and  its 
effects accumulate from point of entry into the labour market along the whole career.  

This implicitly creates a problem also at employers’ level: the fact that discrimination is 
not known by individuals and therefore rarely challenged in practice masks the problem 
of  discrimination  at  employer  level,  even  in  the  case  of  employers  who  want  to  treat 
their employees equally on the basis of sex.  

64 The so-called paradox of ‘the contented female workers’ shows that female workers might end up being 
paid less than  men but being  more  satisfied of their  wage,  in part because they consider lower  wages as 
justified. The concept was originally introduced by Crosby F., Relative Deprivation and Working Women. 
New York: Oxford University Press, 1982. More recently, Mueller C.W. et al, found, with data collected 
from  30  countries,  that  the  paradox  is  essentially  a  universal,  worldwide  phenomenon.  Recent  literature 
(Valet, P., ‘Social Structure and the Paradox of the Contented Female Worker: How Occupational Gender 
Segregation Biases Justice Perceptions of Wages', Work and Ocupations, 2018) contested the existence of 
inherent differences in justice perception between women and men. See Mueller C.W. et al, ‘The contented 
female worker: Still a paradox?’, Hegtvedt, K.A. and Clay-Warner, J. Justice, 2008. 
65  Avent-Holt,  D.,  &  Tomaskovic-Devey,  D.,  ‘A  relational  theory  of  earnings  inequality’.  American 
Behavioral Scientist, 2014. 
66 Research also shows a gendered attitude towards privacy on wages. Women tend to be more private and 
less informed about the market value of labour than men (Babcock et al., ‘Nice girls don't ask  – Women 
negotiate  less  than  men  –  and  everyone  pays  the  price’.  Harvard  Business  Review,  2003).  Cullen  and 
Pakzad-Hurson also find in a field experiment that women are more likely to keep the information received 
private  while  men  will  disseminate  it  among  their  male  peers,  causing  them  to  renegotiate  bonuses  with 
their employer. (Cullen, Z.B. and Pakzad-Hurson B., ‘Equilibrium Effects of Pay Transparency in a Simple 
Labor Market’ Working Paper, April 2019). 
67 Castilla, E.J., ‘Accounting for the Gap: A Firm Study Manipulating Organizational Accountability and 
Transparency  in  Pay  Decisions’,  Organization  Science,  2015;  Kim,  ‘Pay  Secrecy  and  the  Gender  Wage 
Gap in the United States’, Industrial Relations, 2015. 
68  O’Neill,  O.A.  and  O’Reilly  III,  C.A.  (2011),  Reducing  the  backlash  effect:  Self‐ monitoring  and 
women's promotions. Journal of Occupational and Organizational Psychology, 84: 825-832.  
69 40% versus 49% for men according to Special Eurobarometer 465.  
70 World Economic Forum, Women are still not asking for pay rises: here’s why, 2018.  
71 Artz B., Goodall  A.H., Oswald A.J., ‘Do Women  Ask?’,  Industrial Relations: A Journal of Economy 
and Society, 2018, ‘this paper documents evidence […] that women do ask but do not get.  Such a finding 
is potentially consistent with the existence of discrimination in the labour market’, p. 13. 
72  See  e.g.  The  Commission's  2020  edition  of  the  Employment  and  Social  Developments  in  Europe 
(ESDE), chapter 2: ‘Fewer women than men state that they have received fair opportunities in education, 
and particularly in getting the jobs they seek. Controlling for age, activity status, country and ability to get 
by on income, the average gender gaps in perceived fairness amount to 2.5 percentage points for education, 
and 5 percentage points for jobs. There is ample evidence of widespread gender inequalities in the labour 
market, linked to unequal pay, career prospects or occupational segregation’. 

15 

 
                                                           
Regulatory failure  – lack of  legal clarity and difficulty  to  apply key legal concepts  and 
lack of access to justice  

The second key problem driver is related to a regulatory failure due to a lack of legal 
clarity of key legal concepts and the related difficulty to apply them in practice and a lack 
of access to justice to ensure the enforcement of the right to equal pay. This was clearly 
illustrated  by  the  2020  evaluation  and  other  surveys  such  as  a  2019  survey  carried  out 
among trade union confederations73.  

Lack  of  clarity  of/difficulty  to  apply  key  legal  concepts.  Even  though  the  concept  of 
‘pay’  has  been  clarified  by  the  Court  of  Justice  of  the  European  Union,  a  number  of 
national legislators (e.g. AT, FI, IT, LV, SE) have not incorporated such clarifications in 
national law74. In a similar vein, despite the Court’s guidance on the concept of ‘work of 
equal value’75, the application of the concept in practice, by employers, social partners, 
enforcement bodies and courts, remains subject to varied and incoherent interpretations76. 
Stakeholders  in  the  public  consultation77  stressed  that  the  definition  of  ‘work  of  equal 
value’ elaborated by the Court of Justice should be visible in the law and that substantial 
guidance  on  how  to  evaluate  work  of  equal  value  is  needed,  even  for  individual 
employers. 

These  problems  lead  to  the  fact  that,  at  individual  level,  workers  do  not  know  what 
elements are relevant to assess whether they are paid equally on the basis of sex and to 
whom  they  should  compare  themselves  as  regards  carrying  out  equal  work  or  work  of 
equal value. This lack of clarity deters victims from bringing claims and makes running a 
case  even  more  difficult.  Without  clear  criteria  for  assessing  ‘work  of  equal  value’, 
workers cannot exercise their right to equal pay effectively. 

The  above  problems  are  a  problem  also  at  employer  level.  Employers  and  business 
associations  still  underline  the  difficulties  in  applying  the  concept  of  work  of  equal 
value.78  This  may  allow  unconscious  bias  in  pay  setting  and  gives  room  to  gender  pay 
discrimination. While gender bias is particularly relevant in the application of the concept 
of  ‘work  of  equal  value’,  it  also  still  exists  as  regards  ‘equal  work’.79  A  structural 

73 A recent survey among ETUC member organisations asked whether the legislation was easy to use, and 
a clear majority of trade union confederations considered it hard or very hard to make use of the legislation, 
pointing in particular to: (1) difficulty in making comparisons between different occupations; complexity 
of  the  legislation;  (2)  the  idea  that  public  opinion  believes  that  there  is  no  problem;  (3)  the  lack  of 
information  about  pay  levels  of  comparators;  and  (4)  a  lack  of  resources  by  the  bodies  responsible  for 
implementing the legislation (ETUC, Annual Gender Equality Survey, 2019). 
74 European Commission, Evaluation of the relevant provisions in the Directive 2006/54/EC implementing 
the Treaty principle on ‘equal pay for equal work or work of equal value’, 2020, SWD (2020)50, p. 18. 
75  Case  C-400/93  Royal  Copenhagen,  ECLI:EU:C:1995:155:  the  Court  clarified  that  the  value  of  work 
should be assessed and compared based on objective criteria, such as educational, professional and training 
requirements, skills, effort and responsibility, work undertaken and the nature of the tasks involved. 
76  See  ICF,  Final  Report  -  Study  to  support  the  evaluation  of  the  relevant  provisions  in  Directive 
2006/54/EC implementing, DG JUST, 2019.  
77 E.g. the European Women’s Lobby and Make Mothers Matter. 
78 See the results of the public consultation in Annex 2. 
79 Gender pay discrimination for the same work relates to two people who only differ by gender carrying 
out  the  same  job  but  being  paid  differently.  Examples  are  presented  in  Burri  (2019). The  concept  is  not 
always as straightforward as it might seem: it also applies when  people performing the same job are given 

16 

 
                                                           
 
undervaluation of female work, related to specific occupations in the organisation or to 
women’s work in general, could influence wage structures due to institutional inertia:80 in 
the  absence  of  an  external  trigger,  a  legal  obligation,  or  a  very  strong  commitment  at 
managerial level, there is no incentive for employers to evaluate the gender neutrality of 
their  wage  structures  and  revise  them  where  needed,  also  because  employers  might 
simply not be aware that there could be a problem of gender pay inequality.  

Lack  of  access  to  justice.  The  existing  EU  legal  framework  already  makes  efforts  to 
support  potential  victims  in  bringing  their  claim,  e.g.  with  protection  against 
victimisation  and  rules  on  remedies  and  sanctions  or  penalties.  However,  the  2020 
evaluation identified persistent problems with regard to the effective enforcement of the 
right to equal pay and procedural obstacles to this enforcement, leading to an insufficient 
protection of victims. It reported major problems related to the costs of litigation, the lack 
of  a  proper  mandate  for  equality  bodies  to  help  potential  victims  of  sex-based  pay 
discrimination, the lack of possibility of collective action, the practical application of the 
reversed burden of proof, and the low level of compensation awarded.  National experts 
reported the costs of court proceedings as a barrier to access to justice (AT, BE, EE, FI, 
HR, HU, LV, NL, PL)81. While legal aid is only available to (very) low income earners, 
in most countries the ‘looser pays’ principle is a disincentive for many victims to go to 
court.  Compensation  for  material  damages  may  be  claimed  in  only  18  Member  States 
and  non-material  damages  may  be  compensated  in  14  Member  States.82  Most  national 
experts  consider  compensation  or  reparation  of  victims  as  a  significant  problem  as 
remedies  are  too  low  and  not  dissuasive  for  defendants  while  they  discourage  victims 
from taking action especially when compared to litigation costs.83 

Nine Member States (AT, DE, DK, EE,  HR, NL, PL, PT, SE) foresee  no  sanctions or 
penalties  in  addition  to  compensation.84  Symbolically,  the  absence  of  sanctions  or 
penalties  suggests  that  society  at  large  would  not  be  concerned  by  gender  pay 
discrimination.  

The  lack  of  enforcement  and  insufficient  protection  of  victims  were  confirmed  by 
participants in the public consultation. 

different titles depending on gender e.g. ‘chef’ versus ‘cook’; or ‘information manager’ versus ‘librarian’; 
or  ‘management  assistant’  versus  ‘secretary’.  See  ILO,  Global  Wage  Report  2018/19:  What  lies  behind 
gender pay gaps, p. 95, and Oelz et al, 2013, p. 31. 
80 England, P., Comparable Worth: Theories and Evidence. Social institutions and social change, 1992, p. 
22:  ‘[…]  skills  common  in  women's  jobs  […]  may  come  to  be  devalued  via  stigma  that  gets 
institutionalized into wage systems, so that this skill […] carry a low rate of reward’; p. 43: ‘[…] if a job 
starts out as female or male, considerable inertia develops around that initial label. Also, if entry level jobs 
are of one sex or the other, this segregation will be perpetuated over time and up the mobility ladders that 
comprise internal labor markets.’. 
81 Foubert, P., The enforcement of the principle of equal pay for equal work or work of equal value, A legal 
analysis of the situation in the EU Member States, Iceland, Liechtenstein and Norway, European network 
of legal experts in gender equality and non-discrimination, DG JUST, 2017, p. 53. 
82 SWD (2020)50 final, p. 24. 
83 Ibid. 
84 SWD (2020) 50 final, p. 28; see also Article 25 of the Recast Directive.  

17 

 
                                                                                                                                                                            
2.3.  Why is it a problem? 

The Charter of Fundamental Rights of the EU prohibits discrimination, in particular on 
the basis of sex (Article  21), and states that equality between women and men must be 
ensured  in  all  areas  (Article  23).  Equality  between  women  and  men  is  a  fundamental 
value in the European Union (Article 2 TEU). Gender-based pay discrimination and the 
improper enforcement of the principle of equal pay is therefore first of all a breach of an 
individual’s fundamental right protected under Union law.  

Article  23  of  the  Charter  explicitly  refers  to  equality  between  women  and  men  in 
employment,  work  and  pay.  Article  153  TFEU  lists  equality  between  women  and  men 
with  regard  to  labour  market  opportunities  and  treatment  at  work  as  one  of  the  main 
objectives  of  the  Union’s  social  policy.  Article  157  TFEU  calls  on  Member  States  to 
ensure  that  the  principle  of  equal  pay  for  male  and  female  workers  for  equal  work  or 
work  of  equal  value  is  applied.  In  practice  this  means  that  employers  must  have  pay 
structures ensuring that women and men be paid equally for the same work or work of 
equal value. Gender-based pay discrimination hence breaches individuals’ social rights 
protected under Union law.  

Besides  violating  fundamental  and  social  rights,  pay  discrimination  has  negative 
economic consequences as it entails inefficiencies in how the labour market operates 
and  lowers  competitiveness  in  the  internal  market.  From  an  individual  worker’s 
viewpoint, insufficient protection from gender pay discrimination, even if only suspected, 
contributes to lowering personal expectations regarding prospective earnings. As such, it 
can distort decisions relating to employment and occupation. It also impacts workers’ 
decisions on time worked and career patterns, in particular when balancing household 
responsibilities with earnings’ perspectives; the expectation of a potentially lower income 
may influence women’s apparent own choice to  engage in unpaid care rather than paid 
work. This  happens even if the household  would equally share housework and care (or 
have  no  care  responsibilities)  due  to  employers’  possible  biased  expectations  of  future 
caring  responsibilities  for  women  or  the  assumption  that  they  are  not  the  sole  or  main 
earners in a family. All this has negative consequences on poverty rates and ultimately 
on the gender pension gap (which stands at 30%85 in the EU overall). Finally, personal 
beliefs regarding different levels of fairness in pay/pay structures may influence workers’ 
propensity to mobility across sectors or countries.  

The  above  elements  bring  a  clear  risk  of  potential  loss  of  productivity,  due  to 
suboptimal  female  labour  market  participation.  Such  suboptimal  participation  increases 
as a consequence of women’s increasingly higher level of education compared to men.86 
An  economy  cannot  afford  such  a  waste  of  talents,  especially  in  an  ageing  society 
confronted with skills shortages. 

85 Eurostat: ilc_pnp13. 
86  45.8%  of  tertiary  attainment  against  35.7%.  See  the  European  Commission,  Education  and  training 
Monitor,  2019  for  an  overview  of  differences.  An  increase  in  female  labour  market  participation  would 
also be beneficial in view of demographic challenges and sustainability of welfare states.  

18 

 
                                                           
For  employers,  pay  discrimination  has  a  hidden  cost,  as  the  motivation  and 
productivity  of  employees87    may  decrease  if  they  are  –  or  suspect  being  –  treated 
unequally. They may feel undervalued, disrespected, upset or even doubt their capacities 
and  lose  self-confidence.  Pay  discrimination  may  also  result  in  a  loss  of  talent  and 
investment in people in case workers would decide to move to a different employer. 

Furthermore,  even  if  the  guiding  principle  of  equal  pay  for  the  same  work  or  work  of 
equal value is set at EU level, the differences in approach among Member States continue 
to  be  an  obstacle,  not  only  to  workers’  mobility  (see  above)  but  also  for  employers  to 
operate across Member States. Indeed, the very inclusion of the equal pay principle in the 
EU’s founding treaties (at the time the 1957 Treaty of Rome) explicitly aimed at ensuring 
a  level  playing  field  among  employers  in  the  internal  market.88  Ensuring  a  consistent 
equal  pay  between  women  and  men  is  therefore  inherently  a  market  condition  to 
safeguard  fair  competition  among  employers  across  the  EU.  Finally,  without  an  EU 
approach  there  could  be  no  action  taken  on  matters  of  equal  pay  as  employers  might 
overlook the long term productivity gains and concentrate on a perceived risk of loss of 
competitiveness due to potential salary adjustments. 

2.4.  How will the problem evolve? 

As  evidenced  in  the  previous  sections,  gender  pay  discrimination  is  a  persisting 
phenomenon,  even  if  its  extent  may  not  be  evaluated  precisely.  Because  it  is  hard  to 
identify and evaluate by Member States, employers, workers, enforcement bodies such as 
equality bodies and courts, the situation is likely to continue to evolve only very slowly: 
if not identified, existing discriminations may persist. Without further policy intervention 
towards  more  pay  transparency,  it  is  likely  to  remain  largely  hidden,  with  workers 
deprived  of  tools  to  have  their  rights  respected,  employers  lacking  the  incentive  to 
analyse  and  revise  their  pay  structures,  and  governments  and  policy  makers  unable  to 
grasp the extent of the problem effectively enough to tackle it. 

National  legislative  actions  to  correct  this  situation  have  been  scarce  and  there  are  no 
indications  that  their  rate  would  increase.  This  hesitation  conflicts  with  an  increasing 

87  Research  show  a  positive  impact  of  pay  transparency  on  productivity.  See  e.g.  Chamberlain,  A.,  ‘Is 
Salary  Transparency  More  Than  a  Trend?’,  Glassdoor  Economic  Research  Report,  2015Allen,  A.  et  al., 
International study on compensation and pay transparency practices, 2018; Alterman, V. Bamberger, P., 
Belogolovsky,  E.,  et  al.,  ‘Looking  for  Assistance  in  the  Dark:  Pay  Secrecy,  Expertise  Perceptions,  and 
Efficacious Help Seeking Among Members of Newly Formed Virtual Work Groups’, Journal of Business 
and Psychology, 2016; Bamberger, P.; Belogolovsky E. ‘Signaling in Secret: Pay for Performance and the 
Incentive  and  Sorting  Effects  of  Pay  Secrecy’,  Academy  of  Management  Journal,  2014;  Bennett,  R.J.; 
Marasi  S.,  ‘Pay  communication:  Where  do  we  go  from  here?’,  Human  Resource  Management  Review, 
2016; Bennett, R.J.; Marasi, S.; Wall, A.,  ‘Pay openness movement: Is it merited? Does it influence more 
desirable employee outcomes than pay secrecy?’, Organization Management Journal, 2018.  
88  See  C.  Barnard,  ‘The  Economic  Objectives  of  Article  119’  in  D.  O’Keeff  e  and  T.  Hervey  (eds),  Sex 
Equality  Law  in  the  European  Union  (Wiley,  1996).  In  the  words  of  the  Court  of  Justice:  ‘The  aim  of 
Article  119  [now  Article  157  TFEU]  is  to  avoid  a  situation  in  which  undertakings  established  in  states 
which  have  actually  implemented  the  principle  of  equal  pay  suffer  a  competitive  disadvantage  in  intra-
community competition as compared with undertakings established in states which have not yet eliminated 
discrimination against women workers as regards pay’ in CJEU, Case 43/75, Gabrielle Defrenne v Société 
anonyme belge de navigation aérienne Sabena (Defrenne II), Case 43/75, ECLI:EU:C:1976:56, para. 9. 

19 

 
                                                           
openness89  and  demands  for  pay  transparency  from  the  general  public  as  related  to  the 
broader concept of fair pay90, even though these have to some extent been embraced by 
certain employers91, notwithstanding potential costs92. The shift towards rebalancing the 
asymmetry of pay information between workers and employers remains, however, very 
slow overall. The 2014 Recommendation, which is per definition non-binding, received a 
limited follow up by Member States. As a result, there are no incentives for employers to 
act.  In  practice,  the  situation  relies  essentially  on  individual  workers’  responsibility  to 
become  aware,  collect 
take  action  against  pay 
information  (if  available)  and 
discrimination  while  balancing  the  cost-opportunity  of  doing  so.  This  is  unlikely  to 
change on its own.  

The support study carried out in the context of this impact assessment confirms that the 
unexplained part of the gender pay gap, which includes pay discrimination, is not likely 
to decline significantly over time without further interventions.93  

The  main  factor  that  might  shape  future  trends  on  the  labour  market,  and  therefore 
potentially  impact  on  gender  pay  discrimination  as  part  of  the  gender  pay  gap,  is  the 
impact of the COVID-19 crisis. The latter has already shown a gendered impact and a 
strong backlash on gender equality.94  95 It also reversed the usual pattern of a recession: 
this  time,  it  is  women,  rather  than  men,  who  experience  larger  employment  losses  and 
higher unemployment. Women are overrepresented in lower paid jobs which are the first 
and the most affected by redundancies in the crisis, for instance hospitality, retail, care, 
and  personal  services.96  To  the  extent  that  these  women  might  not  find  their  way  back 
into  the  labour  market  (also  because  employers  might  restructure  supply  chains  by 
recurring to more automation in order to allow for social distancing), the gender pay gap 
might  even  decrease  and  give  the  illusion  that  gender  pay  discrimination  will  also 
decrease. 

In addition, the share of pay discrimination in the overall gender pay gap may reasonably 
be expected to increase with the recession. An increase of precarious and atypical jobs97 
(e.g. due to more digitalisation) could reinforce this trend. Precarity risks increasing wage 
discrimination  as  it  further  limits  negotiating  power  on  the  side  of  workers,  which 

89 Almost two thirds of Europeans according to Eurobarometer 465, 2017. 
90  Trotter,  Richard  G.,  Zacur,  Susan  Rawson  and  Stickney,  Lisa  T.,  (2017),  The  new  age  of  pay 
transparency, Business Horizons, 60, issue 4, p. 529-539.. 
91 CIPD, Survey Report Reward management: focus on pay, December 2017. 
92  SimanTov-Nachlieli,  I.,  &  Bamberger,  P.  (2020),  Pay  communication,  justice,  and  affect:  The 
asymmetric  effects  of  process  and  outcome  pay  transparency  on  counterproductive  workplace  behavior, 
Journal of Applied Psychology, Advance online publication.  
93 EY, Support study for the impact assessment, 2021. 
94 EC, JRC (2020), How will the COVID-19 crisis affect existing gender divides in Europe. 
95 Eurofound, Women and labour market equality: Has COVID-19 rolled back recent gains?, Publications 
Office of the European Union, Luxembourg, 2020. 
96 Eurostat, Covid-19 labour effects across the income distribution, October 2020.  
97 See Eurofound for a definition: ‘Atypical work refers to employment relationships that do not conform to 
the standard or “typical” model of full-time, regular, open-ended employment with a single employer over 
a  long  time  span.  [...]  includes  part-time  work,  temporary  work,  fixed-term  work,  casual  and  seasonal 
at: 
homeworkers.’.  Available 
work, 
https://www.eurofound.europa.eu/observatories/eurwork/industrial-relations-dictionary/atypical-work. 

independent  workers 

self-employed 

people, 

and 

20 

 
                                                           
especially  affects  women.  It  may  further  reinforce  the  drivers  mentioned  in  section  2.2 
(market and regulatory failures). While these larger trends on the labour market are out of 
the  scope  of  this  initiative,  their  possible  impact  on  the  problem  addressed  in  this 
initiative cannot be denied.  

Besides transparency on wages and wage structures, there is no indication that the other 
problem drivers would be addressed. Even if the Court of Justice may shed further light 
on  how  to  assess  work  of  equal  value,  such  guidance  is  unlikely  to  reach  individual 
employers if this concept is not encoded in the legal framework and there are no practical 
tools to implement it in practice. Furthermore, there are no indications that the procedural 
obstacles to access to justice are addressed at national level, even though they have been 
known and acknowledged for many years.  

Section 4.3 on the baseline scenario develops these points further. 

3.  Why should the EU act?  

3.1.  Legal basis 

The Union’s specific right to act in this field is set out in detail in Title X of the TFEU 
related to social policy. Its right to act on matters of gender equality in employment and 
occupation  follows  from  Article  157(3)  TFEU.  The  Treaty  provides  that,  although 
Member  States  shall  ensure  the  application  of  the  principle  of  equal  pay  for  male  and 
female  workers  for  equal  work  or  work  of  equal  value  (Article  157(1)  TFEU),  the  EU 
shall adopt measures to ensure the application of the principle of ‘equal opportunities and 
equal treatment of women and men in matters of employment and occupation, including 
the principle of equal pay for equal work or work of equal value’ (Article 157(3) TFEU). 

Article  157(3)  TFEU  is  the  legal  basis  for  the  Recast  Directive  and  for  the  2014 
Commission Recommendation on pay transparency. It should therefore also serve as the 
legal  basis  for  legally  binding  pay  transparency  measures,  which  support  the 
implementation  and  better  enforcement  of  the  principle  of  equal  pay  under  Article  157 
TFEU and the Recast Directive. Unlike for an ‘internal market’ legal basis, the existence 
of an internal market problem is not a prerequisite to the availability of Article 157(3) as 
a legal basis: the pursuit of equal treatment is sufficient in that respect. 

Article 157 TFEU  governs a specific subject  matter (lex specialis)  compared to  Article 
153 TFEU, which provides a legal basis for all measures implementing the principle of 
non-discrimination on grounds of sex in the field of ‘equal opportunities’ and in ‘matters 
of employment and occupation’. The lex specialis prevails over the general norm. Article 
157(3) TFEU therefore constitutes the proper legal basis for this initiative. 

3.2. 

Subsidiarity: Necessity of EU action 

The principle of subsidiarity (Article 5(3) TEU) requires that the Union shall act only and 
insofar as  the objectives of the proposed actions cannot  be sufficiently achieved by the 
Member  States,  either  at  central  level  or  at  regional  and  local  level,  but  can  rather,  by 
reasons of the scale or effects of the proposed action, be better achieved at Union level. 

The EU principle of equal pay was established by the founding Treaties as a fundamental 
support  for  the  functioning  of  the  internal  market.  Equal  pay  between  women  and 

21 

 
men  for  the  same  work  or  work  of  equal  value  ensures  fair  competition  for  companies 
which  have  to  comply  with  a  similar  fundamental  social  requirement,  thus  creating  a 
level  playing  field  for  companies  operating  in  the  internal  market.  In  the  words  of  the 
Court of Justice (1976): 

The  aim  of  article  119  [now  157  TFEU]  is  to  avoid  a  situation  in  which 
undertakings established in states which have actually implemented the principle 
of equal pay suffer a competitive disadvantage in intra-community competition as 
compared with undertakings  established in states which have not  yet  eliminated 
discrimination against women workers as regards pay.98 

The  Treaty  itself  thus  confirms  that  harmonised  requirements  facilitate  cross-border 
operations and create equal conditions for investment in Member States. This objective 
cannot be achieved by individual Member States as national measures would inevitably 
distort competition and create market barriers and could not achieve the envisaged level 
playing field. 

While the principle of equal pay initially had primarily an economic function aiming at 
avoiding distortions to competition, in 1976 the Court of Justice recognised, in addition 
to  its  economic  goal,  the  social  objective  of  Article  119  EEC  and  its  horizontal  direct 
effect99. The latter effect means that the principle of equal pay may be relied upon before 
the national courts and that these courts have a duty to ensure the protection of the rights 
which this provision vests in individuals, even if there are no implementing provisions at 
EU or national level.100 

Later on, the Court added that the social goal prevails over its economic function and that 
equal  pay  is  a  fundamental  right.101  Articles  2  and  3(3)  TEU  include  the  right  to 
equality between women and men as one of the essential values and objectives of the EU. 

Article  23  of  the  Charter  of  Fundamental  Rights  of  the  EU  confirms  that  equality 
between women and men must be ensured in all areas, including employment, work and 
pay.  Articles  8  and  10  TFEU  add  that  the  EU  shall  aim  to  eliminate  inequalities,  to 
promote equality between women and men and to combat discrimination based on sex in 
all its policies and activities. The TFEU also provides that, although Member States shall 
ensure  application  of  the  principle  of  equal  pay  for  male  and  female  workers  for  equal 
work  or  work  of  equal  value  (Article  157(1)  TFEU),  the  EU  shall  adopt  measures  to 
achieve that aim (Article 157(3) TFEU). 

It is important to note that Article 157 is mandatory in nature and that the prohibition of 
discrimination,  as  confirmed  by  the  Court  of  Justice,  applies  not  only  to  the  action  of 

98 Case 43/75, Gabrielle Defrenne v Société anonyme belge de navigation aérienne Sabena (Defrenne II), 
ECLI:EU:C:1976:56, para. 9. 
99 Ibid, para. 8-10. 
100 Ibid, para. 40. 
101 Case 50/96, Deutsche Telekom AG v Lilli Schröder, ECLI:EU:C:2000:72, p.57. 

22 

 
                                                           
public  authorities,  but  extends  to  all  agreements  which  are  intended  to  regulate  paid 
labour collectively, as well as to contracts between individuals.102 

The  EU  acted  to  implement  the  Treaty  principle,  in  particular,  through  the  1975  Equal 
Pay  Directive,  subsequently  merged  into  the  Recast  Directive.  The  evaluation  of  the 
Recast  Directive showed that further action was needed, in  particular in  order to  create 
transparency  on  pay  and  pay  settings.  This  was  done  through  the  2014  Commission 
Recommendation  on  pay  transparency.  The  2017  evaluation  of  the  Pay  Transparency 
Recommendation showed that it had not brought about the necessary change (see below). 
This  was  confirmed  by  the  2020  evaluation,  which  reiterated  that  EU-level  action 
remains  necessary  to  better  enforce  the  right  to  equal  pay  through  pay  transparency.  
Member States and social partners did not so far take sufficient measures to combat such 
discrimination.  

Pay transparency measures as outlined in the 2014 Recommendation were implemented 
only in some Member States, and the fragmented level of implementation raises doubts 
on the effectiveness of non-binding measures.  

The  measures  introduced  by  some  Member  States103  vary  broadly  in  effectiveness,  and 
many Member States did not take any action in this area. There might be several reasons 
for  this,  depending  on  the  perceived  relevance  of  the  equal  pay  issue,  that  may  cause 
reluctance to impose possible costs on employers that  might  put them at a competitive 
disadvantage vis-à-vis foreign employers who are not applying similar norms (yet).   

Member  States  are  therefore  unlikely  to  be  able  to  address  the  problem  on  their  own 
based on the existing non-binding measures. The existing legal framework will therefore 
not bring about significant improvements in pay equality without a new impetus. 

3.3. 

Subsidiarity: Added value of EU action 

Action at EU level would ensure that pay equality between women and men, enshrined in 
Article 157(1) TFEU, is effective and that all citizens can claim their rights according to 
the harmonised minimum standards applicable in all Member States.  

EU  action  does  not  only  create  a  harmonised  minimum  standard  protecting  workers 
(social  objective),  it  creates  equal  market  conditions  for  companies  operating  in  the 
internal  market,  thus  preventing  unfair  competition  (economic  objective).  Only  a 
coherent  and  comprehensive  European  approach  can  ensure  a  level  playing  field  for 
market  operators  in  all  Member  States  and  exclude  possible  unfair  competitive 
advantages that could be derived from pay discrimination (see above). As shown in the 
report on the evaluation of the 2014 Recommendation, national measures regarding pay 
transparency  are  fragmented,  scarce  and  most  often  set  lower  thresholds  than  those 
proposed by the 2014 Recommendation. Their variety, different levels of ambition, and 
the progressive nature of the changes bring unnecessary complexity and uncertainty and 
constitute barriers to operating across Member States. 

102 Case 43/75, Gabrielle Defrenne v Société anonyme belge de navigation aérienne Sabena (Defrenne II), 
ECLI:EU:C:1976:56, para 39. 
103 See Table 2 in the Annex 5, Section 3.  

23 

 
                                                           
EU  action  establishing  pay  transparency  and  related  enforcement  mechanisms  would 
ensure  that  workers  across  the  EU  can  experience  the  same  level  of  protection  of  the 
equal  pay  right,  and  that  employers  can  operate  across  Member  States  with  lower 
risks/uncertainties.  It  would  realise  a  fundamental  and  social  right  while  preventing 
businesses  from  competing  on  an  uneven  playing  field  and  therefore  improve  the 
operation and competitiveness of the internal market. 

4.  Objectives: What is to be achieved? 

4.1.  General objectives 

The  overall  objective  of  the  initiative  is  to  improve  the  implementation  and 
enforcement of the principle of equal pay for equal work or for work of equal value 
both  as a fundamental  right  and social objective  to  be achieved in  the European Union 
and as an economic objective linked to the full realisation of gender equal conditions on 
the internal market. It does so by creating transparency both at the individual worker and 
at  employer  level,  based  on  a  facilitated  implementation  of  the  legal  concepts  of  equal 
pay  for equal  work or for work of equal  value. It  balances the responsibility for taking 
action between workers claiming their EU right and employers ensuring these rights are 
respected. 

4.2. 

Specific objectives 

The initiative more specifically aims at: 

1.  Empowering  workers  to  enforce  their  right  to  equal  pay:  the  initiative  aims  at 
bringing  instances  of  pay  discrimination  to  light  through  transparency,  giving 
workers, especially female workers, the necessary information to act upon them. 
This  objective  could  be  supported  by  addressing  the  difficulties  relating  to  the 
application  of  the  key  legal  concepts  relating  to  equal  pay  and  the  inadequate 
access to justice.  

2.  Addressing  systemic  undervaluation  of  women’s  work  at  employer  level:  the 
initiative  aims,  through  transparency,  at  correcting  biases  in  pay  setting 
mechanisms  that  perpetuate  the  undervaluation  of  work  done  by  women.  Such 
undervaluation occurs  when women’s skills are not or not sufficiently valued in 
pay  structures.  This  objective  could  equally  be  supported  by  addressing  the 
difficulties relating to the application of the key legal concepts relating to pay and 
the inadequate access to justice.  

At the same time, pay transparency measures will help to collect more information and 
data on the existence and extent of pay discrimination. 

4.3.  What is the baseline from which options are assessed? 

EU action through the 2014 Recommendation and the European Semester.  

Under the baseline scenario, the 2014 Recommendation would remain the main action 
at  EU  level  to  address  the  problems  set  out  above.  In  addition,  the  Commission  could 
continue  to  issue  Country  Specific  Recommendations  (CSRs)  in  the  context  of  the 

24 

 
 
European Semester. In principle, CSRs have the potential to address the phenomenon of 
the  gender  pay  gap  but  only  from  a  global  perspective  and  highlight  its  root  causes  in 
Member States. In 2019, the pay gap was addressed in the country reports of 11 Member 
States104 and a country-specific recommendation on the gender pay gap was issued to one 
Member  State105.  The  CSRs  can  contribute  to  tackle  some  of  the  root  causes  of  the 
overall  gender  pay  gap  e.g.  by  supporting  measures  to  strengthen  work-life  balance 
policies, counter sectoral segregation, or even suggesting wage transparency. 

The above actions are, however, unlikely to bring about the desired change and fulfil the 
objectives  set  out  in  sections  4.1  and  4.2.  First  of  all,  as  shown  above,  the 
Recommendation has had limited follow-up in Member States and while a few Member 
States  have  recently  moved  towards  more  transparency  (e.g.  PT,  ES),  most  Member 
States are not undertaking any action or action remains very limited (e.g. only for very 
large  employers,  only  voluntary,  no  structural  measures)  and  does  not  create  the 
necessary level playing field. In regard to action through the European Semester, given 
the  many  issues  addressed  in  the  European  Semester,  the  CSRs  cannot  reach  the 
necessary  level  of  detail  to  address  the  implementation  of  the  principle of  equal  pay  at 
employer level nor to reinforce victims’ protection or support. In addition, the European 
Semester  is  being  reshaped  towards  a  focus  on  the  monitoring  of  Recovery  and 
Resilience  Plans  and  relevant  challenges,  in  particular  in  the  context  of  the  green  and 
digital  transition.  Hence,  while  country  specific  recommendations  could  be  a  useful 
policy  tool,  they  could  only  complement  legislative  measures  on  pay  transparency  and, 
more generally, strengthen a comprehensive approach in tackling the gender pay gap. 

Trends in  the labour market  (see  Annex 5, section 6). Before the  COVID-19 pandemic, 
women  had  largely  reduced,  if  not  reversed,  some  differences  in  the  average 
characteristics relating to pay compared to men: they have surpassed men regarding the 
level of education and are moving, though slowly, into areas that were traditionally men-
dominated  such  as  construction,  transport  and  automotive  services.  These  elements, 
which  were  important  in  explaining  differences  in  average  pay  in  the  past,  may  be 
expected  to  contribute  less  and  less  in  further  reducing  the  relative  pay  differences. 
Today, the justified pay gap represents a third of the total gender pay gap; in the future, a 
further reduction in the gender pay gap may be expected to result mainly from changes in 
the  unexplained  component,  including  gender  pay  discrimination.  At  the  same  time, 
trends in wage setting –  e.g. moving away from collective towards more individualised 
payments linked to new forms of work  – are increasing the scope for discretionary pay 
and therefore could put women further in disadvantage (as they are more likely victims 
of pay discrimination) (see section 2.1). As a consequence, it seems unlikely that without 
any  positive  intervention  through  binding  measures,  the  rate  of  reduction  of  the 

104 AT, CZ, DE, EE, FI, FR, HU, MT, PT, SK, UK. 
105 EE. 

25 

 
                                                           
unexplained part of the gender pay gap  – which covers possible discrimination  – could 
accelerate.106 

in 

their  work-life  balance,  due 

Effects  of  the  COVID-19  pandemic.  The  profound  changes  in  the  socio-economic 
landscape107,  though  still  to  be  fully  manifested,  have  already  shown  a  gendered  effect 
(see section 2.4). The pandemic has had a strong impact108 in sectors in which women are 
overrepresented109,  namely  retail  trade,  transport,  hospitality  and  tourism.  Women  have 
also  been  more  affected 
increased  care 
responsibilities.110  While  the  boost  towards  smart  working  might  increase  women’s 
possibilities for entry into and retention within higher level jobs, there is also a risk that 
these  might  lead  to  more  precarious  and  atypical  jobs  (e.g.  replacing  employment 
contracts of some teleworking workers with outsourcing of services via online platform 
work). The shift towards more automation to allow social distancing could also, once the 
pandemic will be over, push in the same direction. It is also still unclear what will be the 
effect of policy efforts from the EU111 and Member States to limit the economic impact 
of the pandemic and sustain the subsequent recovery, and to what extent these might take 
into account a gender-sensitive perspective.  

to 

5. 

SME test 

The  specific  impact  of  all  policy  measures  on  SMEs  has  been  screened  ex  ante  for  all 
options.  The  aim  of  the  analysis  was  to  check  whether  SMEs112  would  be 
disproportionately  affected  and,  where  relevant,  to  include  mitigating  measures  in  the 
design of the policy options. 

The  measures  envisaged  are  aimed  at  protecting  a  fundamental  right.  They  should 
therefore in principle apply to all workers, independently from sector, employer size or 
type  of  contract.  As  a  large  majority  of  workers  work  in  SMEs,113  it  would  not  be 
consistent  with  the  purpose  of  this  initiative  to  exclude  all  SMEs  from  its  field  of 
application,  as  their  exclusion  would  not  allow  to  reach  the  goals  of  the  initiative  and 

106 With current progress, the ILO estimates that the world GPG could be closed only in 2086. In 2018, the 
gender pay gap for EU 27 was 14.1%, less than two percentage points lower than in 2010. 
107 For an analysis of the economic and social impact of the COVID-19 crisis, see European Commission, 
ESDE, 2020. 
108  EIGE is, among others,  monitoring the evolution of the  pandemic  from a  gender perspective and  will 
deliver a dedicated research  note on the topic to the  Portuguese presidency  in the  first  half of 2021. For 
more information, please access: https://eige.europa.eu/topics/health/covid-19-and-gender-equality.  
109 The gender pay gap (and the corresponding share linked to gender pay discrimination) could, therefore, 
paradoxically, even decrease. 
110  See  Eurofound,  ‘Women  and  labour  market  equality:  Has  COVID-19  rolled  back  recent  gains?’, 
Publications Office of the European Union, Luxembourg, 2020. 
111  European  Commission,  Recovery  and  resilience  facility:  Helping  EU  countries  to  come  out  of  the 
coronavirus crisis stronger, 2020.  
112 For the  SME definition, please see: European Commission,  Commission Recommendation concerning 
the  definition  of  micro,  small  and  medium-sized  enterprises,  C(2003)  1422),  2003.  It  includes  local 
authorities under certain criteria.   
113  According  to  the  Structural  business  statistics  overview  (Eurostat,  April  2020),  SMEs  represented  in 
2017 the overwhelming majority (99.8%) of enterprises active within the EU-27’s non-financial business 
economy, i.e. some 22.2 million. More than 9 out of 10 (93.1%) enterprises were micro enterprises. As a 
consequence,  and  most  relevant  for  our  analysis,  around  two  thirds  (67.0%)  of  the  EU’s  non-financial 
business economy workforce was employed in an SME in 2017. 

26 

 
                                                           
would  undermine  a  fundamental  right.  Nevertheless,  the  measures  may  be  designed  in 
such  a  way  as  to  achieve  the  objectives  of  this  initiative  without  imposing  a 
disproportionate burden on SMEs.  

Consultation of SME stakeholders 

82%  of  respondents  from  business/employers’  organisations  and  associations  in  the 
targeted consultation agree that pay transparency measures should be tailored to the size 
of the organisations. At the dedicated hearing, for instance, SMEunited (the association 
of Crafts and SMEs in Europe) requested the exemption of SMEs from a directive on pay 
transparency at EU level, especially as regards small and microenterprises (see Annex 2). 

Assessment of alternative mechanisms and mitigating measures  

Taking into account the principle of proportionality, concerns expressed by stakeholders, 
and technical feasibility of some individual measures, it seems advisable to modulate the 
measures  according  to  the  size  of  the  employers.  This  was  also  the  conclusion  of  the 
impact  assessment  for  the  2014  Recommendation  and  is  in  line  with  what  is  done  at 
Member State level. In addition, specific measures may be added to shield SMEs and in 
particular micro-enterprises from increased business risk linked e.g. to exposure to legal 
costs. Furthermore, SMEs will benefit from the  guidance and methodologies developed 
to assess work of equal value. Member States could also provide as mitigating measures 
ready-made templates with info line support or  off-the-shelf software, since these were 
found to reduce costs for employers (Eurofound, 2020). 

The definition of the exemption thresholds 

The thresholds applied to tailor the design of the measures in this initiative are directly 
derived  from  the  2014  Recommendation.  Similar  thresholds  are  found  in  national 
legislation of a number of Member States.114  

The definition of the thresholds is linked to the number of workers.115 The reason for not 
referring to other criteria often used to define small and medium sized employers, such as 
turnover  or  annual  balance  sheet  (e.g.  based  on  Commission  Recommendation 
2003/361),  is  that  the  focus  and  scope  of  the  proposed  Directive  is  worker-oriented, 
based  on  the  enforcement  of  an  individual  fundamental  right,  and  it  uses  statistical 
methods for the implementation of which only staff headcount is relevant. Moreover, this 
reference  simplifies  the  implementation  by  avoiding  the  complexity  and  administrative 
burden in verifying the compliance criteria by Member States and employers. 

The  proposed  measures  are  adapted  depending  on  the  size  of  the  employers,  to  find  a 
balance between the interest of all workers in seeing their right protected and minimising 
costs and burden on employers, even if the latter would also benefit from an increase in 
productivity.  While  a  number  of  considerations  are  taken  into  account  to  define  the 

114  Thresholds  of  50+  or  lower  are  implemented  for  pay  reporting  or  pay  auditing  in  the  majority  of 
countries: BE, DK, EE, ES, FI, FR, LT, LU, PT, SE. Larger thresholds apply in AT (150+), IT (100+), and 
UK (250+). Only DE applies a threshold of 500+.  
115 See Annex 3 for the calculation of workforce and company coverage by thresholds. 

27 

 
                                                           
thresholds,  the  ultimate  decision  on  the  exact  threshold  to  apply  in  this  initiative  is  a 
question  of  political  determination  and  a  choice  made  on  this  trade-off.  Focusing  on 
larger employers also follows a cautious approach. It will allow to collect more data on 
the extent of gender pay discrimination and therefore bring more arguments for or against 
extending  it  further  to  smaller  companies. The  details  of  this  tailored  design  of  the 
measures  are  explained  in  the  description  of  the  options  and  analysed  further  for  each 
measure in Section 7. SMEs could always on a voluntary basis adopt more far-reaching 
measures than those set out for them in this initiative in order to build a more attractive 
employer profile. Member States could also decide to extend the scope of the measures 
envisaged by this initiative. 

6.  Description of the policy options for EU level action  

The policy options described in Sections 6.3 through 6.5 below can be broadly described 
as follows: 

-  Option 1 aims at creating transparency at the level of individual workers, mainly 
aiming  at  empowering  workers  (first  specific  objective  of  this  initiative).  It 
includes two possible levels of ambition, with Sub-option 1A presenting a higher 
level of ambition than Sub-option 1B; 

-  Option  2  aims  at  creating  transparency  at  employers’  level,  mainly  aiming  at 
addressing structural undervaluation of women’s work (second specific objective 
of  this  initiative).  It  includes  four  possible  levels  of  ambition,  with  Sub-options 
2A  and  2B  presenting  a  more  ambitious  level  while  Sub-options  2C  and 2D  go 
for a lower level of ambition; 

-  Option 3 aims at facilitating the implementation and enforcement of the existing 

legal framework, contributing to both specific objectives of this initiative.  

The  basic  work  done  in  terms  of  data  gathering  by  an  employer  to  create  transparency 
either  at  individual  or  at  organizational  level  is  the  same  for  most  Sub-options  under 
Options  1  and  2  (see  Section  8.5).  The  options  differ  as  to  the  way  in  which  the 
information is made transparent. 

The  three  options  can  be  effective  on  their  own,  depending  on  the  political  decision  to 
achieve to a greater or lesser extent the policy objectives of this initiative.  

6.1.  Options discarded at an early stage 

Council Recommendation 

This  instrument  has  been considered as an option aimed  at  anchoring pay  transparency 
measures at political level and enhancing Member States’ engagement on the matter. It 
would  replace  the  2014  Commission  Recommendation  providing  general  guidance  to 
Member States on how to address the lack of pay transparency. Given the limited follow-
up  to  the  2014  Recommendation,  the  involvement  of  Member  States  in  the  decision-
making process, even as regards non-binding measures, might constitute a step forward. 

28 

 
A Council Recommendation has the advantage of being a flexible instrument that could 
be  adapted  to  national  contexts.  Moreover,  it  could  provide  a  basis  towards  a  level 
playing  field  between  Member  States  on  how  to  address  the  lack  of  pay  transparency, 
based  on  a  consensus  by  Member  States  at  Council  level  endorsing  their  political 
commitment.  For  this  reason,  it  could  presumably  be  more  effective  than  the  2014 
Commission Recommendation.  

This  option  would,  however,  present  several  drawbacks.  First  of  all,  providing  general 
guidance  to  Member  States,  in  nature  not  binding,  is  very  uncertain  in  terms  of 
compliance. Furthermore, the scope of such initiative would most likely be limited to pay 
transparency  measures  only  as  this  instrument  is  not  suitable  to  introduce  changes  to 
enforcement measures aiming to ensure the effective implementation of the measures and 
enhance workers’ access to justice that are already at least partly covered by the 2006/54 
Directive.  Thirdly,  implementation  would  remain  uneven,  with  different  modalities 
corresponding to different levels of ambition, and without ensuring a minimum level of 
worker  protection.  Fourthly,  there  would  be  no  enforcement  at  EU  level  allowing  to 
assess  and  ensure  the  effectiveness  of  any  measures  taken.  Finally,  the  analysis  of 
existing  Council  recommendations  shows  that  such  type  of  policy  instrument  is  more 
appropriate  to  address  areas  covered  by  Member  States’  exclusive  competence  with  a 
purpose to undertake political commitments by all Member States supported by existing 
EU financial instruments and programmes116. 

Conclusion: Since this option is not likely to effectively achieve the general and specific 
objectives of the initiative, it has not been considered further in this impact assessment. 

6.2.Option 0: Status Quo 

The first  possible course of action would be not  to  undertake further  action and let the 
situation evolve under the current framework (See sections 2.4 and 4.3). 

6.3.  Option 1: Legislative action to create transparency for individual workers  

This option aims at realising the specific objective of empowering workers to claim their 
right to equal pay. Indirectly, by raising awareness among employers when preparing pay 
information  it  could  affect  gender  bias  in  pay  setting  mechanisms  and  valuation  of 
women’s  work,  but  such  effect  would  depend  on  the  self-motivation  of  employers  to 
launch  action  in  that  respect.  Two  alternative  sub-options  (1A  and  1B)  are  suggested 
below. They present different levels of ambition, balancing the rights of workers against 
the cost and burden on employers, especially SMEs. 

116  For  example  on:  youth  guarantee  –  2013/C  120/01;  key  competences  for  lifelong  learning  –  2018/C 
189/01;  Roma  integration  –  2013/C  378/01;  access  to  social  protection  –    2019/C  387/01;  high-quality 
early childhood education and care systems – 2019/C 189/02. 

29 

 
                                                           
Sub-option 1A: Empower workers by granting a right to receive pay information 

Measure 1: Transparency of salary information prior to employment 

This  measure  aims  to  ensure  that  the  employer  informs  prospective  workers  about  the 
initial salary offer or a reasonable range expected to apply to the position concerned. It 
would  strengthen  workers’  bargaining  power  when  it  comes  to  pay  setting  and  their 
understanding of their paid position compared to other workers carrying out equal work 
or work of equal value in the organisation. It would also ensure that the employer is not 
allowed  to  ask  about  the  applicant’s  previous  salary  or  to  require  them  to  sign  non-
disclosure  agreements  concerning  the  wages  they  receive.  The  measure  would  be 
applicable to all employers. 

Measure 2: Employer’s obligation to  provide all workers with individual  information 

on pay compared to their category 

The  existing  obligations  under  the  Treaty  require  employers  to  have  pay  structures 
ensuring that women and men are paid equally for the same work or work of equal value. 
In  order  to  comply  with  this  existing  requirement,  employers  should  group  workers  in 
their  organisation  according  to  the  carrying  out  of  equal  work  or  work  of  equal  value. 
This measure would require the information on average pay levels in such groupings to 
be  made  available  to  workers  insofar  as  it  relates  to  them.  Workers  would  receive 
information on average pay levels, broken down by sex, only for their own category of 
workers  doing  the  same  work  or  work  of  equal  value  within  the  organisation.  On  the 
basis of the information  received, workers would be able, in line with the requirements 
set  by  the  Court  of  Justice,  to  compare  their  position  and  job  description  against  a 
comparator attributed to the same category; this would enable them to evaluate whether 
or not they may be victim of pay discrimination based on sex. 

The  information  would  be  provided  by  employers  to  workers  periodically  (e.g. 
synchronised  with  performance  evaluation  performed  usually  every  year),  without  any 
prerequisite request from the worker.  

Exemption:  the  measure  would  exempt  employers  with  less  than  50  workers  from 
producing such periodic information in the absence of a worker’s request. This means 
that workers in such organisations would still be able to obtain the information, however 
only  upon  request.  To  address  the  possible  fear  of  victimisation,  workers  would  be 
protected  by  a  strengthening  of  the  existing  framework  regarding  the  burden  of  proof 
(from the Recast Directive) by adding an additional alleviation of this burden regarding 
compliance with the pay transparency requirements set out by the initiative. Thus, in case 
an employer does not comply with its pay transparency obligations under the initiative, 
the burden of proof would be automatically shifted on the employer in case of a worker’s 

30 

 
complaint.  In  addition,  minimum  standards  on  access  to  evidence  would  be  set.  Such 
alleviated provision would at the same time better reflect the case law117 of the Court.  

Sub-option 1B: Empower workers by granting a right to request pay information 

Measure 1: Transparency of salary information prior to employment 

Same as measure 1 of Sub-option 1A. 

Measure 2: Right of worker to receive individual information on pay compared to their 

category – upon request 

The  right  to  information  would  be  the  same  as  in  Sub-option  1A  above,  with  the 
difference  that  the  pay  information  under  this  Sub-option  would  be  provided  by  the 
employer  only  upon  an  individual  worker’s  request  (or  by  workers’  representatives  or 
equality bodies). The measure would apply to all employers without exemption. 

6.4. Option 2: Legislative action to create transparency at employer level 

This  option  aims  at  increasing  transparency  about  pay  structures  of  employers  and 
organisations  and  thus  bringing  to  light  any  potential  structural  gender  bias.  It  would 
have  an  indirect  effect  on  the  problem  driver  of  asymmetries  of  information  on  pay  as 
some  information  would  be  shared  with  workers  or  made  public.  However,  this  latter 
effect  would  be  limited  because  of  exemptions  excluding  a  significant  share  of  the 
workforce and the potential difficulty of an individual worker to position themselves with 
the information  provided. Four  alternative Sub-options  are suggested under this option. 
As  in  Option  1,  they  balance,  on  the  one  hand,  the  fundamental  right  and  the  need  for 
protection  of  workers  and,  on  the  other  hand,  the  costs  and  burden  on  employers, 
especially SMEs. 

Sub-option 2A: Equal pay certification  

This  option  would  introduce  the  obligation  for  employers  to  receive  by  an  accredited 
certification  body  the  Standard  accreditation  ‘Equal  Pay  Standard’  (Standard  ÍST  85: 
2012 – Equal Pay Management System – Requirements and Guidance), which is the only 
example existing in the world. The accreditation certifies, ex ante, the gender-neutrality 
of  the  employer’s  pay  structure.118  The  certification  ensures  that  the  difference  in  the 
average pay of women and men for the same work or work of equal value (assessed by 
the  employer  according  to  the  standard)  is  solely  linked  to  objective  factors  (including 
employers’  discretion  based  on  explicit  gender-neutral  criteria  regarding  both  the 
position  and  the  performance  of  the  employee).  There  are  four  main  criteria 
(expertise/competence,  responsibility,  strain  and  working  conditions).  Each  workplace 

117 Case C-109/88, Handels-og Kontorfunktionærernes Forbund I Danmark v Dansk Arbejdsgiverforening, 
acting on behalf of Danfoss, ECLI:EU:C:1989:383. 
118  Icelandic  Standards  (IST)  is  an  independent  association  whose  role  is  the  publication  of  Icelandic 
standards  and  the  representation  of  Iceland  in  international  and  regional  standards  bodies.  ISO  is  an 
independent,  non-governmental  international  organization  with  a  membership  of  165  national  standards 
bodies that represent ISO in their country. IST is the only national standards body in Iceland.  

31 

 
                                                           
must  then  define  its  own  sub-criteria.  This  Sub-option  fundamentally  differs  from  the 
next approaches considered under Option 2, which are limited to ex post actions, aiming 
at uncovering pay inequalities in ad hoc cases. 

Exemption: employers with less than 50 workers would be exempted from this measure. 

Sub-option 2B: Employers’ obligation to carry out a joint pay assessment  

This  option  would  require  employers  to  carry  out  an  annual  pay  assessment  in 
cooperation  with  workers’  representatives.  Such  joint  pay  assessment  could  also  be 
conducted  by  an  external  audit  firm.  It  would  include  an  assessment  of  the  employer’s 
pay  structure  and  any  pay  differentials  based  on  sex,  with  the  aim  of  identifying  any 
unjustified  gender  pay  differences.  If  the  assessment  brings  to  light  such  differences, 
these would need to be remedied.  

This  option would trigger a systematic evaluation by employers on the extent to  which 
their  own  policies  and  practices  may  be,  even  unconsciously,  biased  or  discriminatory 
and how they may thus contribute to the gender pay gap, as opposed to factors justified 
or  outside  the  employer’s  control.  This  option  therefore  aims  at  uncovering  the  often 
unconscious systemic undervaluation of women’s work. It will require remedial action. 

The  main  difference  with  Sub-option  2A  is  that  all  action  would  be  at  organisational, 
employer level, with no mandatory external or Government involvement/certification. 

Exemption: employers with less than 50 workers would be exempted from this measure. 

Sub-option 2C: Basic pay reporting combined with joint pay assessment 

This Sub-option presents a less ambitious alternative, reserving the joint pay assessment 
to larger employers (measure 1), combining it with a less demanding requirement of pay 
reporting on the basis of easily accessible data for medium-sized employers (measure 2). 

Measure 1: Employers’ obligation to carry out a joint pay assessment 

The content of this measure would be similar to the one set out in Sub-option 2B. In light 
of the annual publication of a pay report (see measure 2), the assessment could be carried 
out on a less regular basis, every three years.  

Exemption:  employers  with  less  than  250  workers  would  be  exempted  from  this 
measure. 

Measure  2:  Employers’  obligation  to  report  on  average  differences  in  pay  between 

female and male workers 

This  measure  would  require  employers  to  publish  annually  the  information  on  the 
average  difference  in  pay  between  female  and  male  workers  as  a  percentage  of  the 
average salary of male workers in their organisation. Reporting on average differences in 
pay between men and women in the organisation permits to see how such differences are 
distributed among the overall workforce within the employer, whether they are visible in 
regard  to  the  basic  wage  or  rather/also  in  regard  to  other,  complementary  or  variable 
components such as benefits and bonuses and the proportion of male and female workers 
receiving such components. The information could be easily processed by employers on 

32 

 
the  basis  of  existing  data.  It  would  not  contain  precise  information  on  categories  of 
workers doing the same work or work of equal value; it can therefore only give a rough 
indication  of  possible  pay  inequalities.  No  remedial  action  by  employers  would  be 
required. The information made accessible under this measure would ensure a minimum 
transparency  of  easily  available  information;  as  such,  it  would  complement  the  more 
detailed pay information envisaged under option 1, which would only be available upon 
request.  This  measure  can  still  contribute  to  achieving  the  policy  objectives,  since  the 
publicity  of  the  information  and  the  possibility  for  workers  and  their  representatives, 
equality  bodies  and  labour  inspectorates  to  ask  for  an  explanation  of  any  differences 
shown in the report is expected to work as an incentive for employers to analyse further 
the drivers of pay differences and act upon them. 

The information provided under this measure is to be shared with the national authorities 
which  could  use  it  for  monitoring  compliance  with  the  obligation  to  report,  to  assess 
aggregated data, and possibly to tailor further targeted policy measures e.g. by sector or 
geographical area. 

Member States could alleviate the impact of this measure on employers by gathering the 
information by employer on the basis of administrative data, if available and interlinked.  

Exemption: employers with less than 50 workers would be exempted from this measure.  

Sub-option  2D:  Strengthened  pay  reporting  and  joint  pay  assessment  in  case  of  pay 
differences which cannot be justified by objective, gender-neutral factors 

This  Sub-option  further  reduces  costs  and  burden  for  employers  by  limiting  the 
obligation  to  carry  out  a  joint  pay  assessment  only  to  those  employers  which  have  a 
problem of pay inequality in their organisation. Such targeted action would be based on a 
strengthened  pay  reporting  obligation  which  gives  a  more  refined  view  on  pay 
inequalities than the pay reporting under Sub-option 2C above. 

Measure 1: Employers’ obligation to report on the average difference in pay between 

female and male workers by worker category  

This  measure  would  be  similar  to  measure  2  under  Sub-option  2C  above  but  would 
extend the reporting exercise by the calculation of the average difference in pay between 
female and male employees by categories of workers doing the same work or work of 
equal  value.  As  such,  it  would  provide  for  a  more  refined  diagnosis  of  possible  pay 
inequalities in the organisation. This latter information would only be made available to 
workers  and  their  representatives  (and  equality  bodies  and  labour  inspectorates  upon 
request).  The  reason  for  this  is  that  the  categorization  of  workers  performing  work  of 
equal  value  is  based  on  a  combination  and  weight  of  criteria  which  are  relevant  to  the 
specific  employer  concerned.  Such  information  may  more  appropriately  remain  within 
the employer concerned or be shared only with designated public bodies; it does not have 
much added value for the general public. The overall average pay gap at employer level 
would be made public as in Sub-option 2C. 

33 

 
Exemption:  employers  with  less  than  250  workers  would  be  exempted  from  this 
measure. 

Measure  2:  Employers’  obligation  to  carry  out  a  joint  pay  assessment  if  pay  reports 
show  pay  differences  which  cannot  be  justified  by  objective,  gender-neutral 
factors 

Under this Sub-option, a joint  pay  assessment  would  only be required if  the pay  report 
under measure 1 shows a difference of average pay between female and male workers at 
employer level of 5% in any category of workers doing the same work or work of equal 
value,  unless  the  employer  can  justify  this  difference  by  objective  factors.  In  case  of 
disagreement between the employer and workers’ representatives on the need to launch a 
joint  pay  assessment,  this  obligation  may  need  to  be  enforced  through  the  competent 
enforcement authorities. 

Exemption:  employers  with  less  than  250  workers  would  be  exempted  from  this 
measure. 

6.5.      Option  3:  Legislative  action  to  facilitate  the  application  of  and  enforce  the 

existing legal framework   

This option consists of a package of 3 measures aimed at  facilitating the application of 
and better enforcing the existing legal framework. It would tackle the regulatory problem 
driver  relating  to  the  inconsistent  and  inadequate  application  of  key  legal  concepts 
relating to the principle of equal pay (measure 1). It also addresses the problems relating 
to  access  to  justice  and  deficient  enforcement  through  addressing  the  procedural 
obstacles and victims’ support (measures 2 and 3).  

Measure 1: Facilitate the application of the existing key concepts of  ‘pay’ and ‘work 

of equal value’ 

This  measure  especially  would  ensure  a  common  approach  on  the  application  and 
interpretation  of  the  EU  rules  on  equal  pay.  It  would  enshrine  the  main  guidelines  and 
objective criteria set by the CJEU119 (which is of general nature and authoritative in all 
Member States) in the law. The application of such criteria would facilitate compliance 
with  the  existing  obligation  to  ensure  that  the  pay  structures  of  all  employers  are 
designed to uphold equality of pay between women and men doing equal work or work 
of equal value. 

The legal concept of ‘pay’ will be clarified to reflect that ‘pay’ comprises not only salary, 
but  also  its  complementary  components  whether  in  cash  or  in  kind,  which  the  workers 
receive directly or indirectly, in  respect  of their  employment from  their  employer. This 
clarification  will  ensure  that  the  equal  pay  principle  applies  to  all  components 
constituting  pay  –  not  only  its  fixed  amount,  but  also  variable  components  such  as 
bonuses,  overtime  compensation,  travel  facilities,  compensation  for  attending  training, 

119  For  example,  CJEU  Case  C-400/93  (Royal  Copenhagen);  Case  C-309/97  (Angestelltenbetriebsrat  der 
Wiener Gebietskrankenkasse); Case C-381/99 (Brunnhofer); Case C-61/81 (Commission of the European 
Communities v United Kingdom of Great Britain and Northern Ireland).   

34 

 
                                                           
payments in case of dismissal, overtime supplements, and gratuities paid at the discretion 
of  an  employer,  statutory  sick  pay,  statutory  required  compensation  and  occupational 
pensions.  The  principle  of  equal  pay  does  not  mean  that  all  workers  should  be  paid 
equally;  it  means  that  any  pay  differences  should  be  based  on  objective  criteria,  not 
related to sex. 

In regard to the concept of ‘work of equal value’, the Court stresses that the comparison 
of jobs should be made in the light of objective criteria, such as education, professional 
and  training  requirements,  skills,  effort  and  responsibility,  work  undertaken  and  the 
nature  of  the  tasks  involved120.  The  existing  legislation  would  benefit  from  an 
incorporation of these criteria, as examples, in the law. In practice the application of this 
concept  means  that  employers  have  to  identify  key  criteria  which  are  relevant  to  the 
organisation and its business model and based on which workers doing the same work or 
work of  equal  value  get  comparable pay. Again,  it does not  preclude employers to  pay 
workers  doing  the  same  work  or  work  of  equal  value  differently,  as  long  as  such 
differences  are  based  on  objective,  gender-neutral  and  bias-free  criteria  as  for  example 
performance and competence.  

In  order  to  comply  with  the  current  legal  framework,  all  employers  should  be  able  to 
define  which  workers  in  their  organisation  are  carrying  out  work  of  equal  value.  The 
application of the criteria to assess the value of work also assists workers, both women 
and men, who may have reason to believe their work is under-valued because of gender 
based discrimination, to obtain the necessary information to resolve the problem through 
negotiation  or,  as  a  last  resort,  to  bring  the  matter  to  the  equality  body,  labour 
inspectorate  or  national  courts.  In  situations  where  human  resource  management  is  not 
formalised  or  clear  criteria  are  not  established  by  the  employer,  the  evaluation  of  the 
categorisation of workers by value of the work within a given employer or organisation 
may require effort at managerial level.  

It  is  important  to  note that the comparison  of ‘work of equal  value’,  under the existing 
case  law  of  the  Court,  has  to  be  done  between  workers  at  employer  (as  opposed  to 
sectoral)  level.  It  does  not  compare  similar  jobs  at  sectoral  level  nor  similar  jobs 
between  different  employers  except  in  a  situation  where  pay  structures  are  laid  down 
centrally  for  more  than  one  organisation  or  business  within  a  holding  company  or 
conglomerate. So far, the concept has not been used under EU law to address horizontal 
gender segregation, i.e. the part of the gender pay gap linked to the fact that women are 
overrepresented  in  low  paid  sectors,  or  other  root-causes  of  the  gender  pay  gap.  This 
initiative does not aim to change this situation at this stage. 

Besides clarifying the concept of ‘equal value’ in the law, its implementation in practice 
would  be  improved  by  tools  or  guidelines  developed  at  EU  and  national  level.  At  EU 
level, such guidance would be foreseen as a flanking non-legislative measure under the 
Communication  accompanying  the  legislative  initiative.  Flexibility  would  be  left  to 

120  Case  C-400/93 
Gebietskrankenkasse); Case C-381/99 (Brunnhofer).   

(Royal  Copenhagen);  Case  C-309/97 

(Angestelltenbetriebsrat  der  Wiener 

35 

 
                                                           
Member States as to the choice of the tools or guidelines at national level; these could be 
developed by Governments and/or social partners.  

The tools to support the application of the concept of work of equal value could consist, 
for  instance,  of    gender-neutral  job  evaluation  and  classification  methodologies  (see 
Annex  5,  Section  14)121  or  IT  tools  such  as  Logib122.    Job  evaluation  and  classification 
systems, can be exploited as a basis for an equitable pay structure, though they usually go 
beyond  matters  relating  to  equal  pay,  including  all  matters  relating  to  labour  relations, 
such  as  hiring,  training,  health  and  safety,  etc.  Any  disputes  related  to  pay  or 
performance  evaluation  can  be  settled  conveniently  by  referring  to  the  existing  job 
evaluation  mechanism.  For  job  evaluation  mechanisms  to  be  effective  in  removing 
gender  inequalities  in  pay  structures,  they  must  include  criteria  relevant  to  modern  job 
descriptions  and  be  formulated  in  a  gender  neutral  way123,  i.e.  not  influenced  e.g.  by 
traditional stereotypes.  

Measure 2: Improved access to justice for potential victims of pay discrimination 

This measure includes a set of tools aimed at improving worker’s access to justice in case 
of alleged pay discrimination, addressing specifically the obstacles raised in the studies 
and consultations carried out for the 2020 Evaluation and this impact assessment.  

Victims’ representation (legal standing and representative actions)  

This  measure  would  strengthen  the  provisions  of  the  Recast  Directive  regarding  the 
defence  of  rights  (Article  17)  in  matters  of  pay  equality.  Equality  bodies  and  workers 
representatives’ organisations would have the capacity to act not only in support but also 
on behalf of victims in any judicial or administrative procedure. The aim is to relieve the 
burden of bringing a claim from the individual victim of pay discrimination, who may be 
in  a  precarious  and  vulnerable  situation  and  fear  victimisation.  The  measure  would 
include  the  possibility  for  equality  bodies  or  workers’  representatives  to  join  claims  of 
several victims, with the aim of supporting the latter but also possibly address structural 
discrimination in pay structures. 

An alternative would be to extend the right of action also to associations, organisations or 
other legal entities pursuing the enforcement of the right to equal pay.  

121 The introduction of such systems was already recommended by the European Parliament in one of the 
Recommendation of the so-called Bauer report (European Parliament,  Resolution with recommendations 
to the Commission on application of the principle of equal pay for male and female workers for equal work 
or work of equal value, 2012. (2011/2285(INI)), Texts adopted, P7_TA(2012)025). 
122  The  Logib  tool  (Lohngleichheit  im  Betrieb  –  Pay  Equality  in  Companies)  is  a  web-based  tool  that 
provides  a  standardised  report  on  differences  in  pay  by  gender,  including  an  analysis  of  the  wage  gaps 
within  the  organisation  (or  department),  both  unadjusted  and  adjusted.  It  was  originally  developed  in 
Switzerland and is now also used in Germany, Austria and Luxembourg. 
123 Brosi, P.; Schwarzmüller, T.; Welpe, I.,  Ensuring equal pay and equal access to employment through 
gender-neutral job evaluation and classification 2015. 

36 

 
                                                           
Strengthened and new remedies (compensation and injunction orders) 

This  measure  would  strengthen  the  already  existing  right  to  compensation  under  the 
Recast  Directive  (Article  18)  by  requiring  Member  States  to  enable  victims  who  have 
suffered  harm  caused  by  unjustified  pay  differences  to  obtain  full  compensation.  The 
CJEU  already  clarified  that  measures  appropriate  to  restore  genuine  equality  of 
opportunity  must  guarantee  real  and  effective  judicial  protection  and  have  a  genuine 
deterrent  effect  on  the  employer.124  This  measure  aims  at  translating  this  general 
requirement into more specific minimum standards applicable to matters covered by the 
initiative. It would ensure that the worker is placed in the position they would have been 
in  if no unjustified pay  difference had taken place (including full recovery of back pay 
and related bonuses or payments in kind, compensation for lost opportunities, and moral 
prejudice).  

Furthermore,  under  this  measure,  national  courts  would  have  the  possibility  to  stop  an 
infringement  or  to  order  the  implementation  of  structural  or  organisational  measures  to 
comply with the obligations foreseen under the proposed initiative. 

Limitation periods and legal costs   

One  of  the  obstacles  raised  in  the  context  of  gender  pay  discrimination  claims  is  the 
deadlines for claims to be brought before the courts (limitation periods). If they are too 
short  or  start  running  before  the  victim  may  actually  be  aware  of  the  existing 
discrimination,  limitation  periods  may  make  it  impossible  in  practice  for  the  victim  to 
exercise their rights. Under this measure, therefore, Member States would be required to 
comply  with  minimum  standards  set  out  by  the  initiative  and  applicable  to  matters 
covered  by  the  initiative.  Member  States  will  determine  when  the  period  starts,  its 
duration and the circumstances under which it is interrupted or suspended. 

Probably the most important obstacle preventing access to justice is the financial burden 
of enforcing the equal pay right. Such burden could be alleviated by allowing successful 
claimants to recover proceedings’ costs while defendants who are successful in rebutting 
a pay discrimination claim would, on the other hand, not have the right to recover such 
costs  from  the  claimant.  The  envisaged  rule  would  be  accompanied  by  an  additional 
safeguard so that the claimant-friendly rule would not apply in case of claims brought in 
bad faith, claims which are clearly frivolous or when the non-recovery by the defendant 
would be considered unreasonable under the circumstances. An alternative could be that 
the claimant would always be allowed to recover proceedings’ costs in an equal pay case 
from the defendant whether successful or not.  

Measure 3: Other measures to enhance enforcement and implementation 

Penalties 

124  Case  C-407/14,  María  Auxiliadora  Arjona  Camacho  v  Securitas  Seguridad  España  SA, 
ECLI:EU:C:2015:831, para. 31. 

37 

 
                                                           
This  measure  would  require  Member  States  to  lay  down  administrative  or  criminal 
sanctions or penalties aimed at enforcing rights and obligations under the initiative. The 
level  of sanctions/penalties should be  effective, proportionate and dissuasive. The level 
of fines should include a minimum level and be set at such a level as to reflect the value 
of  equal  pay  as  a  core  element  of  the  fundamental  right  to  equality  and  equal 
opportunities, ensuring a deterrent effect.  

Involvement of the social partners 

Social  partners  at  all  levels  (e.g.  employer,  sectoral,  national)  play  a  crucial  role  in 
ensuring the proper implementation of the right to equal pay. While the matter is high on 
the agenda of social partners in some Member States, it is hardly ever discussed in some 
others125.  The  initiative,  with  due  respect  to  the  autonomy  of  social  partners  and  in 
accordance  with  national  law  and  practice,  would  require  Member  States  to  take 
appropriate  measures  ensuring  that  the  implementation  of  the  rights  and  obligations 
under  this  initiative  be  discussed  with  social  partners.  This  could  be  achieved  through 
different policy measures to help develop active social partnership and inclusion of equal 
pay matters, especially ensuring proper implementation of the right to equal pay for work 
of  equal  value  as  a  key  element  of  collective  bargaining.  The  participation  of  social 
partners  is  important,  for  instance,  in  case  gender-neutral  job  evaluation  and 
classification methods are established to prevent or identify and tackle possible direct or 
indirect gender-based pay discrimination. 

6.6. Overview of the policy options  

Option 1: Legislative action to create pay transparency for individual workers 

Sub-option 1A: Empower workers by granting a right to pay information 

Measure 1: Transparency of salary information prior to employment (exemption: 
none) 

Measure  2:  Employers’  obligation  to  provide  all  workers  with  individual 
information on pay compared to their category doing the same work or work of 
equal value within the organisation (exemption: <50 workers) 

Sub-option 1B: Empower workers by granting right to request pay information 

Measure 1: Transparency of salary information prior to employment (exemption: 
none) 

Measure 2: Right of workers to receive individual information on pay compared 
to  their  category  doing  the  same  work  or  work  of  equal  value  within  the 
organisation  - upon request (exemption: none) 

Option 2: Legislative action to create pay transparency at employer level 

125 EY, Support study for the impact assessment, forthcoming 2021. 

38 

 
                                                           
Sub-option 2A: Equal pay certification (exemption: <50 workers) 

Sub-option 2B: Joint pay assessment (exemption: <50 workers) 

Sub-option 2C: Basic pay reporting combined with joint pay assessment 

Measure  1:  Employers’  obligation  to  carry  out  a  joint  pay  assessment 
(exemption: <250 workers) 

Measure  2:  Employers’  obligation  to  report  on  average  differences  in  pay 
between female and male workers at employer level (exemption: <50 workers)  

Sub-option 2D: Strengthened pay reporting and joint pay assessment if pay report 
shows pay differences which cannot be justified by objective, gender-neutral factors 

Measure  1:  Employers’  obligation  to  report  on  average  differences  in  pay 
between  female  and  male  workers  at  employer  level  and  by  worker  category 
doing the same work or work of equal value within the organisation (exemption: 
<250 workers)  

Measure 2: Employers’ obligation to carry out joint pay assessment if pay report 
shows  pay  differences  which  cannot  be  justified  by  objective,  gender-neutral 
factors 

Option 3: Legislative action to facilitate the application of and enforce the existing 
legal framework  

Measure 1: Facilitate the application of the existing key  concepts  of ‘pay’  and 
‘work of equal value’ 

Measure  2:  Improved  access 
discrimination 

to 

justice  for  potential  victims  of  pay 

Measure 3: Other measures to enhance enforcement and implementation 

7.  What are the impacts of the policy options? 

7.1.    Option 0: Status Quo 

See the Baseline (Section 4.3).  

7.2.  Option 1: Legislative action to create transparency for individual workers 

The  policy  sub-options  identified  in  this  section  primarily  address  the  first  specific 
objective  (see  Section  4.2)  of  this  initiative,  i.e.  empowering  workers  to  enforce  their 
right to equal pay. They aim at strengthening workers’ bargaining power when it comes 
to pay setting and their understanding of their position in regard to pay compared to other 
workers carrying out equal work or work of equal value in the organisation (not across 
sectors). 

39 

 
 
Sub-option 1A: Empower workers by granting a right to receive pay information  

Measure 1: Transparency of salary information prior to employment 

This  measure  is  likely  to  reduce  the  risk  of  gender  bias  when  salary  is  set  for  a  newly 
hired worker. The measure is twofold: first, it provides workers with information on the 
range of the salary envisaged for the vacancy before starting negotiating their salaries126. 
As  such,  it  strengthens  workers’  bargaining  position  by  ensuring  they  have  all  relevant 
information  to  negotiate  on  an  appropriate  basis.  Secondly,  it  prohibits  to  ask  for 
previous salary, something which has been shown to perpetuate gender gaps in pay over 
time,  especially  when  changing  job.  Overall,  this  measure  would  ensure  that  parties  to 
the salary negotiation are on equal footing as regards the information relating to the value 
(or  range)  assigned  by  the  employer  to  that  position.  It  would  ensure  that  salary 
negotiations are unbiased by possible gendered expectations, which tend to work (more 
frequently)  to  the  disadvantage  of  women,  with  consequences  lasting  during  the  entire 
career. Stakeholders’ views: the targeted consultation with social partners informed that 
the inclusion of expected salary in job postings is supported by the large majority of trade 
unions (78%) that participated in the consultation. It is also the most preferred option for 
action on the side of employer association  respondents,  though not  reaching a majority 
(41%) among them. As for the prohibition to ask about previous salaries, in the targeted 
consultation  with  Member  States,  seven  out  of  the  13  who  replied  to  the  question 
included  this  option  in  their  ideal  preferred  package  of  measures,  five  included  the 
prohibition  to  ask  for  previous  salary  and  six  the  prohibition  of  confidentiality 
agreements.  In  the  targeted  consultation  with  social  partners  about  38%  supported  this 
option,  as  the  envisaged  measures  are  yet  known  only  in  a  limited  number  of  Member 
States (see below). 

Costs:  there  are  no  direct  costs  related  to  the  right  to  information  on  pay  before 
employment, and the prohibition to ask about previous salary. Indirect costs could arise if 
the measure would lead to a limitation of the negotiating space for both parties, which is 
not the case. The measure only requires to share/receive information on the starting offer 
(or reasonable range) and would not constrain the negotiating power of either employer 
or  worker.127  Employers  could  be  protected  from  the  risk  of  having  prospective 
candidates ‘poached’ in very competitive job markets by the possibility, in the absence of 
a vacancy notice, to inform about the initial offer only at the beginning of the interview. 
While this would to  some extent reduce the  effectiveness  of the measure, it would still 

126  For  instance,  the  Austrian  Supreme  Court  held  that  the  fact  that  a  woman  expressed  a  lower  salary 
requirement  at  her  job  interview  than  her  male  comparator  cannot  justify  different  payments.  The  Court 
held that it is the employer’s responsibility to pay equally, since they can assess the performance of their 
employees,  having  information  about  the  respective  level  of  remuneration.  The  Court  added  that,  in 
evaluating  alleged  discrimination  on  grounds  of  sex,  the  social  environment  cannot  be  ignored.  From  a 
statistical point of view, women in Austria are paid less than men. Women are also more frequently willing 
to  accept  lower  paid  work  than  men,  particularly  because  women´s  work  is  generally  regarded  as  less 
difficult  and  consequently  ranking  lower  in  job  evaluations.  Equinet,  How  to  build  a  case  on  equal  pay, 
2016, available at: https://equineteurope.org/2016/equinet-handbook-how-to-build-a-case-on-equal-pay. 
127 The measure does not preclude employers to vary workers’ pay, as long as such differences are based 
on objective, gender-neutral and bias-free criteria as for example performance and competence. 

40 

 
                                                           
enable  workers  to  come  better  informed  at  the  negotiating  table.  This  measure  would 
only  carry  an  opportunity  cost  if  the  employer  had  intended  to  benefit  from  a  gender-
biased  salary  offer,  which  would  be  discriminatory  and  therefore  illegal.  Finally,  in 
general  terms,  it  is  also  more  efficient  to  avoid  having  good  candidates  competing  for 
positions  that  they  would  eventually  refuse  because  paid  below  their  minimum 
expectations. 

Benefits: Beyond rebalancing the information asymmetry and reducing the risk of gender 
bias  in  negotiations128,  disclosing  the  pay  range  offered  shows  to  prospective  workers 
how the skills and job requirements are evaluated and valued (process transparency). It 
also  motivates  employers  to  analyse  the  pay  setting  criteria  due  to  be  applied  when 
making the offer, and to ensure that these are gender neutral. The measure is expected to 
have a positive gender effect, as studies show that women negotiate better in transparent 
environments129. Finally, it contributes to building trust between workers and employers 
therefore promoting a better work environment. It is further reinforced by the prohibition 
to  ask  about  previous  salary  that  breaks  a  vicious  circle  of  path  dependency  in  salary 
setting.  

The measures  envisaged may be expected to  gradually benefit an increasing number of 
workers entering the labour market or changing job.130 They may lead to an increase in 
women’s salaries. Estimating such increase cannot, however, be predicted with reliability 
– it would need to be based on an estimate of the  gender biased difference in  salary131 
that  would  have  been  offered  in  the  absence  of  measures  applied  to  an  also  estimated 
share  of  job  applicants  for  each  employer.  This  measure  may  benefit  most  women  in 
precarious situations, such as single mothers, and women potentially subject to multiple 
to  face  higher  gender 
discrimination, 
discrimination  (see  problem  definition).  Finally,  the  consequent  increase  in  women’s 
salaries  may  have  a  negative  impact  on  the  profits  made  by  employers,  profits  which, 
however, were potentially based on illegal behaviour.  

two  categories  which  can  be  expected 

Legal  change:  Transparency  of  salary  information  prior  to  employment  is  currently 
available in 4 Member States (AT, LV, PT, SK) and the prohibition to ask about previous 
salary  only  exists  in  PT.132  No  concern  has  been  expressed  in  the  support  study  that 
introducing this measure would raise questions of feasibility.  

Conclusion: This measure entails low costs in comparison to related benefits, remedying 
the asymmetry of information on pay prior to employment and preventing a perpetuation 
of  an  existing  unjustified  pay  difference  between  women  and  men.  The  cost/benefit 
analysis is therefore positive, even if it entails a change in the majority of Member States.  

128 See problem definition in Section 2. 
129  Leibbrandt,  A.;  List  J.A.,  ‘Do  women  avoid  salary  negotiations?  Evidence  from  a  large-scale  natural 
field experiment’, Management Science 61.9, 2012 (published in 2015), pp. 2016-2024. . 
130 At aggregate level, this increase of salary for workers offsets the decrease in profit for employers. 
131  An  ongoing  behavioural  study  by  JRC  might  provide  useful  insight  on  the  order  of  magnitude.  See 
Annex 4 for details on the methodology.  
132 Information received from the European Equality Law Network. 

41 

 
                                                           
Measure 2:  Employers’ obligation to  provide all workers with individual  information 
on pay compared to their category 

In order to be able to meaningfully exercise their right to equal pay, workers must have 
the information  necessary  to  assess  prima facie  whether they may be the victim of pay 
discrimination.  This  measure  would  achieve  that  objective,  by  making  available  the 
information  on  the  average  level  of  pay  of  their  comparators  (i.e.  workers  carrying  out 
the  same  work  or  work  of  equal  value).  In  order  to  best  address  a  possible  fear  of 
victimisation on the part of workers, the information would be provided without workers 
having to ask for it. 

To the extent that employers have a firm-specific grouping or classification available, the 
information to be provided can easily be gathered (see Section 6.3, Sub-option 1A). If no 
such grouping or classification is available, the employer would need to determine first 
which  workers  carry  out  the  same  work  or  work  of  equal  value.  The  transparent 
classification of jobs and positions by the employer provides an objective picture of the 
pay structure and implicitly of the pay setting and progression mechanisms. As such, it 
brings to light possible biases on which employers could, but would not be obliged to act 
unless a worker were to show an unjustified gender-based pay difference. 

Exemption regarding the automatic provision of information for smaller employers.  

The grouping of workers into categories based on the content or value of the work they 
are attributed to do requires a minimum number of observations to be  effective.133 This 
minimum  number  is  influenced  by  the  specific  field,  the  organisation  of  work  in  the 
organisation and the proportion between women and men. In general, one can expect that 
smaller employers may have less room for differentiating between categories of workers 
or  may  possibly  have  categories  with  no  possible  gender  split.  In  Member  States  that 
have such type of measure in place, the threshold varies very widely, between 10 and 500 
workers  -  most  often  it  is  set  below  or  at  50  workers.  Studying  the  preparation  of 
measures under national law shows that the applicable threshold is  mostly  the result of 
political  decision-making.  For  this  initiative,  it  may  reasonably  be  assumed  that  the 
useful headcount making this measure meaningful, also in statistical terms, may be set at 
least 50 workers. Requiring smaller employers to pro-actively classify their workers and 
provide  regular  information  may  be  considered  as  disproportionate.  The  ‘50+  workers’ 
threshold is also the one retained in the 2014 Recommendation. Using such threshold, the 
right  to  receive  relevant  information  on  pay  automatically  would  apply  to  50%  of  the 
EU27 workforce and on average 1% of EU27 enterprises.  

To  protect  the  right  of  workers  in  organisations  with  less  than  50  workers,  it  must  be 
ensured  that  the  latter  always  have  the  right  to  request  the  information  on  the 
comparators  that  is  relevant  for  them.  Nevertheless,  additional  protection  seems  to  be 
needed since experience in Member States (e.g. Germany) shows that workers frequently 

133  This  technical  issue  is  recognised  even  by  existing  dedicated  softwares  e.g.  Payanalitics:  ‘an 
organization  size  of  around  50  people  is  needed  for  the  full  utilization  of  all  the  softwares  capabilities’. 
Available at: https://www.payanalytics.com/faq  

42 

 
                                                           
hesitate to request information on their comparators for fear of victimisation (e.g. being 
perceived as uncollegial or pushy). Although workers would have the right to request pay 
information,  they  might  be  reluctant  to  do  so.  Therefore,  their  right  to  request  is 
accompanied by a strengthened mechanism regarding the shift of the burden of proof in 
case  of  pay  discrimination.  Under  this  mechanism,  would  an  employer  not  reply  to  a 
worker’s request, this would trigger a presumption of gender pay discrimination and the 
burden to prove that there is no discrimination would automatically shift to the employer. 
Though this would not dispel fear of victimisation, it might provide more motivation for 
workers to act. 

the 

Data  protection.  During 
targeted  hearing  with  social  partners,  employers’ 
organisations raised certain concerns about data protection, especially on the conciliation 
of  potential  transparency  obligations  with  their  obligations  under  the  EU  General  Data 
Protection  Regulation  (GDPR).  These  concerns  were  not  shared  by  trade  unions  (see 
Annex  2).  Disclosure  of  private  data  is  allowed  if  required  by  a  legal  obligation  with  a 
legitimate aim – here the enforcement of the equal pay principle.134 Nevertheless, as the 
culture  around  pay  secrecy  varies  across  Member  States  and  in  order  to  address  the 
concerns,  safeguards  may  be  needed.  First  of  all,  disclosure  of  personal  data  of  an 
identifiable individual could  be avoided while protecting  workers’ right  to  information. 
This  could  be  done  by  disclosing  the  information  through  a  third  party,  such  as  an 
equality body, bound to maintain the confidentiality of the data. In addition, the initiative 
would permit to limit the use of the information obtained for purposes of making a claim 
relating to equal pay only.  

Stakeholder views: EU citizens who replied to the public consultation largely favour this 
measure (88%), as do trade union organisations (89%). Among employers’ organisations, 
only 18% support the measure. The main concerns expressed by employers relate not to 
the measure itself, but to the possible difficulties relating to the grouping of workers in 
categories of equal work or work of equal value (see Option 3) and data protection. The 
consultation  with  Member  States  revealed  that  a  majority  (59%)  of  them  thinks  this 
measure would be the most effective and would best support a better enforcement of the 
equal pay principle across the EU.  

it 

to  workers 

Costs:  For  employers,  the  direct  cost  would  arise  from  assembling  the  necessary 
information  and  communicating 
transparent  manner.  The 
communication cost itself would be very low: automatic information can be easily added 
to  the payslip and punctual  replies to  requests are even less costly overall.  The  overall 
communication cost for employers in EU27135 was estimated at between 70 and 137 
million EUR, i.e. an average cost per employer between a minimum of 32-135 EUR 
and a maximum of 53-262 EUR depending on size (see Annex 5, section 11 for details 
by Member State/employer size). These costs are recurring. 

in  a 

134 See article 6 (1) (c)and (f), General Data Protection Regulation, EU/2016/679. 
135  Data  on  the  number  of  companies  are  only  available  for  the  business  economy.  See  Annex  4  for  the 
methodology.  

43 

 
                                                           
If  the  employer  has  not  yet  compared  the  value  of  work  carried  out  by  workers  in  its 
organisation, the direct cost of this measure might be more substantial. Such cost would, 
however, only arise  from  the non-respect  of the current  legal  obligations under the EU 
Treaty and Recast directive. In that case, the preparatory work might be the most time-
consuming and therefore costly activity under this measure, though the bulk of this cost 
would be one-off. The time would depend on the level of preparedness of the employer, 
the complexity of the organisation and the tasks performed in the different positions136.  

In practice, the employer will build on the existing pay structure, hence no employer is 
likely to start  entirely from  scratch. Employers  must review the  criteria  used to  reward 
the  different  positions  (not  workers)  and  then  group  workers  accordingly.  The  only 
constraint is that these criteria must not be gender biased and must apply to all workers. 
They can however be defined taking into account discretionary elements as long as these 
elements  are  objective  and  free  from  gender  bias.  Collective  agreements  may  already 
provide  for  classifications  that  can  further  inform  the  process  and  therefore  their 
coverage  is  another  factor  influencing  how  demanding  the  process  would  be  and  how 
many  employers  would  be  concerned.  In  addition,  as  set  out  in  Option  3,  the  initiative 
could propose tools to support the classification exercise, thus limiting any burden which 
the measure may entail.  

For employers with 50 workers or more, this classification would need to take place pro-
actively in order to deliver the required information to workers. For employers with less 
than 50 workers, such classification would only need to be carried out in case of a request 
and would be limited to the category to which the requesting worker belongs.  

The possible additional estimated average cost of setting up the grouping of workers 
would  be  between  217  and  1080  EUR  per  employer  depending  on  employer  size 
(taking into account  that several  Member States already have tools available to  support 
the  classification).  It  is  not  possible  to  reliably  estimate  the  number  of  employers  that 
would  have  to  incur  these  costs  and  therefore  the  total  cost  at  EU  level.  This  action  is 
necessary only the first year and only requires adaptations in the following years. 

For  Member  States:  the  costs  of  this  measure  is  negligible.  It  was  estimated  in  the 
2014 Recommendation impact assessment as negligible137, linked to adding an additional 
task  consisting  of  regular  monitoring  of  employers’  compliance  and  dealing  with 
possible complaints.  

Unintended  effects:  Granting  access 
information  on  pay  could  produce  a 
‘disgruntlement effect’, i.e. a decrease in productivity from workers who find out to be 
paid unfairly. Would the difference be large, workers might decide to leave the employer 

to 

136 Job evaluation methods help to determine when two jobs that differ in content are of “equal value” and, 
thus, entitled to equal remuneration. For a review see for instance Chicha, M.-T., ‘A comparative analysis 
of promoting pay equity:  models and  impacts’, ILO Working Papers, International  Labour Organization, 
2006. A project to develop a methodology for a gender bias free assessment  of value of work in a specific 
sector  and  in  a  context  of  social  dialogue  was  cofunded  by  the  EU  in  2005-2008.  See  CGTP-IN  et  al, 
‘Value  of  work and  gender equality  – Guide to  applying a  methodology for assessing the  value  of  work 
free from gender bias’, Lisbon, November 2008 
137 It was estimated in 2014 at a current value between 4,000 and 25,000 EUR per Member State. 

44 

 
                                                           
with a turnover cost to organisations estimated at 100-150% of the salary of the worker 
include  upward  pressure139  on  wages  or  pay 
concerned138.  Other  concerns 
compression140,  and  potential  tensions  and  conflicts141,  which  may  contribute  to 
increased  rates  of  absenteeism.  While  these  effects  cannot  be  excluded,  it  should  be 
noted,  that  even  without  this  measure,  workers  could  in  any  case142  suspect  pay 
discrimination  or  misinterpret  informal  information  on  salaries.  This  underlines  the 
importance of addressing possible unjustified pay  differences and  establishing effective 
communication  on  what  justifies  differences.  A  PayScale  survey  of  70,000  US 
employees in 2015 showed that when people know why they earn what they earn through 
open and honest discussions about pay, they are less likely to quit their job 143. 

There  are  only  two  empirical  studies  in  the  EU  on  this  topic  with  divergent  findings. 
Bennedsen et al. (2019) found some evidence of  ‘disgruntlement’ after the introduction 
of  pay  transparency  measures  in  Denmark,  though  there  was  no  effect144  on  firms’ 
profitability because the reduction in productivity was offset by the lower wage growth 
of  male  employees.  Gulyas  et  al.  (2020)145  found  that  in  Austria,  introducing  pay 
transparency laws led to an increased retention rate of workers, pointing towards higher 
job  satisfaction.  There  is  no  evidence  on  the  extent  to  which  these  results  can  be 
generalised,  although  there  is  evidence  that  pay  transparency  has  a  positive  effect  on 
motivation (see section 2.1 and below). 

Benefits:  The  most  important  benefit  for  workers  is  empowerment  as  they  have  the 
necessary  information  to  assess  whether  they  are  paid  in  a  non-discriminatory  manner 
compared to other workers in the same organisation carrying out equal work or work of 
equal value – and a fortiori to enforce their right to equal pay. As to employers, while no 
remedial action is required unless a claim about unjustified pay differences is made, the 
measure  may  nevertheless  invite  them  to  look  at  their  pay  structures  as  regards  the 
category/ies of work of equal value for which information is given.  

Conclusion: This measure has a positive impact on empowering workers to enforce their 
fundamental  right  to  equal  pay  by  requiring  employers  to  provide  information 
automatically to workers.  While being effective in reaching the first specific objective, it 
would be less effective in removing bias in pay structures. In addition, it would impose a 

138 See for instance https://builtin.com/recruiting/cost-of-turnover 
139 Gomez, R.;Wald, S., ‘When Public-Sector Salaries Become Public Knowledge: Academic Salaries and 
Ontario’s Public Sector Salary Disclosure Act’, Canadian Public Administration, 2010. 
140  Kahn,  L.,  ‘Wage  compression  and  the  gender  pay  gap’,  IZA  World  of  Labor,  Institute  of  Labor 
Economics, 2015. 
141  Trotter,  R.  G.,  Zacur,  S.  Rawson  and  Stickney,  L.  T.,  The  new  age  of  pay  transparency,  Business 
Horizons, 60, issue 4, p. 529-539, 2017.. 
142  Al-Zu'bi,  H.  A.,  ‘A  study  of  relationship  between  organizational  justice  and  job  satisfaction’, 
International Journal of Business and Management, 2010. 
143 See  Smith, D.,  ‘Most People Have No Idea Whether They’re  Paid Fairly’,  Harvard Business Review, 
2015. Available at: https://hbr.org/2015/10/most-people-have-no-idea-whether-theyre-paid-fairly. 
144  However,  Cullen  and  Pakzad-Hurson  (2019)  found  that  firms’  profits  actually  increased  after  the 
implementation of pay transparency, due mainly to the fall in average wages. 
145  Gulyas  et  al.,‘Does  Pay  Transparency  Affect  the  Gender  Wage  Gap?  Evidence  from  Austria’, 
Discussion Paper Series – CRC TR 224, 2020.  

45 

 
                                                           
burden of communicating information to a great number of organisations, including those 
that  may  not  have  a  problem  of  pay  inequalities.  Therefore,  while  having  a  positive 
impact  on  protecting  the  fundamental  right  to  equal  pay,  this  Sub-option  may  be 
disproportionate,  particularly  taking  into  account  the  lack  of  hard  data  on  the  extent  of 
the  problem.  Also,  the  current  economic  crisis  as  a  result  of  the  COVID-19  pandemic 
already  puts  enterprises  under  a  lot  of  strain;  imposing  a  broad  measure  covering  all 
employers, including those that may have no problem, would be difficult to justify at the 
present time.  

Sub-option 1B: Empower workers by granting a right to request pay information  

Measure 1: Transparency of salary information prior to employment 

As in Sub-option 1A. 

Measure  2:  Right  of  workers  to  receive  individual  information  on  pay  compared  to 

their category upon request  

Under this sub-option, the right to information would only be enforced upon request from 
a worker. The type of impact of this measure would be the same as for Sub-option 1A; 
the  difference  would  mainly  lie  in  a  lower  administrative  burden  on  employers, 
depending  on  the  number  of  worker  requests;  there  would  be  no  requirement  to  pro-
actively inform each worker on an annual basis.  

Costs: It can reasonably be assumed that the communication cost146 for a single request 
would  be  proportionally  higher  than  the  cost  of  a  single  request  under  Sub-option  1A/ 
measure 2, as there would be no economies of scale. The total cost per employer would, 
however, remain below the cost of the automatic right to information, at least up to the 
point where the loss of economies of scale in replying to single requests would make it 
more  efficient  for  the  company  to  automatically  provide  the  information  to  all 
employees.  

An accurate estimate of the number of requests is not possible147. Estimating this number 
requires hypotheses on the percentage of employees that would request the information. 
This depends on many factors, e.g. the level of awareness about gender pay differences, 
the  perception  of  gender  pay  differences  being  justified  or  not  ,  the  availability  of 
relevant  comparators,  the  fear  of  victimisation  etc.  The  number  would  also  depend  on 
whether or not this measure is combined with Option 2. Considering that the overall cost 
is  not  likely  to  remain  substantial,  an  estimate  is  not  provided.  As  a  reference,  in 
Germany,  the  cost  of  a  single  request  (under  the  German  law)  was  estimated  at  20 
EUR148  and  a  request  was  filed  by  4%  of  those  entitled  to  ask,  i.e.  workers  in 

146 The possible cost to group employees would be the same as for Sub-option 1A, Measure 2, i.e. between 
217 and 1,080 EUR per employer depending on the size. 
147 An estimation per class-size would also require to know the distribution of employees per class, which 
is not available. 
148 Eurofound, Measures to promote gender pay transparency in companies: How much do they cost and 
what are their benefits and opportunities?, 2020.  

46 

 
                                                           
organisations with more than 500 employees (i.e. for a company of 500 employees, the 
cost of the requests would be of 400 EUR).  

For Member States: the costs of this measure, as in measure 2 sub-option 1A, would be 
linked to monitoring compliance and negligible. 

Benefits: The benefits of this sub-option are, at individual level, of the same nature as in 
sub-option 1A, insofar as the worker has the possibility to obtain the information relevant 
to  assess  potential  gender  pay  discrimination.  However,  under  this  Sub-option  the 
responsibility, including risk of victimisation, left to the individual worker is larger as it 
is  the  worker  who  needs  to  initiate  action  to  uncover  gender  pay  discrimination.  This 
could  be  countered,  however,  by  alleviating  the  worker’s  burden  in  accessing  justice, 
especially by further alleviating the burden of proof as in sub-option 1A. 

Legal  change across Member States:  The right  to  request  information  exists,  in  various 
forms,  in  10  Member  States,  either  directly  from  the  employer  and/or  through  a  third 
party.149  No  major  institutional  or  legal  barriers  to  the  implementation  of  this  measure 
have been highlighted. 

Conclusion: This measure has a positive impact on empowering workers to enforce their 
fundamental right to equal pay. Compared to Sub-option 1A, it shifts the responsibility of 
triggering transparency on the worker. As such, it may be considered less effective than 
Sub-option  1A.  On  the  other  hand,  it  gives  greater  consideration  to  the  proportionality 
arguments and the lack of knowledge about the size of the problem: it is less demanding 
for employers and would be more coherent with the current economic recovery policy. In 
order  to  counter  the  lower  effectiveness  for  workers,  it  could  be  accompanied  by  an 
alleviation of workers’ burden in accessing justice.  

7.3.  Option 2: Legislative action to create transparency at employer level 

The  policy  sub-options  identified  in  this  section  aim  at  realising  mainly  the  specific 
objective of  addressing a systemic undervaluation of women’s work at employer level by 
reducing  the  scope  for  gender  pay  discrimination  attracting  management’s  attention  to 
possible gender pay inequalities in wage structures. This recognises that pay inequalities 
do not only concern individual workers comparing their pay to co-workers of the other 
sex  carrying  out  the  same  work  or  work  of  equal  value,  but  can  be  embedded  in  a 
systemic way in the pay structures of an organisation, which may not value all relevant 
skills, and/or do so in a discriminatory manner.  

Sub-option 2A: Equal pay certification  

This certification,  as developed in  Iceland, ensures that ‘women and men, working for 
the same employer, are paid equal wages and enjoyed equal terms of employment for the 
same  jobs  or  jobs  of  equal  value,  unless  such  differences  can  be  justified  by  relevant 
considerations’. (IST 85).  

149 CY, DE, ES, FI, IE, LV, PT, NL, RO, SE – see Annex 5, section 3. 

47 

 
                                                           
Small employers’ exemption: The application of the standard in SMEs may be hampered 
by the lack of formal human resource practices (e.g. where each member of staff carries 
out multiple tasks and there exists no HR management) or may require hiring specialised 
staff.  The  measure  may  therefore  involve  proportionally  more  costs.  In  Iceland  the 
measure  applies  to  employers  with  more  than  25  workers  –  a  threshold  which  also 
applies for the obligation to develop equality plans at employer level – and follows a very 
strong  and  sustained  political  commitment  at  political  level.  To  limit  the burden  which 
certification may bring for smaller employers and in coherence with the other envisaged 
measures, we rather propose a threshold of at least 50 employees, which allows to cover 
50% of the EU27 workforce. Again, also in Iceland it appears that the decision on the 
threshold  ultimately  was  a  political  decision,  balancing  workers’  coverage  with 
employers’ burden. This balance also depends on the distribution of workers by employer 
size, which explains why a higher threshold may be justified in the EU than in Iceland. 

Costs  –  The  requirement  currently  exists  only  in  Iceland.  It  was  introduced  without  a 
formal impact assessment (See Annex 5, section 9 for details) and the implementation is 
still being rolled out, so there is no comprehensive evaluation yet. Empirical data are also 
scarce.  The  estimates  of  costs  are  based  on  preliminary  information  from  employers 
having already applied the scheme, as shared in a Mutual Learning Seminar organised by 
Icelandic authorities in 2019. 

For national administrations. This option is the most demanding among those proposed. 
As  the  standard  was  developed  by  Icelandic  Standards,  national  administrations/social 
partners  incur  no  costs  beyond  negligible  adaptations  to  each  country’s  specific  labour 
market  and  labour  laws.  However,  a  public  authority  must  be  tasked  to  manage  the 
scheme, i.e. organise the accreditation of auditors, keep the companies’ register, possibly 
control the use of a logo, monitor application and levy possible sanctions in case of non-
respect  of  the  standard.  This  function  could  be  carried  out  by  an  existing  body  or 
department in a ministry or an entirely new body, which could presumably also take up 
additional  tasks  related  to  gender  equality  in  general.  Extrapolating  the  cost  for  a 
voluntary labelling scheme computed in the impact assessment carried out for the 2014 
Recommendation,  the  cost  of  setting  up  a  new  dedicated  body  may  be  estimated  in 
current prices at 190,000 EUR150. This cost, if incurred, would come in addition to the 
costs estimated for monitoring compliance, i.e. a one-off cost of around 400,000 EUR 
for setting up a database and website and a recurrent maintenance cost of around 
50,000 EUR annually. Running costs would depend on the number of  new employees 
assigned to these functions.  

For  employers  -  A  certification  is  more  demanding  than  a  pay  reporting  or  a  joint  pay 
assessment  presented  under  the  next  Sub-options,  especially  in  terms  of  time  invested 

150  This  is  in  line  with  estimates  from  Estonia  for  setting  up  an  equal  pay  competence  centre  at  cost  of 
around  1  million  EUR  over  4  years  (including  IT  investments  and  administration  costs,  information, 
communication and other support activities). 

48 

 
                                                           
and  burden  on  the  part  of  employers151.  Interestingly,  according  to  unpublished 
information  from  a  survey  among  the  first  employers  that  introduced  the  standard  in 
Iceland, it appears that employers at the beginning of the process had overestimated the 
costs but underestimated the time and efforts needed for the implementation152. The main 
reported  challenges  were  the  job  classification,  the  implementation  of  procedures,  the 
lack  of  time  for  implementation,  and  the  certification  process  itself.  The  financial  cost 
was not among the main challenges cited by employers; it was named only on 8th place 
out  of  a  choice  of  11  factors.  Employers  that  already  apply  other  management  quality 
standards can build on those and reduce costs. Moreover, after the initial cost, the costs 
are likely to be significantly lower in the following years.  

The  estimated  cost  is  relatively  high  (and  substantially  higher  than  for  the  other  Sub-
options presented below): between a minimum of 2.2 and a maximum 3.4 billion EUR 
for  all  companies  with  at  least  50  employees,  i.e.  an  average  cost  per  employer 
between a minimum of 5,791 and 13,136 EUR and a maximum between 8,301 and 
24,512 EUR depending on the size of the organisation. For comparison, the estimated 
costs of an audit in the UK impact assessment on the national pay transparency measures 
was  around  15,000  EUR.  The  impact  assessment  for  the  2014  Recommendation 
estimated an actualised amount of between 1,500 and 5,600 EUR, depending on the size 
of  employer,  for  applying  a  voluntary  labelling  scheme.  Finally,  the  more  employers 
apply the scheme the lower the consultancy fees are likely to be.  

Benefits  –  Based  on  the  experience  from  Iceland,  there  are  indications  of  behavioural 
changes triggered by the certification. Most surveyed employers153 are satisfied with the 
standard: it  increased the quality of human resource  management and pay systems 
and  highlighted  pay  inequalities  as  well  as  the  intersectional  dimension  of 
discrimination.  Employers  are  able  to  improve  their  job  evaluation154  systems  and 
correct  undervalued  salaries.  60%  of  the  surveyed  employers  corrected  salaries  of 
specific  people  and  11%  corrected  it  for  wage  groups.  1/3  made  improvements  to  the 
evaluation  system or  reviewed the salary  system,  and ¼  changed job  titles or reviewed 
perks and bonuses. One-third of respondents also looked at equality factors not strictly 
required  by  the  standard,  e.g.  number  of  women  administrators,  appointments  to 

151  According  to  information  reported  during  a  mutual  learning  seminar  in  2019,  the  National  Bank  of 
Iceland estimated the average cost of obtaining the equal pay certification at: 2-3 million ISK (15-22,000k 
EUR) for a consulting firm, 800.000 ISK / 6,000 EUR  for the certification process itself and having one 
employee on the payroll for a year. In 2017, the monthly median income of in the category ‘personnel and 
career  professionals’  was  759,000  ISK  (around  6000  EUR).  The  Directorate  of  Customs,  the  first 
organisation to voluntary obtain the certification, had one employee on the payroll for six months. These 
estimates are in line with the results of a survey of the first (big) companies that obtained the certification: 
the cost varied from several hundred thousand icelandic kronas (ISK) to over 4 million, with an average of 
3 million ISK (22,000 EUR) and 40% of respondents spending below 2 million ISK. 
152 The average length for the implementation was 18 months for the bigger companies in the first survey, 
varying from 6 months to 2 years. 
153 81% of the 58 (large) employers who applied the standard and between 46 and 58% of the 206 smaller 
companies  surveyed  later.  The  difference  depends  on  the  stage  of  implementation  and  interestingly 
companies which had not started yet had much more negative opinions (13.3% very negative) compared to 
those which had almost concluded it (3%). 
154 See Annex 5, section 15 for some examples. 

49 

 
                                                           
boards and committees, gender ratio in job classification, training and other professional 
growth  opportunities  within  the  job.  Finally,  over  30%  which  did  not  previously  have 
any written procedures or quality systems developed them according to the standard. 
These findings correspond to the objective of the Standard to have better organised and 
formalised remuneration practices. The whole process required the involvement of senior 
management  and  reinforced  the  priority  given  to  equality  within  the  employer.  Other 
benefits  included  increased  employee  satisfaction  and  a  reduction  in  staff  turnover. 
We can expect that similar benefits would come from an application at EU level. 

Conclusion: This option would in principle eliminate any difference (at employer level) 
in pay by gender not linked to objective factors (including gender-neutral factors specific 
to  the  position  or  to  the  worker).  As  such,  it  would  in  particular  address  a  systemic 
undervaluation of women’s work and remove hidden gender bias. It would also be very 
visible and increase awareness of the equal pay principle. Theoretically, there should not 
even be a further need to empower workers in organisations covered by certification nor 
to increase access to justice as the absence of differences in pay linked to gender bias is 
certified  ex  ante.  In  order  to  guarantee  the  right  to  equal  pay  also  in  smaller 
organisations, this option could be combined with Sub-option 1B, especially Measure 2, 
which  ensures  that  workers  always  have  access  to  pay  information  relevant  to  assess 
whether  they  may  be  victim  of  pay  discrimination.  Nevertheless,  it  might  be  that  the 
great  visibility  of  the  measure  might  already  motivate  smaller  employers  to  comply 
voluntarily  with  the  Equal  pay  standard,  which  would  reduce  the  number  of  individual 
requests.  To  optimise  its  effectiveness,  the  certification  could  be  supported  by  a 
clarification of the key legal concepts relating to ‘pay’ and ‘equal value’ (see Option 3). 

The main limitation  of this  measure consists in  the  costs and the burden  it brings  for 
employers. Taking into account the difficulty in assessing the scale of the problem and at 
a time of economic downturn,155 it makes it score low from a proportionality perspective. 
It  requires  a  strong  commitment  from  the  management  at  employer  level  and  a  strong 
political commitment to pass and monitor the implementation of the certification. Iceland 
has  a  longstanding  tradition  in  this  regard:  employers  with  25  workers  or  more  are 
already required to have a gender equality plan and boards of employers with 50 or more 
workers are required to have gender balance (60/40 at least).  

Sub-option 2B: Joint pay assessment  

The joint pay assessment involves a systematic revision of pay structures combined with 
remedial action where needed. 

Exemption: There may be an issue in implementing this measure in smaller organisations 
as the computation of the average pay differences can be easily distorted by outliers - few 
employees at  the top  or at  the bottom  of the wage distribution. In light  of this possible 

155  The  latest  economic  forecasts  indicate  that  recovery  prospects  are  subject  to  a  high  degree  of 
uncertainty, with downside risks to the outlook (European Commission, Autumn 2020 European Economic 
Forecasts, Institutional Paper 136, November 2020). 

50 

 
                                                           
distortion  and  weighing  this  risk  against  the  burden  of  producing  the  assessment,  the 
initiative  would  limit  the  obligation  of  pay  assessment  to  employers  with  at  least  50 
workers. Applying such threshold, the pay assessment would apply to 50% of the EU27 
workforce and an average of 1% of EU27 enterprises. 

Carrying out, on a regular basis, an assessment of the employer’s pay structure and any 
pay  differentials  based  on  sex,  would  ensure  a  regular  analysis  of  the  proportion  of 
female and male workers in each category doing the same work or work of equal value, 
information on average pay levels in those categories, and an analysis of the reasons for 
any pay differences between women and men. 

The  effectiveness  of  the  measure  would  depend  on  the  follow-up  action  on  problems 
brought to light in the assessment. The Eurofound study showed significant differences 
between  employers  and  workers  in  terms  of  perception  of  actions  taken  (Eurofound, 
2020), suggesting the importance of addressing and communicating the pay audit results 
with workers. It also relies on the relevant expertise available at workers’ representatives 
level to be able to assess the root-causes of possible differences in pay – which might be 
stronger than workers’ own assessment of the same information.  

This  measure  provides  for  a  diagnosis  helping  the  development  of  targeted  action  on 
equal pay within the organisation and would contribute to bringing to light conscious or 
unconscious gender bias in pay setting and discriminatory pay practices.  

Ideally, an assessment should take place on an annual basis. This would allow to include 
short  term,  seasonal  and  interim  workers  where  relevant  and  would  follow  from  the 
definition of ‘pay’ encompassing all the elements  going beyond basic pay  that are best 
accounted  for on  an annual  basis.  It would also  reduce the costs as it may be expected 
that no relevant major changes take place from one  year to the next one, thus allowing 
employers and workers’ representatives to easily build on the results and actions from the 
previous  year.  It  also  allows  to  link  the  exercise  to  regular  the  workers’  evaluation, 
normally carried out every year, which might result in a revision of job descriptions (and 
possibly  of  pay)  or  the  introduction  of  new  profiles  at  employer’s  level.  Nevertheless, 
despite  all  the  above  reasons  for  an  annual  exercise,  it  may  be  noted  that,  in  those 
Member  States  that  have  introduced  a  similar  type  of  measure,  the  decision  on  the 
frequency  of  the  assessment  (between  1  to  4  years)  is  typically  subject  to  political 
decision-making. 

Stakeholders’  views:  pay  auditing/assessment  is  among  the  most  preferred  options  for 
trade union respondents to the consultation strategy (95.6%), but received limited support 
from employers’ associations (23.5%). The ILO highlighted pay audits as a platform for 
change in helping to expose pay differentials and to reveal the need for structural change 
in the workplace. It pointed to the value of providing practical support for employers to 
implement  measures;  making  employer  action  plans  public;  involving  employers’  and 
workers’  organisations;  recognising  the  effective  contribution  made  by  collective 
bargaining;  and  strengthening  complaint  mechanisms.  The  European  Women’s  Lobby 
recommended  the  introduction  of  mandatory  joint  pay  assessments  in  all organisations, 
regardless of size. Support to employers with up to 500 workers is recommended by the 

51 

 
Business & Professional Women organisation in order to create a culture of reporting and 
auditing on gender issues in the workplace, including pay.  

Costs: The Eurofound report found that this measure would be more time consuming and 
costly  than  other  transparency  measures  while  nevertheless  remaining  moderate.  The 
costs range from 88 EUR per audit in Estonia (where it is done only in the public sector) 
to  820  SEK  (80  EUR)  in  Sweden  (according  to  the  reply  from  Sweden  to  the  targeted 
survey),  and  to  1,390  EUR  on  an  annual  basis  for  the  compilation  of  a  full  gender 
equality plan including a pay audit in Finland.  

The average cost per employer (all sizes) would be between 1,800 and 2,500 EUR in 
their  first  year.  This  cost  might  decrease  in  the  following  exercises  depending  on  the 
learning curve in relation to the exercise and specific context for the employer. It should 
be noted that the costs of an internal assessment are manifestly lower than those related 
to an audit carried out by an external consultant (e.g. in UK, the costs of an external audit 
have  been  calculated  at  around  15,000  EUR).  The  recurring  costs  relating  to  any 
subsequent assessments are expected to be lower.  

The total cost for the EU 27 is estimated at between 636 and 932 EUR million, again 
taking into account that some Member States already apply similar measures. (See Annex 
5, section 11 - for the split by Member States and employer size). 

For Member States: the costs of this measure would be linked to monitoring compliance 
and therefore negligible. 

Benefits:  The  cooperation  between  employers  and  workers’  representatives  ensures  a 
supported  approach  and  leads  to  common  action.  The  communication  of  the  results 
contributes  to  a  better  workplace  environment  and  has  an  additional  deterrent  effect 
against non-compliance or failure to follow up. This measure triggers mandatory action 
on the part of employers to look into their pay setting practices and address any potential 
gender bias in pay structures. By encouraging proactive measures, it reduces the risk of 
legal  action  for  the  employer  and  the  need  to  respond  to  individual  requests,  hence 
savings of time and money. Employers could make use of tools to assess work of equal 
value,  such  as  gender-neutral  job  evaluation  and  classification  systems,  which  would 
effectively contribute to the implementation of the joint pay assessment. 

Data protection: see Option 1, Sub-option 1A, measure 2 

Legal  change  across  Member  States:  several  models  of  pay  auditing  are  currently 
available in 8 Member States (BE, DE, DK, ES, FI, FR, PT, SE). Their frequency ranges 
between  1  and  4  years.  The  degree  of  legal  change  required  in  these  Member  States 
would vary depending on what they already have in place. The measure would need to be 
set  up  in  the  remaining  19  Member  States  which  do  not  provide  for  a  joint  pay 
assessment yet.  

Conclusion:  In  a  situation  where  no  ex-ante  certification  would  be  organised  at 
Governmental  level,  an  annual  joint  pay  assessment  involving  workers’  representatives 
and employers would be the second best option to create pay transparency at employer 
level. The overall positive scoring of this measure by experts interviewed for the support 

52 

 
study  from  across  the  different  assessment  criteria  reflects  the  significant  expected 
effectiveness  of  joint  pay  assessments  in  removing  gender  bias  in  pay  structures.  The 
institutional  assessment  points  towards  a  positive  conclusion  in  spite  of  challenges  in 
relation  to  stakeholder  resistance.  There  is  no  indication  of  legal  barriers,  including  on 
data  protection  concerns  as  the  information  would  not  be  about  individual  identifiable 
workers’ data. Overall, all perspectives converge to a positive assessment with the scope 
to  boost  equality  outcomes  through  this  measure.  At  the  same  time  this  option  would 
bring the same proportionality questions as mentioned in Sub-option 2A. 

Finally,  as  with  pay  certification,  this  measure  could  be  accompanied  by  an  additional 
measure ensuring that the right to equal pay is ensured for those workers not covered by 
any  joint  pay  assessment,  i.e.  in  employers  with  less  than  50  workers.  This  option 
could therefore be combined with Sub-option 1A, in particular Measure 2, which ensures 
that  workers  in  such  organisations  have  access  to  pay  information  relevant  to  assess 
whether  they  may  be  the  victim  of  pay  discrimination.  In  addition,  its  implementation 
would  be  strengthened  if  combined  with  measures  aimed  at  the  facilitation  of  the 
application of the key legal concepts relating to ‘pay’ and ‘equal value’ (see Option 3). 
Finally, as no ex ante screening of pay structures is organised by public authorities, this 
option could be further supported by measures aimed at improving access to justice and 
other enforcement and implementation measures (see Option 3). 

Sub-option 2C: Basic pay reporting combined with joint pay assessment 

Measure 1: Employer obligation to carry out a joint pay assessment 

This measure would trigger a transparent revision of pay structures as set out under Sub-
option 2B but only on the part of larger employers. In order to create at least some degree 
of  transparency  in  medium-sized  employers,  it  would  be  complemented  by  a  pay 
reporting as referred to in measure 2. 

Exemption: Considering that employers already produce pay reports (measure 2), action 
may  already  be  triggered  by  stakeholders,  and  given  the  costs  involved  of  a  pay 
assessment,  this  additional  measure  would  be  limited  to  those  employers  expected  to 
have increasingly formalised human resources in-house, i.e. usually employers with more 
than 250 employees. This threshold is the one usually used to refer to larger organisations 
in  the  European  Union.156  It  is  also  in  between  the  thresholds  set  at  national  level  for 
similar  measures.157  The  study  of  preparatory  work  at  national  level  shows  that  the 
threshold is ultimately the subject of political decision. Finally, an integral part of a pay 
assessment is  an analysis  of pay structures and therefore also  of the job  evaluation  and 
classification  system  in  the  organisation,  in  order  to  ensure  that  all  relevant  skills  are 

156  European  Commission,  Recommendation  concerning  the definition  of  micro,  small  and medium-sized 
enterprises, 2003, p. 36–41. 
157  Thresholds  of  50+  or  lower  are  implemented  for  pay  reporting  or  pay  auditing  in  the  majority  of 
countries: BE, DK, EE, ES, FI, FR, LT, LU, PT, SE. Larger thresholds apply in AT (150+), IT (100+), and 
UK (250+). Only DE applies a threshold of 500+. 

53 

 
 
                                                           
valued and that they are valued in a gender-neutral way. This brings benefits mostly for 
employers of a certain size.158 Exempting employers with less than 250 employees from 
the  obligation  of  conducting  the  joint  pay  assessment,  while  further  reducing  the 
administrative burden from employers (as compared to Sub-option 2A), would limit the 
coverage  of  the  measure  to  33%  of  the  EU27  workforce  and  an  average  of  0.2%  of 
EU27 enterprises.159 

Costs: The total cost of the measure for employers in the class size ‘250+ workers’ in the 
EU27  for  ensuring  the  joint  pay  assessment  can  be  estimated  between  around  90  and 
125 million,160 i.e. an average cost between 1,829 and 2,175 EUR per employer (the 
detailed  calculations  per  country  and  employer  size  are  in  Annex  5,  section  11).  One 
could expect that these costs would decrease following a first assessment, as subsequent 
assessments  may  be  based  on  the  previous  one.  Also,  in  order  to  reduce  costs,  the 
assessment  could  be  carried  out  every  three  years,  considering  that  the  pay  reporting 
would fill in the gap between the joint pay assessments.  

For  Member  States:  as  in  Sub-option  2B,  the  costs  of  this  measure  would  be  linked  to 
monitoring compliance and therefore negligible. 

Benefits: As in Sub-option 2B but for less employers and workers. 

Measure  2:  Employer  obligation  to  report  on  average  differences  in  pay  between 

female and male workers 

The information under this measure gives a general idea about the situation regarding pay 
equality in the organisation. In countries where such information is published (e.g. UK, 
DE),  it  creates  peer  pressure,  raises  awareness  and  triggers  action.  It  gives  a  basis  for 
workers’  representatives,  labour  inspectorates  or  equality  bodies  to  ask  questions  and 
explanations if important gender pay differences come to light. 

Publishing data about average differences in pay between men and women at employer 
level  would  not  in  itself  directly  contribute  to  reaching  the  objective  of  empowering 
workers  to  claim  their  right  to  equal  pay,  but  it  offers  sufficient  details  to  motivate 
workers  to  request  more  information  should  they  suspect  gender  pay  discrimination. 
This,  in  addition  to  reputational  concerns  -  or  as  a  result  of  questions  by  trade  unions, 
labour  inspectorates  or  equality  bodies  -  could  therefore  trigger  action  on  the  part  of 
employers. It could more specifically serve as a trigger for a systematic revision of pay 
structures  from  the  perspective  of  discrimination  based  on  sex,  even  if  such  follow-up 
action would not be mandatory. 

The effect of this measure could be strengthened by ensuring a centralised publication of 
the data by the Government, as done, for instance, in the UK.161 The gathering of the data 
by  the  Government  would  further  allow  public  authorities  to  assess  and  monitor  the 
impact  of  pay  transparency  measures  at  aggregate  level.  It  would  also  allow  them  to 

158 See Impact assessment of the 2014 Recommendation, SWD(2014)59 final. 
159 Ibid. The 2014 Recommendation’s impact assessment obviously still covered the United Kingdom. 
160 The calculations take into account that some Member States already have adopted similar measures. 
161 See Gender pay gap service at https://gender-pay-gap.service.gov.uk. 

54 

 
                                                           
analyse the data to detect differences per region, per sector, etc. and to develop targeted 
policy measures. 

The  national  experts  who  contributed  to  the  support  study  were  particularly  positive 
about  this  measure  in  terms  of  fitting  within  existing  institutions  and  its  likely 
effectiveness (behavioural feasibility). 

Two important elements affecting efficiency need to be taken into account when shaping 
this measure: 

  Publicity  on  the  results  and  follow-up/monitoring:  publicity  is  an  important 
mechanism to promote change and awareness of the gender pay gap. In addition, 
it motivates employers to act taking into account branding, image, and capacity to 
attract talent. There should be follow-up action in case unjustified pay differences 
come to light. 

  Sanctions and/or positive incentives should be in place to ensure that employers 

provide the information. 

Exemption  for  smaller  employers:  There  are  statistical  reasons  to  exempt  smaller 
organisations from pay reporting. In small and very small employers, the computation of 
the average pay differences can easily be distorted by outliers or by few employees at the 
top  or  at  the  bottom  of  the  wage  distribution.  Because  of  this  possible  distortion  and 
weighing this risk against the burden of producing the report (even if the latter is low, see 
below), the initiative would limit the obligation of reporting on the pay gap to employers 
with at least 50 workers. The impact of such a limitation on the coverage of workforce 
and employers concerned is the same as set out under Sub-options 2A and 2B. 

Stakeholders’  views:  The  majority  of  respondents  (78.4%)  to  the  public  consultation 
think  pay  reporting  would  be  effective  to  better  enforce  the  principle  of  equal  pay.162 
Furthermore,  making  the  pay  report  available  to  the  public  at  large  is  expected  to  be 
effective by between 65% and 78% of respondents from all groups, with the exception of 
only a limited minority of employers/business associations and organisations supporting 
this  measure  (20%).  The  Member  States’  consultation  shows  that  a  large  majority  of 
respondents (82%) favour this measure and selected it as the first most effective one to 
better enforce the principle of equal pay. No particular concerns were raised. 

Costs:  For  employers  –  The  reporting  consists  of  three  different  steps:  (1)  information 
gathering, (2) computing the average pay differences, (3) writing and clearing the report 
for  publication.  Data  on  salaries  are  already  available  to  the  employer  and  the 
computation itself is not difficult; the most demanding task is the clearance process for 
the publication of the results and possibly developing a supporting narrative. 

The impact assessment for the 2014 Recommendation assessed the average time needed 
for (broader) pay reporting at  40 hours per  year. This  assessment is consistent  with the 
estimate for Germany of about 3.5 working days for a report obligation for an employer 

162  81%  of  respondents  from  trade  unions,  90%  of  NGOs,  81%  of  EU  citizens  while  the  measure  is 
considered effective for 46% of business/company associations and organisations. 

55 

 
                                                           
with  more  than  500  workers163  and  with  the  estimate  of  23  hours  in  the  impact 
assessment  of  the  UK  government  for  a  lighter  measure.  Finally,  the  mini-survey  of 
employers  carried  out  for  this  impact  assessment  showed  that  7  out  of  11  employers 
(mostly with over 250 workers) expect a cost below 1,000 EUR, noting that digitalisation 
and data availability simplify data processing.  

Our estimation of costs for the EU27 is consistent with these figures and is of an overall 
cost of around 131 and 214 million EUR, i.e. an average cost between 315 and 500 
EUR  per  employer.164  This  decreases  in  the  following  years  to  between  20  and  36 
million EUR, i.e. an average of less than 100 EUR per employer (the detailed estimated 
amounts per Member State are available in Annex 5, section 11). 

For  Member  States:  The  gathering  and  publication  of  the  reports  by  Member  States, 
including  an  analysis  of  the  aggregate  data,  would  entail  costs  on  the  part  of  Member 
States. The minimum costs are related to building a database to monitor compliance. This 
can be estimated as one-off cost of around 400,000 EUR for project and delivery of 
the  website  and  recurrent  maintenance  of  around  50,000  EUR  annually.165  An 
employee  should  be  assigned  full  time  to  monitor  compliance.  The  annual  median 
earning  of  public  employees  in  the  EU  is  around  32,000  EUR.  Member  States  could 
generally rely on existing administrative entities and/or hire new staff. Setting up a new 
dedicated body would be the most expensive option: the costs of setting up an equal pay 
competence  centre  in  Estonia  was  estimated  at  around  1  million  EUR  over  4  years 
(including  IT  investments  and  administration  costs,  information,  communication  and 
other  support  activities).  Such  a  body  would  be  likely  to  carry  out  broader  tasks  than 
simply  collecting  and  monitoring  data,  most  likely  it  would  also  deal  with  additional 
gender equality policies. 

Finally, there are no costs involved for trade unions/workers’ representatives in regard to 
the implementation of the measure. There may be work involved by these organisations 
in  the  follow-up  to  the  publication  of  the  pay  gap  information,  in  particular  when 
questions  arise  regarding  a  specific  employer  or  for  the  purpose  of  wage  negotiations. 
However,  any  such  follow-up  action  is  voluntary.  Nevertheless,  it  should  be  noted  that 
pro-active  monitoring  of  the  published  data  by  trade  unions/workers’  representatives 
would significantly increase the effectiveness of this measure. 

Unintended  effects:  Employers’  accountability  for  the  existence  of  average  gender  pay 
differences  in  their  organisation  would  make  somewhat  lower  managerial  wage 
discretion  and could  even influence hiring/firing decisions.  IT applications allowing to 
assess the impact of any prospective hiring on such differences are already available for 

163  Eurofound  (2020),  p.51.  This  estimate  is  based  on  the  assumption  that  the  required  data  are  already 
available in the company. 
164 These estimates take into account that some countries have already applied similar measures. See Annex 
4 for the methodology. 
165 Estimates based on the experience in the United Kingdom. 

56 

 
                                                           
free166. The effect could be to reduce the discretion of the employer, also given the larger 
publicity  of  the  information.  For  the  same  reason,  however,  more  accountability  could 
induce  employers’  voluntary  implementation  of  gender  equality  plans,  also  considering 
that workers’ representatives would have relevant information as basis for discussion.  

Benefits: Pay reporting has intangible benefits by making employers more conscious of 
equal  pay  issues,  with  an  added  peer  pressure  element  that  could  motivate  a  stronger 
focus  and  awareness  on  the  gender  pay  gap  not  only  among  workers  but  also  among 
other stakeholders e.g.  NGOs, national  and social  media. Depending on  the monitoring 
and  action  by  relevant  stakeholders,  the  measure  may  be  expected  to  trigger  action  at 
employer level. However, it should be noted that the main weakness of this measure, if 
adopted on its own, would be the lack of pro-active remedial action by employers in case 
the  data  were  to  show  possible  pay  inequalities  in  the  organisation.  Follow-up  action 
would only be triggered  in  case of questions  by  workers, their representatives,  or other 
stakeholders. 

Legal  change  across  Member  States:  several  models  of  pay  reporting  are  currently 
available in 11 Member States (AT, BE, DE, DK, ES, FR, IT, LT, LU, NL, PT). Some 
changes  may  be  required  in  these  Member  States  to  adapt  their  current  reporting 
obligation to that foreseen in this initiative. The measure would need to be set up in the 
remaining 16 Member States. 

Alternative  sub-option:  Pay  transparency  realized  through  action  by  national 
administrations  

It  may  be  feasible,  in  some  Member  States,  that  national  administrations  are  able  to 
gather and interlink the necessary data allowing for a computation of the gender pay gap 
per  employer.  Where  that  is  possible,  such  administrative  action  could  replace  the 
obligation for employers to do so.  

Technically, this is only possible if administrative data matching employers’ (firm level) 
to  workers’  (individual  level)  data,  including  benefits  in  cash  and  in-kind,  are 
available167. It would require interlinking data from several public administrations (such 
as tax inspectorates, social security offices, etc.). According to a study carried out by the 
OECD, some countries should already be able to carry out this task168. All 20 surveyed 

166 This is obviously not the ultimate purpose of these softwares. They are tools by which companies can 
(voluntarily)  analyse  their  pay  structures  and  detect  a  potential  gender  pay  gap  and  its  causes.  The 
company-specific  outcome  report  informs  about  the  (unadjusted  and  adjusted)  gender  pay  gaps  and  the 
statistical significance of the most relevant drivers. One example is for instance the EU-funded Equal pacE, 
based  on  Logib-D,  a  system  financed  by  the  German  government,  in  turn  based  on  Logib,  the  software 
used for official gender pay reporting in Switzerland.  
167 See Granato, S., Santangelo, G., ‘Administrative data for the evaluation of Pay transparency measures’, 
JRC Technical report, 2020. 
168  A  survey  on  the  availability  of  linked  firm-level  and  individual-level  data,  carried  out  in  cooperation 
with the OECD, gives the following picture. All 20 surveyed Member States, except Czechia, record firm-
level  information;  12  countries  already  link  firm-level  with  individual-level  data  (Belgium,  Denmark, 
Finland, Germany, Greece, Hungary, Latvia, Lithuania, Malta, the Netherlands, Portugal and Sweden) and 
five expect to be able to do so shortly (Austria, Bulgaria, Ireland, Italy and Spain). According to this study, 
Czechia,  Slovakia and Slovenia are not yet able to link the data, and have no specific plans to do so soon. 

57 

 
                                                           
Member States, except Czechia, record firm-level information; 12 countries already link 
firm-level  with  individual-level  data169  and  five  expect  to  be  able  to  do  so  shortly 
(Austria, Bulgaria, Ireland, Italy and Spain). According to this study, Czechia, Slovenia 
and Slovakia are not yet able to link the data, and have no specific plans to do so soon. 
Despite  this  study,  in  the  targeted  consultation  only  six  Member  States  out  of  20 
confirmed that their existing national registers (tax, social security, etc.) would allow to 
compute  the  gender  pay  gap  at  organisational  level170.  Computation  by  national 
organisations  already  happens  for  instance  in  Estonia  and  Denmark171.  In  the  public 
consultation,  Member  States  found  pay  reporting  done  by  organisations  more  efficient 
than  reporting  by  administrative  authorities.  Almost  80%  of  employer  organisations 
replying to the public consultation found it ineffective for the labour inspectorate/equality 
body  to  perform  automated  checks  based  on  employment,  tax,  and/or  social  security 
registers. 

In  addition,  the  computation  of  average  pay  differences  at  employer  level  by 
administrative authorities may have an  additional  drawback. It  would leave employers 
in  a  reactive  role,  just  in  case  they  would  be  flagged  in  the  system.  If  employers  are 
involved  in  the  reporting  themselves,  stronger  buy-in  and  commitment  from  the 
employer’s  management  level  may  be  expected,  eventually  leading  to  a  mind  shift  at 
employer  level.  Also,  employers  may  wish  to  control  and  handle  the  data  themselves, 
particularly in light of the relative small burden that calculating the average gender pay 
differences at employer level entails. 

Nevertheless,  in  light  of  the  concerns  expressed  by  employers’  associations  as  to  the 
possible burden on employers in the initiative and in light of the fact that certain Member 
States  may  be  able  to  alleviate  such  burden  by  achieving  the  results  of  this  measure 
through administrative computation of the pay gap at employer level, the initiative could 
allow the flexibility for Member States to impose this as an obligation on employers or 
carry out the task at governmental level. 

Overall conclusion of Sub-option 2C 

Under  this  option,  the  regular  joint  pay  assessment  would  be  limited  to  large 
organisations of at least 250 workers and to a tri-annual exercise in order to limit burden 
on employers. A lighter obligation would be added for those organisations of at least 50 
workers.  This  lighter  annual  exercise,  based  on  available  human  resource  data,  would 
create a framework that would bring to light potential pay inequalities in organisations. 
Even if the data gathered would not be very detailed and may not trigger follow-up action 
from  employers  in  the  absence  of  action  triggered  by  stakeholders,  the  publication  of 
such  data  would  give  indicative  information  to  stakeholders  and  may  be  expected  to 
create  peer  pressure  among  employers.  Therefore,  this  Sub-option  would  be  somewhat 

169 BE, DE, DK, EL, FI, HU, LT, LV, MT, NL, PT and SE. 
170 CZ, DK, FR, LT, PT and SE. 
171  In  Denmark,  annual  pay  reports  are  compiled  by  employers  organisations,  or  Statistics  Denmark  for 
non-affiliated  companies,  or  companies  themselves;  companies  must  then  share  the  results  with  workers 
representatives and pay audits are voluntary. In Estonia, for the public sector, the labour authority would 
run automated checks of companies based on wage data.  

58 

 
                                                           
effective  in  empowering  workers  and  relatively  effective  in  removing  bias  in  pay 
structure.  It  would  represent  a  proportionate  measure  having  limited  cost,  imposing  a 
limited  burden  on  employers  and  therefore  being  relatively  coherent  with  current 
economic recovery policy. 

For  all  workers  to  have  the  possibility  to  access  the  specific  information  relevant  to 
establish  gender  pay  discrimination,  the  pay  reporting  and  assessment  measures  above 
could  be  accompanied  by  the  measure  envisaged  under  Sub-option  1B,  especially 
Measure 2.  

As  in  Sub-option  2B  above,  the  joint  pay  assessment  could  be  supported  by  a 
clarification  improved  implementation  of  the  key  legal  concepts  relating  to  ‘pay’  and 
‘equal  value’ (see Option  3). As no  ex-ante screening of pay structures is organised by 
public  authorities,  this  option  could  be  further  supported  by  measures  aimed  at 
improving  access  to  justice  and  improved  enforcement  and  implementation  (see 
Option 3). 

Sub-option 2D: Strengthened pay reporting and joint pay assessment if pay differences 
which cannot be justified by objective, gender-neutral factors 

Measure  1:  Employer  obligation  to  report  on  average  differences  in  pay  between 

female and male workers by worker category 

The  strengthened  pay  reporting  envisaged  under  this  option  would  require  a  slightly 
heavier investment on the part of employers as they would need to calculate, in addition 
to  the  average  gender  pay  differences  in  their  organisation  overall,  more  specific  pay 
differences among workers carrying out the same work or work of equal value. However, 
it  should  be  noted  that  this  measure  requires  processing  the  same  information  as 
envisaged under measure 2 in Sub-option 1A and 1B, but for all categories of workers. 
Depending  on  the  situation,  the  employer  may  therefore  already  have  the  information 
available. Compared to the basic reporting under option 2C, access to this information is 
more valuable to precisely identify possible unjustified pay gaps and the reasons behind 
such gaps. 

Exemption: Because of the heavier burden on employers and in order to remain coherent 
with the other thresholds chosen for the pay transparency measures, this measure would 
exempt small and medium sized employers, i.e. employers with less than 250 workers. 
This measure would therefore cover about 33% of the EU27 workforce and an average 
of  0.2%  of  EU27  enterprises.  Again,  ultimately  the  threshold  is  subject  to  political 
decision. 

Costs: The total cost for the employers would amount to around 26 and 50 million EUR, 
i.e. between a minimum of 379-508 and a maximum of 721-890 EUR per employer 
depending on the size. These amounts are higher by class-size than those for Sub-option 
2C measure 2 (basic pay reporting for 50+), but they are lower as regards the total cost 
since a larger share of employers would be exempted. These costs would also be reduced 
in the following years. 

59 

 
For Member States: as in Sub-option 2C, the costs of this measure would be linked to the 
gathering and publication of the reports by Member States, including an analysis of the 
aggregate data and monitoring compliance.  

Benefits: The measure gives a more precise insight on the side of employers on possible 
discrimination and bias of which they may not have been aware (valuation of women’s 
work).  As  such,  the  measure  creates  a  better  enabling  environment  to  trigger  change, 
building  an  environment  of  transparency  and  trust.  This  would  have  a  result  on  the 
employer’s reputation, making it more attractive for new applicants and current workers 
(retention  of  talent),  and  pointing  to  higher  job  satisfaction.172  As  an  indirect  effect  it 
could  also  push  the  management  to  reflect  on  gender  equality  policies  more  generally. 
For workers, the measure gives them the information necessary to assess whether or not 
they may be subject to discrimination. This measure actually provides workers with the 
information foreseen under Option 1 in an automatic way, only in companies with more 
than  250  workers.  For  Member  States,  long-term  intangible  benefits  relate  to  raising 
awareness  and  stimulating  political  and  social  debate  on  gender  equality  issues  at 
employer level. The main weakness of this measure remains, however, that on its own it 
does  not  ensure  follow-up  action  on  the  side  of  the  employer,  as  it  does  not  impose 
corrective  measures.  For  that  reason  this  sub-option  envisages  targeted  joint  pay 
assessment to be applied where unjustified pay differences have been discovered. 

Data protection: see Option 1, Sub-option 1A, measure 2. 

Measure 2: Employer obligation to carry out a joint pay assessment if pay reports show 

pay differences which cannot be justified by objective, gender-neutral factors 

To ensure follow-up action in those organisations that show a problem of pay inequalities 
through  the  pay  reporting  conducted  under  measure  1,  pay  reporting  would  be 
accompanied by the obligation to carry out a joint pay assessment,  for those employers 
showing a difference of 5% in any category of workers doing the same work or work of 
equal value which cannot be justified by objective factors. This measure would build on 
the  pay  report,  not  duplicating  transparency  obligations,  and  would  remedy  the  main 
weakness  of  measure  1  in  a  targeted  manner.  The  5%  criterion  ensures  statistical 
significance.  In statistical  terms  5% level  gives an indication whether a phenomenon is 
worth  paying  attention  to  as  something  likely  to  occur  beyond  a  mere  coincidence.  In 
most areas of scientific research it is conventionally set at 5% level.  

Exemption:  This  measure  would  exempt  employers  with  less  than  250  employees,  for 
similar  reasons  as  set  out  under  Sub-option  2C.  Assuming  that  voluntary  follow-up 
action may have been triggered by the publication of the pay report (measure 1), the joint 
pay  assessment  would  only  be  imposed  as  a  mandatory  measure  for  statistically 
significant differences. As such, the measure would target follow-up action to those large 
employers where the pay report shows a manifest problem in regard to pay equality. 

172  Gulyas  et  al.  (2020)  analysed  the  effect  of  the    2011  Austrian  Pay  Transparency  Law  and  found  that  
policy led to an increase in the retention rate of workers.  

60 

 
                                                           
Cost:  Based  on  the  explanations  on  method  followed  to  calculate  the  cost  of  joint  pay 
assessments (cf. supra), the average cost of such assessment can be estimated between a 
minimum of 1,180-1,724 EUR and a maximum of 1,911 and 2,266 EUR depending 
on  size.  These  costs  are  lower  than  the  average  cost  of  option  2B,  as  they  are  partly 
covered from the pay reporting under measure 2D1 for which employers would already 
have  collected  and  published  part  of  the  information.  This  cost  may  be  expected  to 
decrease  in  any  subsequent  exercises  or  not  be  necessary  at  all,  should  the  unjustified 
difference in pay be eliminated as aimed to by the joint pay assessment.  

For Member States: the costs of this measure would be linked to monitoring compliance 
and may be considered negligible. 

Benefits: The main benefit of this measure would be that follow-up action is targeted to 
only  those  employers  where  problems  of  pay  inequalities  are  brought  to  light  by  pay 
reporting. See also Sub-options 2B and 2C above in relation to this measure. 

Overall conclusion on Sub-option 2D 

The pay reporting envisaged under this option would be more effective than under Sub-
option 2C, as it would bring to light not only possible pay inequalities in organisations, 
but also unjustified pay differences in specific categories of workers doing the same work 
or work of equal value. While this information may trigger voluntary follow-up action, a 
mandatory joint pay assessment would be required only in case of manifest problems of 
pay  inequalities.  By  limiting  the  obligation  on  employers  and  focusing  more  stringent 
intervention  on  employers  which  have  a  problem  relating  to  pay  inequalities,  this  Sub-
option  presents  the  most  proportionate  solution,  taking  into  account  current  limitations 
regarding  the  measurement  of  the  scale  of  the  problem  and  the  strain  on  companies  in 
this  time  of  economic  downturn.  The  limitation  of  both  measures  to  employers  with  at 
least 250 workers, while limiting their scope, would limit to the maximum extent the cost 
and burden on employers.  

However, in order to ensure the adequate protection of all workers also in organisations 
with  less  than  250  workers,  this  sub-option  could  be  combined  with  one  of  the  Sub-
options  of  Option  1;  this  could  especially  ensure  that  all  workers  have  access  to  the 
information necessary to assess whether they are victim of gender pay discrimination.  

In  addition,  in  order  to  increase  its  effectiveness,  the  joint  pay  assessment  could  be 
combined with Option 3.  

7.4.      Option  3:  Legislative  action  to  facilitate  and  enforce  the  existing  legal 

framework 

This option aims to address the problem of inconsistent and inadequate application of key 
concepts  relating  to  equal  pay.  It  does  so  by  allowing  workers  and  employers  to  more 
easily point to possible comparators of the other sex doing work of equal value. Access 
to justice and enforcement of the existing legal framework would be improved not only 
to  tackle  individual  instances  but  also  systemic  discrimination.  As  such,  it  would 

61 

 
contribute to addressing the undervaluation of women's work and to empower workers to 
claim their right to equal pay, even without pay transparency. 

Measure 1: Facilitate the application of the existing key concepts of ‘pay’ and ‘work of 

equal value’  

Stakeholders’ views: The public consultation showed broad consensus that the concept of 
‘work  of  equal  value’  requires  clearer  definition  and  improved  implementation  if  pay 
discrimination  legislation  is  to  be  effectively  implemented  and  enforced.  This  could  be 
done,  it  was  highlighted,  by  ensuring  the  gender  neutrality  of  job  evaluation  and 
classification, a measure that had the highest consensus in terms of effectiveness across 
all groups of respondents (80%). However, the targeted consultation with social partners 
revealed  antagonist  views  between  employers’  organisations  and  trade  unions.  While  a 
broad majority (87%) of trade union respondents view job evaluation  and classification 
as effective, especially in light of the direct involvement of social partners, the majority 
(58%) of employers’ organisations view this as ineffective.  

Costs: clarification of the ‘pay’ concept and incorporating the CJEU criteria into the new 
legislative proposal would not bring, as such, a change to the legal framework, as these 
criteria already apply through the case law today; it would only enhance the visibility of 
these criteria in the law. Therefore, it would not entail direct costs. As for the support for 
companies  in  the  implementation  of  the  concept  of  ‘work  of  equal  value’,  flexibility 
would  be  left  to  Member  States  concerning  the  choice  of  the  relevant  tools.  Any  costs 
would largely depend on the present availability of supporting instruments and therefore 
cannot  be  calculated  precisely.  For  instance,  gender  neutral  job  evaluation  and 
classification systems can be implemented at company level (which may take a few days 
in  a larger company) but  equally at  collective bargaining level  (which then depends on 
negotiations which may take months or years). 

Benefits:  Legal  clarity  aimed  at  a  uniform  application  of  key  concepts  would 
significantly support the proper implementation of the current legal framework, reducing 
implementation gaps.  

The availability of clear criteria in national legislation would help claimants to establish a 
valid  comparator  and  evaluate  whether  or  not  they  are  treated  less  favourably  than  the 
comparator  performing  the  same  work  or  work  of  equal  value.  It  would  also  allow 
employers to better categorize jobs based on objective criteria and ensure that such jobs 
are remunerated in a just and bias-free way. It is of particular relevance to note that in the 
consultations  carried  out  for  this  impact  assessment,  employers’  associations  raised 
concerns on the difficulty to assess what constitutes ‘work of equal value’, knowing that 
they  already  are  obliged  by  law  to  apply  that  concept.  It  should  be  stressed  that  the 
assessment  of  equal  value  is,  under  the  current  legal  framework,  an  assessment  at 
company  level,  and  not  at  sectoral  level  (which  is  out  of  the  scope  of  the  present 
initiative). 

Legal  change:  No  legal  barriers  have  been  identified  for  the  implementation  of  this 
measure. 

62 

 
Conclusion: This measure could help workers to establish a valid comparator and could 
allow employers to ascertain that their pay settings are based on bias-free and objective 
criteria  and  may  therefore  contribute  to  achieve  both  the  specific  objectives  of 
empowering  workers  and  addressing  the  systematic  undervaluation  of  work  done  by 
women. Furthermore, clarification of the ‘pay’ concept would clarify that the equal pay 
principle  applies  to  all  components  constituting  pay,  whether  in  cash  or  in  kind,  which 
the  workers  receive  directly  or  indirectly,  in  respect  of  their  employment  from  their 
employer.  These  measures  would  benefit  an  improved  implementation  of  the  current 
legal  framework,  but  could  also  be  used  to  support  the  implementation  of  new  pay 
transparency measures. 

Measure 2: Improved access to justice for potential victims of pay discrimination  

Victims’ representation (legal standing and representative actions):  

-  Legal standing 

Stakeholders’ views: More than three fourth (76%) of respondents from all groups to the 
public  consultation  found  that  strengthening  the  mandate  of  equality  bodies  as  well  as 
workers’  representatives  to  support  victims  would  be  an  effective  measure  to  improve 
access to justice for individual victims. 

Costs: this measure consists of a legislative change  at  EU level  which entails  no direct 
costs. In those Member States where equality bodies and workers’ representatives do not 
yet  have  legal  standing,  the  measure  might  increase  to  some  extent  their  workload 
assuming that they might, at least in the medium term, be asked to handle more claims. 
However, combined with the measure below on representative actions, they could ensure 
economies of scale as they could act on behalf of a group of victims.  

Benefits: Ensuring legal standing for equality bodies and workers’ representatives would 
contribute  to  removing  one  of  the  most  important  obstacles  which  victims  of  pay 
discrimination face when claiming their rights, especially the burden of carrying a legal 
claim and the fear of victimisation.  

Legal  change  required:  Equality  bodies  have  the  power  to  bring  cases  to  court  or  to 
represent  the  claimant  before  courts  or  administrative  bodies  in  only  8  Member  States 
(DK, FI, HU, IE, IT, SE, SI, SK).173 This measure would thus require a legal change in 
19 Member States where equality bodies presently do not have the power to act on behalf 
of  individuals.  As  regards,  workers’  representatives,  they  have  legal  standing  in  most 
Member States; the measure would entail a change only in four Member States (DE, EE, 
FI, RO).174 

-  Representative action   

173 Information received from the European Equality Law Network. 
174 Foubert, 2017, pp. 49-50. 

63 

 
 
                                                           
Article 17(1) of the Recast Directive contains a general requirement for Member States to 
ensure  that  judicial  procedures  are  available  for  victims  of  sex  discrimination  in 
employment  matters.  Member  States  have  mainly  not  implemented  this  provision, 
relying on their common civil judicial procedures laid down in national law. As a result, 
in most Member States victims of discrimination can only pursue an infringement of the 
right  to  equal  pay  on  an  individual  basis.  Experience  shows,  however,  that  structural 
biases in  pay structures in  a given organisation may affect  several  workers in  the same 
way.  

Costs:  introducing  this  measure  as  such  would  not  entail  costs.  It  would  enable 
economies of scale in the preparation and litigation of equal pay cases and may reduce 
coordination  and  transaction  costs  of  bringing  victims  together  for  redress  purposes. 
Qualified  entities  would  experience  procedural  efficiencies  from  being  able  to  assess 
equal  pay  claims  in  a  single  procedure,  enabling  them  to  bear  the  costs  of  preparing  a 
single  action.  If  the  action  is  successful,  it  will  of  course  entail  costs,  in  the  form  of 
proceedings  costs,  sanction  and/or  compensation,  for  infringing  employers.  Again, 
however,  such  costs  would  be  incurred  only  to  comply  with  their  current  obligations 
under EU law.  

Benefits: collective claims are a way to facilitate actions that would not otherwise have 
been  brought  because  of  procedural  and  financial  barriers  or  fear  of  victimisation.  In 
particular,  allowing  collective  complaints  can  reduce  the  fear  of  reprisals  and 
victimization  and  reduce  the  overall  costs  for  complainants.175  Furthermore,  collective 
claims  have  the  potential  to  improve  compliance  with  pay  transparency  measures 
especially regarding businesses sensitive to  reputational  damage. They also allow more 
easily  to  uncover  systemic  discrimination  and  create  visibility  of  equal  pay  and  gender 
equality in society as a whole. Representative actions therefore have an important impact 
on  employers'  awareness  and  willingness  to  act  preventively.  This  measure  combined 
with the other proposed enforcement measures may be expected to have a preventive and 
deterrent effect and reduce costs linked to legal action. 

Legal change: as collective action is currently only possible, in discrimination cases, in 
seven Member States (DK, ES, FR, IT, LV, NL, SI),176 this measure would bring change 
in the legal framework of 20 Member States. 

While it would be useful to extend the right of action also to associations, organisations 
or other legal entities pursuing the enforcement of the right to equal pay, the wide variety 
of  such  organisations  and  the  interests  they  represent  call  for  caution.  Such  alternative 
was therefore not retained. 

Strengthened and new remedies (compensation and injunction orders) 

Costs: The introduction of these requirements does not entail costs as such. Strengthened 
rules on compensation and court orders may entail costs for non-compliant employers, as 

175 That argument was as well mentioned in the International Labour Organisation’s answer to the public 
consultation. 
176 Based on Member States’ answers to the consultation. 

64 

 
                                                           
would  be  the  case  with  any  non-compliance  with  the  law.  Some  minimum  costs  of 
informing judicial authorities may be incurred; these may be covered, among others, by 
trainings such as those organised by the Academy of European Law (ERA) funded by the 
European Commission. 

Benefits: a strengthened requirement to compensation will provide incentives for victims 
of  gender  pay  discrimination  to  seek  justice  and  uphold  their  right  to  equal  pay.  Court 
orders  to  stop  infringements  or  impose  remedial  action  will  allow  to  address 
infringements  of  the  pay  transparency  rules  and  systemic  undervaluation  of  women’s 
work. In addition, these measures would contribute to dissuade employers to infringe the 
workers’ right to equal pay and motivate them to pro-actively undertake action.  

Minimum standards on limitation periods  

Costs: The introduction of this requirement does not entail any costs as such, except for 
training of judicial authorities which may have to apply the new rules (see above).  

Benefits:  for  victims  to  have  sufficient  time  to  gather  the  necessary  evidence  to  make 
their case and to take action once they become aware of the potential pay discrimination. 
Under the current  framework some victims may already have moved on to  another job 
and  many  other  victims  decide  simply  not  to  act  because  of  the  unsurmountable 
difficulties involved in taking the necessary action within the required time limits. Action 
on limitation periods requiring minimum standards would therefore enhance an effective 
access to justice. 

Legal change: Some Member States (DE, EE, LV, SI)177 have very short time limits to 
bring  a  case  to  court,  from  30  days  to  3  months.  Other  Member  States  have  longer 
limitation periods from 3 years (AT, BG, CZ, HU, LT, PL) to 5 years (BE, FR, NL).178  

Support to carry legal costs  

Stakeholders’ views:  respondents  in  the public consultation  conducted for this  initiative 
identified legal costs as a relevant enforcement problem in relation to pay discrimination. 
A large majority of respondents (92%) considers the provision of support to be important 
in order to lower these costs and enable action in pay discrimination cases.  

Costs:  Some  minimum  costs  of  informing  judicial  authorities  may  be  incurred  (see 
above).  

Benefits: The possibility for prevailing claimants to recover the proceedings’ costs while 
not  having  to  bear  the  costs  of  a  successful  defendant  would  alleviate  one  of  the  most 
important barriers faced by victims to enforce their rights and have access to justice. This 
rule would not apply to claims brought in bad faith, which are clearly frivolous or when 
the  non-recovery  by  the  defendant  would  be  considered  unreasonable  under  the 
circumstances. This rule would be innovative in most Member States, as it deviates from 

177 ICF, 2019. 
178 Information received through consultation of  the European Equality Law Network. 

65 

 
                                                           
the  normally  applicable  loser  pays  principle179.  However,  it  is  justified  in  the  specific 
case  of  pay  discrimination  because  of  the  particular  vulnerability  of  victims  in  these 
cases. 

The envisaged alternative that the claimant would recovers proceedings’ costs from the 
defendant whether successful or not would pose questions of fairness and proportionality 
and was therefore not retained.   

Overall conclusion of Measure 2: 

The  measure  could  contribute  to  achieving  both  the  specific  objectives  of  empowering 
workers to enforce their right to equal pay and addressing the systemic undervaluation of 
women’s work at employer level that would potentially come to light. Furthermore, the 
measure may be effective in tackling the problem driver of insufficient access to justice 
and would trigger action to remedy systemic discrimination overall with clarification of 
what  constitutes  full  compensation  and  providing  for  injunction  orders  in  case  of 
infringements.  

However,  while  these  measures  may  contribute  to  improving  the  existing  legal 
framework,  their  effectiveness  would  remain  rather  limited  if  applied  on  their  own 
because  potential  victims  of  gender  pay  discrimination  would  still  lack  crucial 
information on pay to bring gender pay discrimination claims to courts. 

Measure 3: Other measures to enhance enforcement and implementation 

Penalties 

Costs: Strengthening rules on sanctions/penalties would require some minimum costs of 
informing the authorities that have the power to sanction under national law (see above).  

Benefits:  The  proposed  measure  would  strengthen  the  existing  minimum  standards  on 
sanctions/penalties  regarding  gender  pay  discrimination  across  the  EU  and  further  the 
deterrence  effect  for  employers  engaging  in  illegal  behaviour  regarding  pay  setting 
practices  and  gender  pay  discrimination.  At  the  same  time,  it  would  have  a  preventive 
effect in stimulating employers to comply pro-actively.  

Conclusion:  this  measure  could  be  effective  in  tackling  the  problem  driver  of  deficient 
enforcement  of  the  right  to  equal  pay.  It  would  contribute  to  achieving  the  specific 
objective of addressing the systemic undervaluation of women’s work at employer level 
by sanctioning the infringement of the equal pay principle by employers and stimulating 
employers’ compliance. However, its effectiveness would remain limited if applied on its 
own  because  potential  victims  of  gender  pay  discrimination  would  still  lack  crucial 
information on pay to be able to bring gender pay discrimination claims to courts. 

179  Such  rule  exists,  for  instance,  in  the  United  Kingdom  in  certain  matters  (e.g.  personal  injury).  It  was 
recently  recommended  to  extend  it  to  discrimination  claims  before  the  county  courts  (see  House  of 
Commons  Women  and  Equalities  Committee,  Enforing  the  Equality  Act:  The  Law  and  the  Role  of  the 
Equality  and  Human  Rights  Commission,  10th  report  of  session  2017  –  19,  30  July  2019 
(https://publications.parliament.uk/pa/cm201719/cmselect/cmwomeq/1470/147003.htm). 

66 

 
                                                           
Involvement of social partners 

The  effect  of  this  measure  requiring  Member  States  to  take  appropriate  measures 
ensuring  that  the  implementation  of  the  rights  and  obligations  under  this  initiative  be 
discussed  with  social  partners  would  depend  on  the  culture  of  social  dialogue  in  the 
Member  States.  If  it  would  lead  to  equal  pay  matters  being  taken  up  in  collective 
bargaining,  it  would  concern  the  share  of  the  workforce  that  is  covered  by  collective 
agreements.  This  percentage  varies  largely  in  the  EU.  In  11  Member  States  the  largest 
share  of  workers  in  the  country  are  not  covered  by  collective  agreements.  Collective 
bargaining coverage ranges from 7% in LT to 98% in FR and AT.180 The level at which 
discussions  take  place  also  influences  the  impact  of  the  measure,  with  industrial  and 
national  level  being  the  most  common  modalities.  If  it  is  at  employer  level,  social 
partners could discuss employer-specific implementation and identify targeted solutions 
to reduce gender-based pay inequalities. As a result, action at all levels of social dialogue 
is  useful.  Such  action  would  increase  in  effectiveness  if  supported  by  the  information 
made available through pay transparency measures.  

Expert views. The study carried out for this impact assessment showed that this modality 
has the most positive score of all by experts in terms of effectiveness in addressing the 
problem  of  pay  inequalities.  The  experts’  scores  on  behavioural  feasibility  or 
effectiveness  also  underline  positive  outcomes.  However,  despite  the  overall  positive 
scoring of this measure across the different perspectives, the importance attached to the 
autonomy  of  social  partners  on  the  one  hand  and  the  weak  bargaining  culture  in  some 
Member States on the other hand lead to a greater spread of opinions than for some other 
modalities (see Annex 5, section 8 and EY, 2021). Institutional and legal  experts, social 
partners  and  individual  Member  States  raised  these  concerns.  In  order  to  respect  the 
autonomy of social  partners, the initiative would not  impose an obligation of result but 
only  an  obligation  on  Member  States  to  take  appropriate  measures  ensuring  that  the 
implementation  of  the  rights  and  obligations  under  the  initiative  is  discussed  in  social 
dialogue,  without  prejudice  to  the  autonomy  of  social  partners  and  in  accordance  with 
national law and practice181.  

Stakeholders’  views:  the  obligation  to  include  social  partners  in  the  implementation  of 
equal pay matters was viewed as being effective to better enforce the principle of equal 
pay  by  81%  of  respondents  from  the  public  consultation.  The  social  partners’  targeted 
consultation  shows that employers’ organisations and trade unions have opposite views 
regarding regular equal pay bargaining. A large majority of the trade unions respondents 
(85%)  answered  that  this  measure  would  be  effective  to  better  enforce  the  principle  of 
equal pay while 64% of employers’ organisations answered that this measure would be 
ineffective.  However,  outside  the  context  of  collective  bargaining  as  such,  the 
involvement of social partners is generally considered positive.  

180 European Trade Institute, What’s happening to collective bargaining in Europe?, April 2019.  
181 For example, during the consultation process, although this initiative does not concern wage formation 
or  setting,  the  Confederation  of  Swedish  Enterprises  emphasized  that  in  Sweden  social  partners  are 
responsible for wage formation and wage setting is to be determined in collective agreements. 

67 

 
                                                           
Costs: In accordance with the impact study for the 2014 Recommendation, the average 
annual  administrative cost  of this measure  for  employers  may  be  assessed as inexistent 
since the obligation only concerns social partners. For social partners the consideration 
of equal pay issues does not imply any significant costs, as it is part of their institutional 
discussions with no obligation of result. If the discussion would include matters such as 
the  desirability  of  gender-neutral  job  evaluation  and  classification  tools,  this  would 
require a minimum level of expertise for both parties. Several experts signalled that this 
is not necessarily always the case; some training would therefore be useful. 

For Member States, this measure could require ensuring that social partners are involved 
in  the  implementation  of  the  rights  and  obligations  under  the  directive.  The  obligation 
could be monitored by labour inspectorates or by other competent authorities as part of 
the  regular  monitoring  and  enforcement  of  the  equal  pay  legislation.  Estimates  on  the 
time spent to monitor social dialogue are not available in the literature. If Member States 
would  go  beyond  the  obligation  to  ensure  debate  on  the  matter,  and  go  into  the 
monitoring  of  collective  agreements  themselves,  it  may  be  referred  to  the  impact 
assessment  for  the  2014  Recommendation  which  reports  that  the  monitoring  of 
approximately  2,000  company  level  collective  agreements  would  take  100  hours.  That 
would  mean  an  average  updated  amount  of  around  15,000  EUR  per  year  per  Member 
State. However, this would not be mandatory under the current initiative. 

Benefits: The measure would raise awareness of equal pay matters among social partners, 
key  stakeholders  in  ensuring  protection  of  the  right  to  equal  pay.  As  a  result  of  this 
measure,  employers  and  trade  unions  could  e.g.  present  a  diagnosis  of  the  situation, 
identify  a  list  of  possible  measures  to  address  equal  pay  issues  and/or  the  discussion 
could  feed  into  wage  negotiations.  In  the  context  of  this  initiative,  this  measure 
contributes to addressing the systemic undervaluation of women’s work. 

Legal  change across  Member States:  In principle, this measure would not require legal 
change as social dialogue is available at national level. The measure would only require 
the inclusion of equal pay in the existing social dialogue and support the implementation 
of equal pay as such. As the 2020 evaluation identified, equal pay matters and pay audits 
have  so  far  been  explicitly  included  in  collective  bargaining  only  in  3  Member  States 
(BE, FR and LU).  

Conclusion:  This  measure  has  the  potential  to  address  the  systemic  undervaluation  of 
women’s work at employer level with the development of active social partnership and 
inclusion of equal pay matters, especially ensuring a proper implementation of the equal 
pay right to work of equal value as a key element of social dialogue. It would not impose 
an  obligation  of  result  but  only  an  obligation  on  Member  States  to  ensure  that  the 
implementation of the rights and obligations under the initiative is discussed with social 
partners,  without  prejudice  to  the  autonomy  of  social  partners  and  in  accordance  with 
national law and practice. 

68 

 
8.  How do the options compare / preferred option 

8.1. Effectiveness 

Option 0 would not be effective in achieving the objectives overall as no action would be 
initiated  to  tackle  the  problem  drivers  and  issues  highlighted.  This  means,  at  best, 
continuing at a very slow pace towards better enforcement of the equal pay principle. 

Option 1 Sub-option 1A scores high on achieving the specific objective of empowering 
workers to claim their right to equal pay as it would allow workers to have the necessary 
and  relevant  information  on  pay  and  to  be  most  effectively  protected  against  potential 
victimisation. On its own, however, it would not address the problem driver related to the 
persisting bias in pay setting mechanisms and valuation of women’s work because of the 
lack of structural  corrective measures. As such, it does not score well in  relation to the 
second  objective,  even  if  it  would  create  the  conditions  for  potential  remedial  action; 
employers  would  be  obliged  to  gather  the  information  on  a  regular  basis,  at  least  in 
organisations  with  at  least  50  workers,  which  might  potentially  incite  them  to  analyse 
their  pay  structures  more  closely.  In  order  to  more  effectively  remove  systemic  bias  in 
pay structures, this  option could  be combined with  either of the Sub-options  2B, 2C  or 
2D. 

Option  1  Sub-option  1B  scores  lower  than  Sub-option  1A  but  is  still  significant  to 
achieve the specific objective of empowering workers to claim their right to equal pay as 
it would allow all workers to request the relevant information on pay to their employers. 
This option would reduce the administrative burden on employers by relieving them from 
the obligation to inform workers on a regular basis. Workers would be protected through 
a strengthened reversal of the burden of proof countering a possible fear of victimisation. 
Even less than Sub-option 1A, however, this sub-option would not address the problem 
driver related to the persisting bias in pay setting mechanisms and valuation of women’s 
work.  Indeed,  because  of  the  lack  of  systematic  gathering  of  the  information  by 
employers,  the  latter  would  be  even  less  triggered  to  analyse  their  pay  structured  on 
hidden  pay  inequalities.  For  similar  reasons  as  Sub-option  1A,  this  Sub-option  could 
work better if combined with either of the Sub-options 2B, 2C or 2D. 

Option  2  Sub-option  2A  scores  very  high  in  effectiveness  for  the  two  main  specific 
objectives  and  therefore  also  high  on  the  general  objective.  It  would  contribute  to 
empowering  workers  ex  ante  (rather  than  ex  post,  once  a  discrimination  case  arises),  it 
would  strongly  address  the  systemic  undervaluation  of  women’s  work  by  an  ex-ante 
screening  of  pay  structures  thus  eliminating  gender  bias  in  pay  setting  practices  at 
employer level. The envisaged exemption, however, would reduce its impact; in order to 
protect all workers, this Sub-option could be combined with one of the Sub-options under 
Option 1, for those organisations not covered by the certification.  

Option  2  Sub-option  2B  equally  scores  very  high  on  achieving  the  two  main  specific 
objectives  and  thus  on  the  general  objective.  The  joint  pay  assessment  is  based  on 
information needed by workers to assess possible individual discrimination which would 
be made available to them, even if the assessment would not be carried out ex ante. If the 

69 

 
information  is  provided  in  a  transparent  manner  allowing  workers  to  place  themselves 
individually in the context of the provided salary information, it could also score well on 
the  first  specific  objective.  In  addition,  the  joint  pay  assessment  with  workers’ 
representatives  would  oblige  employers,  beyond  any 
instances  of 
discrimination, to focus the attention on potential gender bias in their pay structure and 
more importantly to take remedial action in case discrimination and bias are uncovered. 
However, the envisaged exemption would reduce the impact of this Sub-option; in order 
to protect all workers, it could be combined with one of the Sub-options under Option 1, 
for those organisations not covered by the joint pay assessment. 

individual 

Option 2 Sub-option 2C scores lower than Sub-option 2A or 2B. Indeed, pay reporting 
as  envisaged  under  this  Sub-option  would  not  give  workers  the  information  needed  to 
assess  possible  discrimination  in  their  individual  case,  but  it  gives  a  basis  for  workers, 
workers’  representatives,  labour  inspectorates  or  equality  bodies  to  ask  questions  and 
explanations on overall gender pay differences in organisations and acts as an incentive 
for companies to  assess those more in  detail.  Any  systematic revision of pay structures 
from  the  perspective  of  gender  pay  discrimination  would  nevertheless  depend  on  the 
willingness to do so by the employer based on peer pressure or questions as referred to 
above, except for large organisations with at least 250 workers that would be subject to a 
joint pay assessment. In order to be more effective on the first specific objective and to 
ensure the protection of workers in all organisations across the EU, this Sub-option could 
gain in effectiveness if combined with any Sub-option under Option 1, especially in those 
organisations not covered by the joint pay assessment. 

Option 2 Sub-option 2D scores lower than Sub-option 2C but is still relevant to achieve 
the  two  specific  objectives.  It  covers  less  employers  but  the  inclusion  of  the  additional 
key  element  in  the  pay  reporting  allowing  to  better  uncover  pay  discrimination  makes 
this  reporting  more  useful  than  the  one  under  Sub-option  2C.  The  limitation  of  the 
requirement  to  carry  out  a  joint  pay  assessment  to  those  organisations  where  problems 
would be evidenced, would permit to target action on the part of large employers where 
such  action  is  mostly  needed  (relevant  pay  difference  exceeding  the  statistical 
significance threshold). The envisaged limitation of the measures to organisations with at 
least  250  workers  would,  however,  reduce  the  impact  of  this  Sub-option.  Again,  given 
the  exemptions  envisaged  and  to  ensure  that  all  workers,  also  those  employed  in  small 
and medium-sized organisations, have tools to enforce their right to equal pay, it would 
gain in effectiveness if combined with any Sub-option under Option 1. 

Option  3  scores  relatively  high  on  achieving  both  specific  objectives.  It  does  so  by 
allowing  workers  to  more  easily  point  to  possible  comparators  of  the  other  sex  and 
employers to gain insight in their pay structures through a better understanding of what is 
‘work of equal value’. Access to justice would be improved, not only to tackle individual 
instances of gender pay discrimination but also systemic discrimination. However, on its 
own  this  option  would  only  partially  achieve  the  objectives  as  it  does  not  address  the 
primary  obstacle  consisting  in  the  lack  of  pay  information  necessary  to  assess  whether 
one  is  victim  of  pay  discrimination  or  whether  there  is  gender  bias  in  pay  structures. 

70 

 
Therefore,  in  order  to  contribute  to  the  overall  objective,  it  should  be  combined  with 
other measures foreseen under Options 1 and/or 2. 

8.2. Efficiency 

Option  0  scores  null  in  terms  of  efficiency  because  it  would  not  have  any  more 
costs/benefits than the current framework.  

Options  1  Sub-option  1A  scores  relatively  well  on  efficiency  in  relation  to  the  first 
specific  objective  as  it  has  the  most  benefits/social  impacts  on  workers  and  brings 
moderate economic costs for employers. Thanks to the exemptions tailored to the size of 
employers, the costs and burden are minimised for smaller employers. Even if workers 
would  not  automatically  receive  information  in  smaller  organisations,  an  effective 
protection  of  their  rights  would  still  be  ensured  by  the  reinforced  burden  of  proof 
mechanism  and  other  access  to  justice  tools.  On  the  other  hand,  this  option  would  still 
impose a burden of communicating information to a great number of organisations, also 
those  in  which  there  may  be  no  problem  relating  to  pay  inequalities.  The  Sub-Option 
does  not  score  very  well  on  the  second  specific  objective;  it  would  create  costs  for 
employers  without  triggering  a  systematic  revision  of  pay  structures,  even  if  it  would 
create the necessary conditions for such revisions. 

Option  1  Sub-option  1B  scores  better  on  efficiency  in  relation  to  the  first  specific 
objective.  It  achieves  the  objective  of  empowering  workers,  while  maximally  reducing 
the burden on employers. As such, it would constitute a more proportionate measure, in 
that  information  would only  need  to  be  provided  in  case  of  suspected  problem.  On  the 
other hand, it would score lower in  regard to  the second specific objective, as it would 
seem unlikely to trigger any systematic revision of pay structures in organisations. 

Option 2 Sub-option 2A scores lower than the other options on efficiency as the costs 
and burden of the option are much higher. Although the mandatory certification scheme 
has  the  potential  to  drastically  reduce  pay  discrimination,  its  application  to  all 
organisations with at least 50 workers would include those that might not have a problem 
relating  to  pay  inequalities.  In  addition,  its  application  in  Iceland  has  not  yet  been 
evaluated, therefore it is difficult to fully assess the rather high costs against the expected 
benefits.  

Option 2 Sub-option 2B scores better than Sub-Option 2A but still lower on efficiency 
than  Sub-options  2C  and  2D.  While  it  would  have  a  strong  influence  on  addressing 
gender bias in pay structures and has the potential to empower workers in organisations 
with  at  least  50  workers,  it  would  still  impose  a  noteworthy  burden  on  medium  sized 
employers, even if its cost would be lower than the cost of Sub-Option 2A. In addition, it 
suffers  from  the  same  drawback  as  Sub-Option  2A  in  that  it  would  entail  costs  and 
burden on the part of all employers, including those which may not  have a problem of 
pay inequalities in their organisation. 

Option  2  Sub-option  2C.  The  limited  average  time  of  pay  reporting  added  to  the 
possible  simplification  of  the  data  processing  through  digitalisation  shows  that  the 
overall  costs  of  pay  reporting  as  envisaged  under  this  Sub-option  remains  low.  This  is 

71 

 
proportionate to the benefits it entails in terms of peer pressure and providing at least an 
indication of possible pay inequalities triggering questions from stakeholders. While the 
measure  may  involve  more  costs  for  Member  States  in  regard  to  the  monitoring  of  the 
data, they could generally rely on existing administrative entities. In term of efficiency, 
some Member States may be able to alleviate the administrative burden on employers by 
achieving the results of this measure through administrative computation of the pay gap 
at employer level.  The joint  pay  assessment for  employers with  at  least 250 employees 
would  ensure  that  follow-up  action  takes  place  in  large  organisations;  its  costs  remain 
moderate compared to the benefits it brings. However, the assessment would be imposed 
on all such organisations, even those that may not have a problem with pay inequalities, 
thus raising similar questions regarding proportionality as Sub-Options 2A and 2B above. 

Option 2 Sub-option 2D would entail the least costs and burden for employers, ensuring 
transparency on pay structures in large organisations and providing targeted action where 
problems of discrimination and bias are detected. Benefits would be limited to workers in 
organisations  with  at  least  250  employees.  Nevertheless,  this  Sub-option  could  be 
considered the most adequate at this moment in time, in light of the lack of hard data on 
the extent of existing gender based pay discrimination on the one hand  and the current 
economic downturn as a result of the pandemic on the other hand. It would constitute a 
first  step,  allowing  to  gather  more  data  at  least  in  large  organisations  and  awaiting 
circumstances where employers could more easily carry the burden of more effective pay 
transparency measures. By laying down minimum standards targeting action only where 
necessary,  this  Sub-option  would  reach  the  second  specific  objective  in  a  more 
proportionate  manner.  However,  its  efficiency  in  relation  to  the  first  specific  objective 
would remain limited. 

Option  3  scores  relatively  high  on  efficiency  because  the  benefits  and  social  impacts 
would be higher than the costs involved. The envisaged measures consist  of legislative 
changes which entail no direct costs while providing strengthened protection and support 
to potential victims of discrimination and deterring potential infringers. 

8.3. Coherence 

In terms  of coherence, all the options considered under this initiative are coherent  with 
the social and economic goals of the EU as described in the Section 1 and Section 3.2 of 
this  impact  assessment.  Together  with  other  EU  action  such  as  the  Work-Life  Balance 
Directive, the proposed  Gender  Balance on Corporate Boards proposal,  the EU’s Skills 
Agenda, it contributes to combating the root causes of the gender pay gap. It is coherent 
to the Gender Equality Recast Directive, to which it would constitute a lex specialis (see 
Section 8.8 below). As a targeted binding measure, the initiative would address the most 
problematic issue identified by the 2013 implementation report of the Recast directive – 
the implementation of the principle of equal pay between women and men. It does so by 
way of measures which already exist to a certain extent in a number of Member States. 
This  proposal  is  also  coherent  with  the  initiative  aimed  at  increasing  companies’ 

72 

 
 
reporting of relevant non-financial information182. It is consistent with and supported by 
the EU minimum wage initiative183 and the upcoming sustainable corporate governance 
initiative184. 

The  initiative  is  coherent  with  the  Commission's  commitment  to  recovery  from  the 
economic  crisis  resulting  from  the  COVID-19  pandemic.  It  seeks  to  achieve  the 
proportionate balance between protecting workers’ rights and moderating the burden and 
costs of pay transparency for employers. Through a combination of measures, it may be 
ensured that a minimum level of transparency would exist in all organisations in the EU, 
even in small and medium-sized enterprises. The latter would thus not necessarily suffer 
in terms of image as attractive employers or ability to retain talent. Of course, they may 
always go for higher levels of transparency and remedial action if they wish to do so.  

At different  stages of the consultation  process,  including the consultation  related to  the 
2020 Evaluation, Member States and stakeholders expressed some concerns, in particular 
as  regards  the  possible  interference  of  EU-level  intervention  with  Member  States’ 
different  labour  market  models,  different  levels  of  social  partners’  participation  in  the 
area of wage setting and related employment relations as well as the autonomy of social 
partners. All options are designed in a manner that effectively addresses the objective of 
the  intervention  while  respecting  different  features  of  national  social  dialogue  and 
collective bargaining systems and the autonomy of social partners. The initiative not only 
allows  but  would  most  desirably  rely  on  social  partners  to  be  entrusted  with  the 
implementation  of  the  measures  and  would  allow  for  the  necessary  flexibility  in  this 
regard.  

8.4. Comparison of options 

The  table  below  compares  the  different  options  taking  into  account  the  assessment 
criteria of effectiveness, efficiency and coherence.  

Table 1: comparison of options 

Baseline 

Sub-option 
1A 

1
n
o
i
t
p
O

Sub-option 
1B 

Effectiveness 
0 
+++Strongly  effective 
in  ensuring  access  to 
information on pay and 
relevant 
comparators 
Less 
for  workers. 
effective  in  removing 
bias in pay structures 
in 
++ 
to 
ensuring 
information on pay and 
relevant 
comparators 
for  workers.  Not 

Effective 

access 

Efficiency 
0 
++  Beneficial  for  workers 
and  moderately  costly  for 
companies  and  Member 
States. 
Questions 
regarding  proportionality 
though 

Coherence 
0 
++ Higher positive impact on 
protection  of 
fundamental 
rights  and  social  goals  of  the 
EU.  Less 
coherent  with 
economic recovery policy 

Beneficial 

for 
+++ 
imposing 
workers  while 
less  costs  and  burden  on 
employers. 
More 
proportionate  

impact  on 
+++  Positive 
fundamental 
protection  of 
rights  and  social  goals  of  the 
EU.  Coherent  with  economic 
recovery policy 

182 https://ec.europa.eu/info/law/better-regulation/have-your-say/initiatives/12129-Revision-of-Non-
Financial-Reporting-Directive 
183 COM(2020) 682 final. 
184 https://ec.europa.eu/info/law/better-regulation/have-your-say/initiatives/12548-Sustainable-corporate-
governance  

73 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
                                                           
+  Addresses  both  specific 
objectives  but 
imposes 
high  burden  and  costs  on 
employers.  Questions  on 
proportionality though 

++  High  positive  impact  on 
protection  of 
fundamental 
rights  and  social  goals  of  the 
EU.  Less 
coherent  with 
economic recovery policy 

costs 

Better 

+  Addresses  mainly  the 
systemic 
undervaluation 
of  women’s  work  while 
still imposing high  burden 
and  costs  on  employers 
(proportionality) 
and 
++Limited 
and  moderate 
burden 
stimulus  for  employer’s 
action. 
on 
proportionality 
+++  Least  administrative 
burden and targeted action 
towards  employers  where 
problems 
of 
discrimination and bias are 
Most 
detected. 
proportionate  in  regard  to 
second specific objective 
+++  Least  administrative 
providing 
and 
burden 
strengthened 
protection 
and  support  to  potential 
victims  of  discrimination 
while  deterring  potential 
infringements of the law 

++  High  positive  impact  on 
protection  of 
fundamental 
rights  and  social  goals  of  the 
coherent  with 
EU.  Less 
economic recovery policy  

impact 
on 
++  Positive 
fundamental 
protection  of 
rights  and  social  goals  of  the 
EU.  Relatively  coherent  with 
economic recovery policy. 
impact  on 
+++ 
protection  of 
fundamental 
rights  and  social  goals  of  the 
EU.  Most  coherent  with 
economic recovery policy 

  Positive 

+++  Positive 
impact  on 
fundamental 
protection  of 
rights  and  social  goals  of  the 
EU.  Most  coherent  with 
economic recovery policy  

Sub-option 
2A 

Sub-option 
2B 

Sub-option 
2C 

Sub-option 
2D 

2
n
o
i
t
p
O

3
n
o
i
t
p
O

Effective 

effective  in  removing 
bias in pay structures 
strong 
+++  Very 
effectiveness 
in 
empowering  workers 
and  removing  bias  in 
pay  structures  (ex  ante 
certification) 
strong 
+++  Very 
effectiveness 
in 
removing  bias  in  pay 
structures;  potentially 
effective 
in 
empowering workers 
in 
++ 
removing 
addressing 
bias  in  pay  structures; 
somewhat  effective  in 
empowering workers 
+ 
Medium 
effectiveness 
in 
addressing 
systemic 
undervaluation 
of 
women’s 
work. 
in 
Limited  effective 
regard  to  empowering 
workers 
+  Somewhat  effective 
in  offering  employers 
the  tools  to  assess  and 
define  which  workers 
in  their  organisations 
are  carrying  out  work 
of  equal  value  (thus 
the 
addressing 
undervaluation 
of 
women’s work). While 
for 
helpful 
workers,  nevertheless 
limited effectiveness in 
the 
regard 
to 
of 
empowerment 
workers  because  of 
remaining 
of 
crucial  information  on 
pay 

lack 

also 

8.5. Possible combination of options 

The  above  analysis  shows  that  none  of  the  options  would  reach  the  two  specific 
objectives  on its own. However,  a combination of (Sub-)options  would permit  to  reach 
the two specific and hence also the general objective of the initiative.  

Option 3 is of limited relevance as a stand alone option. While it would improve better 
implementation  and  enforcement  of  the  existing  legal  framework,  it  is  not  expected  to 
improve  the  current  situation  tangibly  if  not  accompanied  by  the  possibility  to  gather 
information on a comparator and/or if employers are not involved in the gender analysis 

74 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
of  the  pay  structure.  This  option  should  therefore  be  combined  with  one  of  the  other 
options to be effective and to support them.  

The  basic  work  done  in  terms  of  data  gathering  by  an  employer  to  create  transparency 
both  at  individual  or  at  organisational  level  is  the  same  for  most  Sub-options  under 
Options 1 and 2. For this reason, most combinations of such Sub-options would lead to 
some  economies  in  terms  of  overall  cost  and  burden.  The  only  exception  is  basic  pay 
reporting  (Sub-option  2C),  where  this  obligation  is  much  lighter  as  no  active  grouping 
according to work of equal value would be triggered; the calculation would concern only 
the  percentage  of  pay  difference  between  all  women  and  all  men  working  within  the 
establishment.  

In  choosing  the  preferred  combination  of  Sub-options,  it  is  important  to  avoid 
unnecessary  duplication  of  obligations.  For  instance,  combining  Equal  pay  certification 
(Sub-option 2A) or Joint pay assessment (Sub-option 2B) with Option 1A would add a 
communication burden on employers without adding much information for workers. The 
latter  would  indeed  already  have  pay  information  as  a  result  of  the  certification/pay 
assessment (except in organisations with less than 50 workers).   

On the other hand, any Sub-option under Option 2 which would not lead to (all) workers 
having  the  necessary  transparency  on  their  individual  situation  in  regard  to  pay,  would 
need to be combined with either of the Sub-options under Option 1 in order to ensure that 
both specific objectives could be achieved. This would be particuraly the case for basic 
pay  reporting  (Sub-option  2C)  where  only  the  information  on  the  overall  gender  pay 
difference in the company is provided. 

8.6. Preferred Package 

In light of the above, the preferred package should be a combination of measures creating 
transparency at individual worker level and at employer level. These measures should be 
accompanied  by  measures  aiming  at  facilitating  the  application  of  the  key  concepts  on 
equal pay and at strengthening access to justice. 

The  best  combination  would  consist  of  Option  1B  (ensuring  transparency  prior  to 
employment and right to receive information on pay upon request), coupled with pay 
reporting on the part of large  employers, including on pay differences  among workers 
carrying out equal work or work of equal value and mandatory joint pay assessment in 
case of unjustified differences in pay between women and men in the same grouping of 
workers above a 5% threshold (Sub-option 2D). To be fully  functional,  these measures  
should be supported by Option 3 with its three measures.  

This  preferred  package  would  empower  workers  to  claim  their  right  to  equal  pay  and 
start creating an incentive to more systematically assess gender bias and discrimination in 
pay structures. It would achieve the objectives of the initiative while balancing workers’ 
fundamental  right  to  equal  pay  with  the  possible  burden  and  costs  of  the  envisaged 
measures on  employers.  Even if Sub-option 2D only applies to  employers with  at  least 
250  workers,  all  workers’  rights  would  still  be  protected  through  their  right  to  ask  for 

75 

 
information,  reinforced  further  by  improved  access  to  justice.  Moreover,  the  package 
may  be  expected  to  increase  broader  awareness  around  equal  pay  and  could  therefore  
prompt a voluntary move towards more transparency at employer level.  

The  preferred  package  would  reach  the  objectives  in  the  most  proportionate  manner 
possible as it allows to improve the practical possibility to verify and assert the respect of 
the  equal  pay  principle  for  all  workers  while  at  the  same  time  limiting  costs  to  a 
maximum  extent.  It  is  not  possible  to  provide  an  estimate  of  the  total  costs  of  the 
preferred package. As to the cost related to the individual right of information, the cost of 
a  single  request  was  estimated  at  20  EUR.  The  total  cost  per  company  as  for  pay 
information will depend on the number of requests. The overall cost for pay reporting for 
employers would amount to around 26 and 50 million EUR, i.e. between a minimum of 
379-508 and a maximum of 721-890 EUR per employer depending on the size. Where 
gender pay differences are small or absent, there will be no or little follow-up action (pay 
assessment)  triggered  -  the  average  cost  per  employer  to  carry  out  the  additional 
assessment  has  been  estimated  between  a  minimum  of  1,180-1,724  EUR  and  a 
maximum of 1,911 and 2,266 EUR (expected to decrease in any subsequent exercises to 
respectively 843-1,232 EUR and 1,461-1,675 EUR). As described in previous sections, 
the cost for national administrations would amount to one-off spending of 400,000 EUR  
and about 82,000 EUR annually. 

The  choice  for  a  rather  modest  policy  intervention  furthermore  takes  into  account  the 
lack  of  hard  data  on  the  size  of  the  problem.  The  chosen  pay  transparency  measures 
permit  to  target  the  more  stringent  obligations  to  companies  with  a  gender  pay 
discrimination  problem. They may be expected to  shed more light  on the extent of pay 
discrimination in the future.  

The choice is furthermore based on the uncertainty linked to the longer term  economic 
impact of the COVID-19 crisis  which puts  employers  already under significant  stress. 
The  latest  economic  forecasts  indicate  that  recovery  prospects  are  subject  to  a  high 
degree of uncertainty, with downside risks to the outlook.185 It is hence advisable to focus 
on instruments which, while giving individuals some minimum tools to claim their right, 
do not impose unnecessary costs and burden on employers at this time. 

Once the impact of the current measures as well as the impact of the current economic 
crisis  is  clear,  the  opportunity  for  extending  the  scope  of  the  measures  could  be 
assessed with the help of the additional data on pay discrimination collected through the 
first measures.  

8.7. Hypothetical  scenario  of  the  potential  economic  impact  of  the  preferred 

package of measures 

The  impact  of  pay  transparency  measures  should  ideally  be  measured  through  the 
reduction of pay discrimination  and/or a reduction of gender bias in  pay  structures that 
would affect relative wages between women and men. As a suitable metrics of the scale 

185  European  Commission,  European  Economic  Forecasts  Autumn  2020,  Institutional  Paper  136, 
November 2020. 

76 

 
                                                           
of ‘gender pay discrimination’, or even of ‘gender discrimination’, is lacking, this impact 
assessment estimates – purely for illustrational purposes – distributional effects of a very 
modest reduction in the gender pay gap that may result from pay transparency measures. 
The  assumption  is  that  pay  transparency  will  help  correcting  discriminatory  gender 
differences in average wages and therefore reduce the share of the gender pay gap that is 
due  to  gender  pay  discrimination.  Since  this  share,  as  mentioned,  cannot  be  measured 
with  precision, the estimates of a possible impact  rely on experts’ judgement  and other 
various, mostly qualitative, assessments of the possible reduction. More specifically, the 
hypothetical  scenario is  built  based on estimates available in  the impact  assessment for 
the  2014  Recommendation  for  similar  measures  and  on  the  qualitative  assessment  of 
experts  consulted  in  the  context  of  the  support  study  for  this  initiative.  Similar 
assessments  have  been  carried  out  elsewhere,  such  as  in  the  European  Parliament’s 
study186 and in studies assessing the impact of pay transparency measures carried out at 
national level187. 

The qualitative assessment of experts confirms the possible scale of estimates presented 
in the impact assessment for the 2014 Recommendation for similar measures, namely: 

  a  right  to  pay  information  would  have  a  positive  impact  in  the  order  of  1-2 

percentage points reduction of the gender pay gap; 

  pay reporting would have a positive impact in the order of 2-3 percentage points 

 

reduction of the gender pay gap; 
joint pay assessment would have a positive impact in the order of 2-4 percentage 
points reduction of the gender pay gap. 

In addition, if social partners are involved and this would lead to equal pay matters being 
included  in  collective  bargaining,  this  would  have  a  positive  impact  in  the  order  1 
percentage point reduction of the gender pay gap. 

Considering that the measures in the preferred package (combination of Sub-option 1B, 
Sub-option 2D, and Option 3), cannot have, and do not aim at having, an impact on all 
the root causes of the gender pay gap, but are meant to affect pay discrimination, which 
is one part of the unexplained component of the gender pay gap, the percentage change is 
applied  to  the  latter  only.  In  order  to  estimate  potential  distributional  effects  in  a 
hypothetical scenario, we assume a conservative reduction of the unexplained part of 
the  pay  gap  of  3  percentage  points  as  a  result  of  the  application  of  the  package  of 
measures. Pay transparency measures would influence differences in pay by gender and 
therefore wages and the income distribution. This change assumes that the average speed 
of  the  reduction  in  the  unexplained  pay  gap  would  double  as  compared  to  the  change 

186 European Parliament, Equal pay for equal work – Binding pay-transparency measures, 2020.  
187 See Annex 5, section 4 for a summary review, i.e. Baker et al., ‘Pay Transparency and the Gender Gap’, 
NBER, 2019 (Canada); Vaccaro, G., ‘Using econometrics to reduce gender discrimination: Evidence from 
a  Difference-in-Discontinuity Design’,  IZA, 2018 (Switzerland); Manning,  A.,  ‘The Equal Pay  Act as an 
Experiment to Test Theories of the Labour Market’,  Economica, 1996 (UK); Bennedsen et al. ‘Do Firms 
Respond to Gender Pay Gap Transparency?’, NBER, 2019 (Denmark); Kim, M. (2015), ‘Pay Secrecy and 
the Gender Wage Gap in the United States’, Industrial Relations, 54, 2015, pp.: 648-667. (US). 

77 

 
                                                           
observed  for  the  years  2010-2014.188  This  overall  estimate  is  more  conservative  than 
what can be found e.g. in the assessment of the Recommendations of the Bauer report.189  

Impact  on  household  income  distribution,  risk  of  poverty  and  public  budgets:  The 
following analysis looks at the potential direct impact of a reduction in the unexplained 
part  of  the  gender  pay  gap  on  the  household  income  distribution  (the  at-riskofpoverty 
rates (per different groups) and on government budgets using the EUROMOD190 model 
(See Annex 4, section 4 for more details).  

EUROMOD is  a static tax-benefit microsimulation model, which allows simulating the 
immediate  effects  of  a  policy  change.  In  this  modelling  framework  neither  behavioral 
responses nor general equilibrium macroeconomic effects are accounted for; thus, results 
should be interpreted as a ¨morning-after¨ effect.  

For this  analysis, the simulations focused on the impact  of an externally  given targeted 
increase in  women  gross hourly wages, driven by  the  expected reduction of the  gender 
pay gap, while keeping constant all other variables, including male wages. The estimated 
impact  on  household  disposable  income  on  poverty  and  inequality  indicators  and  the 
budgetary implications, come both from this external shock in gross earnings as well as 
from the interactions of the tax and benefit system in each country.  

The  micro  simulations  obtained  from  the  EUROMOD  model  evaluate  the  impact  of 
closing  the  gender  pay  gap  by  raising  women´s  gross  hourly  wages  and  applying 
countries´ tax-benefit systems (as of 2019). Microeconomic analysis allows to take into 
account the initial distribution of wages, the shares of working women in each decile, the 
household composition, the structure of personal income taxes (e.g., progressivity of the 
personal income tax, joint assessment of taxable income, etc.) and the interactions within 
the tax-benefit system. We present the effects of the expected reduction of 3 p.p. of the 
unexplained part of the gender pay gap191, compared to the baseline given by the policy 
systems in 2019 (see Annex 4 – for a comparison with the impact of a reduction of 1 and 
5 p.p.). 

Main results  (see further details in Annex 4): 

188 The unexplained gender pay gap decreased in the EU on average by 1.4 percentage points between 2010 
and 2014. Boll, C., Lagemann, A., Gender pay gap in EU countries based on SES (2014), 2018. Available 
at:https://op.europa.eu/en/publication-detail/-/publication/828e54d8-db2c-11e8-afb3-01aa75ed71a1/ 
language-en/format-PDF/source-178531332  
189 The Bauer report assessed a potential impact of measures: to introduce an improved situational analysis 
and transparency of pay data, to introduce a transparent job classification process, to empower and ensure 
adequate funding for equality bodies within Member States, and to introduce sanctions, each between 1 and 
2 percentage point reduction of the unadjusted part of the gender pay gap.  
190  The  estimates  are  based  on  the  EU-microsimulation  model  EUROMOD  and  its  underlying  microdata 
based  on  the  European  Union  Statistics  on  Income  and  Living  Conditions  (EU-SILC),  EU-SILC  2018 
(incomes refer to 2017).   
191 In the simulations, the reduction of the unexplained gender pay gap by 3 pp is focused on the subsample 
of women earning less than the target gross hourly wage that narrows the gap for each group. Groups of the 
working  population  are  defined  by  occupation,  sector,  education  and  working  experience  (36  groups  are 
considered). 

78 

 
                                                           
Impact on gross earnings and inequality: Raising women´s gross hourly wages in order 
to close the gap would lead to an overall increase of total gross earnings of 6.9% on 
average at the EU level, and a reduction of inequality in market income (i.e. income 
before taxes  and benefits)  inequality for all  Member States. Due to  the interaction of 
the  tax-benefit  systems,  the  reduction  of  inequality  of  disposable  income  (i.e.  after 
taxes and benefits) would occur for 18 Member States.  

Impact  on poverty:  The  at-risk-of-poverty  rate  would drop from  the initial  16.3% on 
average  in  the  EU27  to  around  14.6%,  with  important  heterogeneities  across  countries 
and by household types. The risk of poverty would be mostly reduced for single parent 
households, which are mostly women (85%).192 

Impact on public budgets: The reduction of the gender pay gap would generate a positive 
budgetary impact due to a rise in government revenues (higher collection of income 
taxes and social insurance contributions) and a small decline in social (cash) transfers 
(mainly explained by a reduction of means-tested cash benefits). At the EU population-
weighted  average  level,  the  shrinking  of  the  gap  is  expected  to  lead  to  a  rise  in 
government revenues from direct taxes and social contributions of about 7.5%, while the 
reduction of social transfers (cash benefits) would be of approximately 0.4% . 

The  results  differ  substantially  across  Member  States.  The  growth  in  total  market 
incomes  and  government  revenues  would  range  from  around  4%  to  14%.  It  would  be 
particularly high in  some countries,  such as  BG, EE,  LT and  LV (in between 10% and 
14%), whereas it would be more limited in EL, IT, MT and NL (of about 5%).  

Macroeconomic impact: The analysis of the behavioral impacts of a change in the gender 
pay  gap  could  in  principle  be  carried  out  with  other  types  of  models.  For  instance,  a 
labour supply model could assess the impact of these changes in women gross earnings at 
the  extensive  margin  (change  in  labour  market  participation)  and  intensive  margin 
(change in number of hours worked for people already employed). The use of a general 
equilibrium model (which could estimate effects on other earnings, prices and gender pay 
gap) would however require a number of assumptions, which could make the macro-level 
effect  of  the  reform  difficult  to  evaluate.  For  example,  accounting  only  for  the  wage 
increase would overestimate the effect at the macrolevel as it could not be excluded that 
male labour supply/participation would adapt to such a large increase in female earnings 
(e.g. within households). Firms might also just re-adjust wages on male workers in order 
to mitigate the higher wage costs. 

Several studies have estimated the potential impact of a reduction of the gender pay gap 
on economic growth through different channels (See Annex 5, section 4 – for a summary 
review). The main channel is the increase in labour market participation. The European 
Added Value Assessment carried out by the European Parliament estimates a substantial 
potential effect of a reduction of the gender pay gap on the GDP: each percentage point 
reduction  in  the  gender  pay  gap  would  translate  into  an  increase  in  the  EU  gross 

192 See https://eige.europa.eu/topics/health/covid-19-and-gender-equality. 

79 

 
                                                           
domestic product (GDP) of 0.1 percentage point.193 This impact was estimated as the 
result  of  the  implementation  of  the  Recommendation  of  the  Bauer  report194  mentioned 
above. EIGE’s estimates of the effect on GDP of closing the gender pay gap are lower: 
they show a 0-0.2% increase in GDP per capita over the 2030-2050 period.  

8.8. Choice of legal instrument 

As regards the choice of the legal instrument, different types of acts were considered. A 
regulation would impose uniform obligations in all Member States, which would be most 
easy  to  monitor  and  apply  across  the  EU.  However,  a  regulation  would  make  it  more 
difficult for Member States to integrate the new measures taking into account the existing 
legal  and  administrative  framework;  it  would  also  not  allow  flexibility  to  adapt  the 
implementation in accordance with their specific labour market models. Room should be 
left  for  implementation  especially  considering  the  crucial  role  of  Social  Partners  for  a 
successful implementation.  

A revision of the Recast Directive was discarded because of its wider scope and because 
its entire logical structure would have to be revised to include the new measures. Indeed, 
the new measures focus on one aspect of the Recast Directive, namely the right to equal 
pay, tailoring measures according to size of organisations; as a result, a specific directive 
dedicated  to  this  matter,  strengthening  the  general  rules  under  the  Recast  Directive,  is 
considered as more appropriate.  

On the basis of the 2020 evaluation and this impact assessment, a new directive, laying 
down  a  framework  to  enhance  the  application  of  the  equal  pay  principle  through  pay 
transparency and related reinforced enforcement mechanisms, is therefore considered to 
be a more appropriate instrument. A Directive allows for flexibility as to the means each 
Member  State  considers  appropriate  to  ensure  compliance  with  the  obligations  taking 
into account the national context. It would also be in line with the approach followed as 
regards  similar  obligations 
the  field  of  employment  (posted  workers)  and 
discrimination  (free  movement  of  workers).  Further  development  of  non-binding 
measures,  as  mentioned  in  Section  6.1,  is  unlikely  to  bring  pay  inequalities  on  the 
political  agenda  and  engage  in  setting  the  necessary  framework  to  combat  pay 
discrimination  and  bias  in  pay  structures.  This  does  not  mean  that  the  future  directive 
may  not  be  supported  by  non-legislative  flanking  measures,  some  of  which  may  be 
directly  relevant  to  a  good  implementation  of  the  new  rules  (e.g.  guidance  on  how  to 
assess and define work of equal value based on the criteria set out in the new rules).  

in 

9. 

How will actual impacts be monitored and evaluated? 

Monitoring of implementation. Transposition of the initiatve into national legislation will 
be  monitored  by  the  European  Commission,  in  particular  at  the  end  of  the 

193  ‘European  Added  Value  Assessment  on  the  application  of  the  principle  of  equal  pay  for  men  and 
womenfor equal work of equal value’, EAVA 4/2013.  
194  See  European  Parliament  resolution  of  24  May  2012  with  recommendations  to  the  Commission  on 
application  of  the  principle  of  equal  pay  for  male  and  female  workers  for  equal  work  or  work  of  equal 
value (2011/2285(INI)), Texts adopted, P7_TA(2012)025, so called ‘Bauer report’. 

80 

 
                                                           
transposition  period  and  thereafter.  The  monitoring  would  look  at  legislative  or  non-
legislative initiatives adopted by Member States beyond what is strictly required by the 
initiative and their effect. The Commission  will  evaluate the initiative 8  years  after the 
end of the implementation deadline referred to in the initiative. 

In  addition,  monitoring  of  the  implementation  of  national  legal  provisions  will  be 
conducted  through  a  body  designated  in  accordance  with  the  initiative.  This  national 
body may be part of existing bodies at national level pursuing similar objectives. Regular 
exchanges  between  these  bodies  would  be  organised  at  EU  level  in  the  context  of  the 
existing  Advisory  Committee  on  equal  opportunities  for  women  and  men195  (together 
with social partners and relevant NGOs represented in the Committee). 

Quantitative monitoring of impacts. Ideally, progress towards achieving the objectives of 
the initiative should be monitored on the basis of a quantitative indicator of gender pay 
discrimination.  However,  the  lack  of  data  and  methodological  difficulties  make 
developing such indicator a challenging exercise.196 A feasibility study could be launched 
to investigate how to assess pay discrimination and the possibility to develop more robust 
indicators  based  on  the  additional  information  collected  through  the  envisaged  pay 
transparency measures. 

In the absence of a pay discrimination indicator, a refinement of the GPG indicator at 
EU level could already support in-depth quantitative analysis. Such analysis should focus 
on the impact  on people starting out  in  their careers and in  their mid-career in  order to 
capture changes in behaviour and outcomes. The aggregated information collected from 
data resulting from pay  reporting could  also be used with this purpose at national level 
e.g. by monitoring the evolution of data by employer/group of employers and checking 
the progression in  the reduction of the gender pay  gap over time. Depending on public 
availability of data, a selection (e.g. by size or sector) of employers could be monitored at 
EU  level  over  time  at  aggregate  level,  possibly  with  in-depth  analysis  of  volunteering 
employers. Finally, considering that the legal baseline is different across Member States, 
progress  could  be  monitored  with  reference  to  tailor-made  benchmarks,  i.e.  monitoring 
progress compared to the initial situation up to a common EU target. This could be done 
in coordination with the European Semester process197. 

Qualitative monitoring of impacts could be organised as follows:  

-  Based on data collected in Member States, the state of pay discrimination may be 
evaluated based on the number and percentage of employers that will have to 
carry out a joint pay assessment. Such data will give an indication of suspected 

195 It was established by Commission Decision 2008/590/EC: of 16 June 2008 (replacing previous decision 
82/43/EEC of 9 December 1981). The Committee was set up to assist the Commission in formulating and 
implementing the Community's activities aimed at promoting equal opportunities for women and men. It is 
also  aimed  at  fostering  ongoing  exchanges  of  relevant  experience,  policies  and  practices  between  the 
Member States and the various parties involved. 
196 See Annex 8 of the 2020 Evaluation and its Section 3 – Process, methodology and limitations.  
197 The European semester is the framework for the coordination of economic policies across the EU. 

81 

 
                                                           
gender pay discrimination in the context of the pay reporting exercice set out by 
the initiative.  

-  Follow  up  analysis  could  be  done  on  remedial  action  by  employers,  e.g.  in 
terms  of  gender  equality  plans  developed  after  the  introduction  of  pay 
transparency measures or voluntary overall revisions of pay structures.198  

-  Data  on  the  number  of  claims  brought  before  enforcement  authorities  (e.g. 
equality  bodies,  courts)  would  also  be  a  useful  indication  of  the  impact  of  the 
measures. This could be monitored through the European Equality Law Network 
and could be combined with a periodic survey of judicial and enforcement staff 
to  test  the  extent  to  which  awareness  and  skills  to  deal  with  these  matters  are 
increasing. 

-  The  cooperation  with  social  partners  would  allow  collective  qualitative 
information on implementation issues and to link the monitoring process of equal 
pay  to  the  broader  concept  of  gender  equality  in  the  workplace.  The  presence, 
quality  and  relevance  of  specific  measures  aimed  at  fostering  equal  pay  in 
collective  agreements  e.g.  the  successful  development  and  implementation  of 
tools  to  facilitate  the  application  of  the  concept  of  ‘work  of  equal  value’  (e.g. 
gender-neutral  job  evaluation  and  classification  systems)  would  be  monitored 
through  surveys  or  dedicated  hearings  with  social  partners.  Possible 
recommendations  from  such  surveys/meetings  could  feed  into  mutual  learning 
sessions  organised  under  the  Commission’s  Mutual  Learning  Programme  on 
gender equality and capacity-building seminars.  

-  The  increase  in  the  level  of  awareness  on  equal  pay  issues  among  the  general 
public  could  be  monitored  by  looking  at  the  frequency  with  which  equal  pay  is 
mentioned  in  the  press,  parliamentary  acts,  company  reports  and  other 
relevant sources.  

-  Finally,  a  Eurobarometer  survey  (such  as  the  one  from  2017)  could  show 

change in perceptions and attitudes.  

The  future  evaluation  of  impacts,  i.e.  to  assess  factually  the  degree  of  success  of  the 
initiative, would require a timeframe of at least eight  years from full implementation of 
the initiative and would require data gathered at Member State level. The review should 
ideally be synchronised with the release of SES data.199 Different conceptual options are 
in principle available:  

1.  Counterfactual  analysis  –  the  golden  standard  to  determine  the  specific  impact  of  a 
policy measure. The literature shows some national examples regarding pay transparency 

198 In Australia, for instance, the  Workplace Gender Equality Agency generates public reports  (excluding 
confidential  remuneration  information)  on  gender  equality  indicators,  including  on  equal  pay,  for  any 
company  willing  to  compare  itself  with  a  benchmark  of  similar  companies  (Workplace  Gender  Equality 
Agency, International Gender Equality Reporting Schemes, April 2019, p. 6). 
199  Data  are  released  every  4  years.  The  latest  release  was  at  the  end  of  2020  for  2018  data.  Eurostat  is 
working to reduce the time-lag between data collection and release. 

82 

 
                                                           
measures200.  Due  to  the  granularity  of  the  data  required  for  this  exercise,  the  analysis 
would need to be tailored to the specifics of the national legislation of each Member State 
and  should  therefore  be  carried  out  at  national  level.  The  Commission  could  support 
Member States through dedicated projects.  

2. Indicators on transparency in wage setting: regression of wage levels  on explanatory 
variables  such  as  age,  occupation,  economic  activity,  etc.  can  provide  an  indicator  (the 
coefficient of determination – R2) on the transparency of wage setting mechanisms in the 
different  countries.  Moreover,  adjusting  the  gender  pay  gap  for  the  above  mentioned 
explanatory  factors  can  give  indications  on  possible  inequalities  between  male  and 
female  earnings.  Both  indicators  could  be  further  refined,  by  collecting,  possibly,  a 
variable to account for career breaks. 

200 Bennedsen, M.; Simintzi, E.; Tsoutsoura, M.; Wolfenzon, D.: ‘Do Firms Respond to Gender Pay Gap 
Transparency?’, NBER Working Paper No. 25435, 2019.; Gulyas et. al., Does Pay Transparency Affect the 
Gender Wage Gap? Evidence from Austria’, Discussion Paper Series – CRC TR 224, 2020. 

83 

 
 
 
                                                           
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92 

 
 
 
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93 

 
 
 
 
 
ANNEXES 

94 

 
 
 
 
 
Annex 1: Procedural information 

1.  Lead DG, Decide Planning/CWP references 

This  impact  assessment  and  the  related  initiatives  are  under  the  responsibility  of  the 
Directorate-General for Justice and Consumers (JUST). 

The Agenda Planning Reference is PLAN/2019/5818. 

The project has been added to the 2020 European Commission work programme201 under 
the section 'A new push for European democracy', following the non-legislative Gender 
Equality  Strategy  2020-2025,  as  binding  pay  transparency  measures  (legislative, 
including impact assessment, Article 157 TFEU, Q4 2020).  

2.  Organisation and timing 

Work on the preparation of this initiative started during the autumn 2019. The Inception 
Impact assessment consultation was carried out between 06 January 2020  - 03 February 
2020.  The  impact  assessment  was  prepared  with  the  involvement  of  JUST  C.3  (Data 
protection)  as  well  as  the  following  Services  through  the  Inter-Service  Steering  Group 
(ISG),  chaired  by  the  Secretariat  General:  DG  BUDG,  DG  CLIMA,  DG  CNET,  DG 
COMM, DG DEFIS, DG EAC, DG ECFIN, EEAS, DG ENV, ESTAT, DG FISMA, DG 
GROW, DG HOME, DG MOVE, DG RTD, JRC. 

The Inter-Service Steering Group was set up in 2019. The first ISG meeting took place 
on  24  January  2020  and  focused  on  a  study  to  support  an  Impact  Assessment  of  pay 
transparency  measures,  consultation  strategy  and  on  public  consultation  questionnaire. 
The  following  ISG  meeting  took  place  on  17  July.  The  interim  report  of  the  support 
study, the preliminary results aof the consultations and the outline of the Communication 
were discussed. Another meeting took place on 26 August to discuss a first draft of this 
IA. The last meeting took place on 11 November. 

On  each  occasion,  the  members  of  the  Steering  Group  were  given  the  opportunity  to 
provide  comments  orally  and/or  in  writing  on  the  draft  versions  of  the  documents 
presented. 

3.  Consultation of the RSB 

This version of the impact assessment was submitted to the RSB on 23 December 2020. 
It  took  into  account  comments  received  from  the  Board  on  25  September  and  on  17 
November  2020.  A  hearing  with  the  Regulatory  Scrutiny  Board  took  place  on  23 
September 2020. An upstream meeting with the Regulatory Scrutiny Board took place on 
5 May 2020. 

The RSB comments were taken into account in the following way:  

  3rd RSB opinion: 

General comments 

(1)  Some  aspects  of  the  policy  options  remain  Clarifications  have  been  added  in  the  description 

201 COM(2020) 440 final, Annex I 

95 

 
 
                                                           
unclear  (e.g.  as  regards  their  exact  content,  the 
interplay between the different measures and their 
practical implementation). 
(2)  The  report  lacks  an  overview  of  the  global 
costs and benefits of the preferred package. It does 
not  sufficiently  explain  why  this  combination  of 
measures  is  considered  the  most  proportionate 
one. 

of the options (see below). 

The  presentation  of  costs  and  benefits  and  the 
analysis of proportionality  have been revised (see 
below). 

Specific comments 

regards 

to  provide 

(1) The report should further clarify the content of 
some of the options and how they would function 
in  practice.  For  instance,  it  should  better  explain 
the  complementarity  or  possible  overlap  between 
the  proposed  measure 
individual 
workers  with  pay  information  and  the  more 
generalised  obligation  on  pay 
reporting  at 
company level. It should explain how a measure to 
report  on  pay  differences,  without  differentiating 
between worker categories, would be able to reach 
the  objectives.  It  should  clarify  the  trigger  and 
foreseen process  for requiring companies to carry 
out  a  joint  pay  assessment  under  the  preferred 
option, and what possibilities employers will have 
to  contest.  It  should  further  specify  how  data 
protection  would  be  ensured  and  by  whom.  The 
structure  of  the  options  would  gain  in  clarity  if  it 
would  address  all  objectives  by  combining  the 
different options into alternative packages. 
(2)  The  impact  analysis  should  draw  coherent 
the  effects  of  pay 
conclusions  as 
discrimination  on  companies’  competitiveness 
(e.g. 
likely  competitive  disadvantages  versus 
productivity  gains,  talent  retention  or  reputational 
benefits).  The  impact  analysis  of  individual  pay 
transparency  measures  (e.g.  ban  for  employers  to 
ask  for  previous  wage)  should  better  take  into 
account that pay differences play a legitimate role 
in 
report  should 
explain in more detail the assumptions behind the 
analysis  of  economic  impacts  (Euromod  model) 
and  the  channels  which  lead  to  the  expected 
impacts.  It  should  explain  how  male  wages, 
business profitability and (male and female) labour 
market  participation  would  evolve.  It  should 
consider  the  impact  of  these  changes  on  prices, 
thus on supply and demand. 
(3) The assessment should be clearer on the costs 
and  benefits  of  the  preferred  combination  of 
measures  and  why  it  is  judged  to  be  the  most 
proportionate.  The  report  should  provide  a  clear 
estimate of the total costs of the preferred package 
(in  the  main  report  and  in  the  summary  table  in 
annex). 
(4)  The  executive  summary  should  be  fully 
aligned with the revised impact assessment report. 

rewarding  performance.The 

features, 

complementarities 

The  description  of  options  and  their  impacts  has 
been  further  clarified  in  the  text.  It  now  better 
specifies 
and 
interactions  among  different  measures  and  their 
contribution to the objectives (chapter 6). The text 
clarifies how the joint pay assessment is triggered 
and  what  happens  if  the  employer  and  worker 
representatives do not agree on the need to carry it 
out.  It further clarifies how data  protection  would 
be  ensured.  In  order  to  adopt  a  gradual  approach, 
and  therefore  to  target  with  more  demanding 
measures  only 
for  which  pay 
employers 
discrimination is suspected, the preferred option is 
necessarily 
the  best  combination  of  possible 
options.  A  full  description  of  all  other  feasible 
combinations  was  not  carried  out 
to  avoid 
unnecessary lengthy discussion.    

to 

reward 

The  presentation  of  the  conclusions  has  been 
the  effects  on  competitiveness 
adapted  and 
clarified.  It  has  been  further  clarified  that  the 
measures do not have in any way an effect on the 
possibility 
performance.  The 
presentation  of  the  EUROMOD  model  and  its 
assumptions and features has been expanded in the 
text. The text explains the analytical scope of this 
model. It also presents  more  references to studies 
on  macroeconomic  impact  including  on  labour 
market  participation  (Chapter  7  and  relevant 
annexes). 

The text of chapter 7 on impacts has been revised 
and its coherence with the summary table on costs 
and  benefits  in  Annex  3  was  ensured.  A  table 
regrouping  costs  and  benefits  of  all  options  has 
been  added  to  better  illustrate  the  proportionality 
of the preferred package. The text on the prefered 
package was further clarified. 
The executive summary is now fully aligned with 
the main text. 

96 

 
 
 
  
  2nd RSB opinion: 

General comments 

1)  The  report  makes  strong  claims  on  pay 
discrimination,  despite  the  limited  evidence.  It 
continues to rely on the gender pay gap indicator to 
show the existence of pay discrimination, to define 
the  objectives  of  the  initiative,  and  to  measure  the 
expected impacts of the policy options. 

report  does  not  demonstrate 

2)  The 
the 
proportionality of the preferred option, and the need 
for and suitability of all included measures. 

there 

The  problem  is  presented  with  more  balanced 
language  and  necessary  qualifiers  were  added 
when  referring  to  the  link  between  gender  pay 
gap  and  pay  discrimination.  The  report  specifies 
that  there  is  limited  statistical  evidence  on  the 
scale  of  pay  discimination,  though  maintaining 
that 
is  sufficient  circumstantial  and 
qualitative  evidence  about  its  prevalence.  The 
report  clarifies  that  the  lack  of  evidence  is 
actually  to  a  large  extent  due  to  the  lack  of  pay 
transparency.  The  monitoring  and  evaluation 
section  includes  more  coordinated  efforts  to 
collect  evidence  in  cooperation  with  Member 
States based on the pay transparency created. 
The objectives are narrowed down to the problem 
of  pay  discrimination,  without  referring  to  the 
overall gender pay gap.  
The  report  acknowledges  that  while  gender  pay 
discrimination is only one element of the  gender 
pay gap indicator and therefore its reduction may 
be  expected  to  have  an  impact  on  the  overall 
gender pay  gap, the extent of this impact cannot 
be  measured  precisely.  The  report  presents 
alternative hypothetical simulations of the impact 
of  a  reduction  of  the  gender  pay  gap  specifying 
that they are for illustrative purposes only.   
The  impact  assessment  added  some  possible 
solutions  on  how  pay  transparency  will  fill  the 
gap in data in the future monitoring framework 
The options  were regrouped in a  gradual  way of 
ambition  to  better  account  for  proportionality 
concerns.  The  need  for  and  suitability  of  the 
various  measures  are  explained  in  light  of  the 
specific  objectives  of 
initiative.  The 
complementarity  of  various  options  and  of 
different  measures  within  options  has  been 
clarified. 
A broader proportionality analysis is carried out, 
taking  into  account  not  only  costs  and  benefits, 
but  also  proportionality  in  light  of  the  lack  of 
hard data on pay discrimination and the economic 
downturn as a result of the COVID-19 pandemic. 

the 

Specific comments 

there 

1)  The  report  should  avoid  making  strong  claims 
on pay discrimination unless they are supported by 
strong  evidence.  Where 
is  not  strong 
evidence,  the  text  should  present  the  arguments 
using  more balanced language. Given  the  number 
of  sources,  it  would  be  helpful  to  specify  which 
evidence is most robust and of direct relevance for 
this impact assessment. 
2)  The  report  acknowledges  that  the  gender  pay 
gap is not a good yardstick for pay discrimination. 

As  mentioned  above,  language  has  been  revised, 
with  a  narrower  focus;  the  number  of  references 
was  also  reduced  accordingly  and  limited  to  the 
most relevant. 

As  mentioned  above,  the  objectives  have  been 
revised  and  the  presentation  of  the  impact  on  the 

97 

 
 
 
 
Nevertheless, it relies on this indicator throughout 
the report. The report should review the references 
to  gender  pay  gap.  It  should  avoid  defining 
objectives  and  measuring  the  impact  of  pay 
transparency measures in terms of the gender pay 
gap. 
evidence  on  pay 
limited 
3)  Given 
discrimination  and 
importance  of  such 
the 
information  for this policy area, the  report should 
discuss possible solutions to solve the lack of data 
in the future monitoring framework. 

the 

4)  The  report  should  discuss  the  feasibility  of 
using  the  concept  of  ‘work  of  equal  value’  in 
practice  at  large  scale  (not  only  in  specific  legal 
cases)  and  assess  how 
the 
possibility  to  implement  (and  the  success  of)  the 
measure to clarify legal concepts. 

this  may  affect 

gender-neutral 

frequency  of 

extent  would 

5)  The  report  should  justify  why  the  option  on 
‘access  to  justice’  does  not  present  alternative 
ways of addressing the relevant problem drivers. 
6)  For  the  legal  option  on  pay  transparency,  the 
report  should  substantiate  why  all 
included 
measures  are  necessary  and  proportionate.  For 
instance, what is the added value of an obligation 
to report on the gender pay gap, given that this is 
not a direct indicator for pay discrimination. Why 
is  there  a  need  for  a  measure  on  pay  reporting  if 
there  is  a  requirement  for  joint  pay  assessments? 
What  would  an  inclusion  of  equal  pay  matters  in 
collective  bargaining  add  to  these  measures?  To 
what 
job 
classification  systems  be  a  prerequisite  (and  thus 
an intrinsic part) of the other measures? How was 
the 
reporting 
requirements decided and why could it not be less 
often  (e.g.  some  Member  States  are  doing  pay 
audits  every  four  years)?  On  the  basis  of  these 
clarifications, 
consider 
report 
presenting  and  assessing  alternative  groupings  of 
these  measures,  representing  different  degrees  of 
ambition. 
individual  pay 
7)  The 
transparency  measures  should  better  take  into  
account that pay differences play a legitimate role 
in  rewarding  performance.  The  report  should 
the 
integrate  possible  negative  effects 
comparison  of  measures.  It  should  also  complete 
the  impact  analysis  of  the  measure  to  introduce 
gender-neutral  job  evaluation  and  classification 
systems.  It  should  provide  more  detail  on  the 
causal  links  between  pay  transparency  measures 
and the expected macroeconomic income growth 

impact  analysis  of 

the  different 

should 

into 

the 

adjusted gender pay gap is included for illustrative 
purposes only. 

The  monitoring  framework  now  includes  specific 
measures  to  improve 
the  collection  of  both 
quantitative  and  qualitative  data.  It  includes  a 
feasibility  study  on  the  possibility  to  develop  a 
more  robust  indicator  of  pay  discrimination  and 
various  ways  of  gathering  qualitative  data, 
including through exchange of experience with the 
implementation  in  the  context  of  the  Advisory 
Committee on equal opportunities for women and 
men    (involving  Member  States,  social  partners 
and relevant NGOs). 
The  text  of  the  impact  assessment  clarifies  that 
while  the  concept  is  in  place  since  the  Treaty  of 
Rome and general criteria for its application exist 
at  EU  level,  in  practice  it  must  be  applied  at 
employer  level  with  employer-specific  criteria. 
The  application  of  the  concept  will  be  improved 
by making the EU-level criteria more visible in the 
legislation  and  by  and  supporting  tools  and 
methodologies to be developed by MS. 
A  number  of  alternative  ways  are  added  and 
discussed. 

The  measures  are  regrouped  and  presented  by 
degree of ambition in under each option  – see the 
explanation  at  the  introduction  of  Section  6.  The 
report  explains  the  different  degrees  in  pay 
reporting and why one would be  more useful, but 
also  more burdensome, than the  other. It explains 
why  the  role  of  social  partners  is  important  in 
supporting  implementation  of  the  measures.  It 
job 
further 
classification  systems  are  only  a  possible  tool  to 
facilitate  the  application  of  the  concept  of  ‘equal 
value’;  other  methodologies  may  exist  at  national 
level  and  flexibility  would  be  left  to  Member 
States  in  this  respect.  The  report  explains  the 
choice  for  the  frequency  as  regards  the  various 
obligations. 

gender-neutral 

explains 

that 

interfere  with 

the  possibility 

The report clarifies that the proposed measures do 
not 
to  reward 
performance (unless rewarding is based on gender-
biased criteria).  Possible unintended effects of the 
measures have been included when relevant in the 
assessment  of  the  various  measures.  The  report 
clarifies  that  gender  –  neutral  job  evaluation  and 
classification  systems  are  a  possible  support  tool 
to  assess  work  of  equal  value,  among  other 
possible tools that may exist at national level. The 
illustration of the possible impacts of the preferred 

98 

 
8)  The  report  introduces  exemptions  for  small 
companies.  However,  the  report  should  explain 
how  workers’  rights  would  be  respected 
in 
exempted  companies.  This  is  relevant  given  the 
large  share  of  workers  that  would  not  be  covered 
by  certain  measures.  The  report  should  also 
provide  more  coherent 
the 
different SME exemptions. 

justifications  for 

9)  The  report  should  fully  present  the  content  of 
the options in the options description. It should not 
introduce  further  option  characteristics  -  on,  for 
in 
example,  SME  exemptions  - 
impact 
analysis. 
the  measures 
should  number 
consistently in the options and impacts sections. 

the 

It 

to 

revised 

tailored 

report  explains 

option  details  the  link  between  pay  transparency, 
wages and macroeconomic income growth 
the  specific 
The  exemptions  are 
measures and their justification takes into account 
the  varying  elements  that  are  relevant  for  each 
measure.  The 
these 
elements in more detail and why they are relevant 
for  the  different  measures.  The  report  further 
clarifies  the  trade  off  between  any  applicable 
thresholds  and  individual  workers’  protection  and 
how  workers’  protection  is  ensured  when  certain 
measures  do  not  apply  to  exempted  companies. 
Such  protection  is  ensured,  in  particular,  through 
the  combination  of  various  pay  transparency 
measures  as  well  as  reinforced  access  to  justice 
(e.g.  reversed  burden  of  proof)  and  enforcement 
mechanisms. 
The options description has been extended  with a 
more  detailed  description  of  the  options  and  with 
the envisaged SME exemptions. The coherence of 
the text has been double-checked. 

  1st RSB opinion: 
General comments 
1)  The 

report  does  not  provide  sufficient 
evidence of the problem it aims to fix. It does 
not  explain  clearly  the  links  between  the 
problems, the objectives and the measures. 

2)  The  difference  between  the  main  policy 
options  is  unclear  and  some  possible  options 
are not analysed. The report does not explain 
how the specific measures of the options were 
selected. 

3)  The  analysis  of  potential 

is 
incomplete.  The  report  deals  with  a  few 
expected impacts only. The analysis relies on 
experts’  views  and  does  not  sufficiently 
consider stakeholders’ views. 

impacts 

99 

The  updated 
report  provides  more  explicit 
evidence  of  pay  discrimination  and  combines 
empirical  analysis,  data  from  surveys,  links  to 
sources of information and evidence as well as an 
overview  of  legal  cases.  The  explanation  on  the 
lack  of  measurement  of 
the  extent  of  pay 
discrimination  has  been  incorporated  within  the 
section on the problem definition. 
The  report  clarifies  the  link  between  problem, 
objectives and measures. It underlines the need for 
more  pay  transparency  to  let  discriminatory  pay 
practices  ,  as  well  as  bias  in  pay  setting  and 
valuation fully emerge. 
The presentation of options has been significantly 
redrafted.  The  report  explains  the  choice  of  pay 
transparency  options,  its  link  with  the  existing 
2014 Pay transparency recommendation as well as 
opinions  of  stakeholders  expressed  during  the 
consultation process.  
The  report  clarifies  the  need  to  minimise  the 
administrative 
pay 
transparency measures to employers with a certain 
number  of  workers.  It  further  clarifies 
the 
complementarity  of  the  measures  ensuring  their 
effectiveness and avoiding overlap. 
stakeholders’  views 
The 
alongside  the  views  of  experts  consulted  for  the 
study  and  covers  their  main  concerns  related  to 
data  protection,  administrative  burden,  and  social 
partners’ autonomy. 
for 
The  calculation  of 
employers  has  been  developed  and  additional 

the  potential  costs 

report  highlights 

aligning 

burden 

by 

 
 
 
calculations  of 
included, 
together  with  literature  findings  about  the  impact 
of the various measures. 

impacts  have  been 

The  updated 
report  provides  more  explicit 
evidence  of  pay  discrimination  combining 
empirical  analysis,  data  from  surveys,  links  to 
sources of information and evidence as well as an 
overview  of  legal  cases,  though  acknowledging 
the limitations of the evidence. The explanation of 
the  extent  to  which  pay  differences  can  be 
decomposed 
and  non-
into  discriminatory 
discriminatory  determinants  has  been  further 
clarified  and  incorporated  within  the  section  on 
the  ‘size  of  the  problem’.  More  clarification  has 
been added on detailed analysis of the pay gap at 
national and at sector level. 
The  report  addresses  these  issues  under  the 
section  ‘what  are  the  problem  drivers’.  The 
description of the key drivers of the problem was 
further clarified namely: i) a market failure linked 
to  asymmetries  of 
information  on  pay  and 
persisting  bias  in  pay;  ii)  a  regulatory  failure 
linked  to  lack  of  legal  clarity  and  difficulty  to 
apply  key  legal  concepts  and  lack  of  access  to 
justice for potential victims. 
The  report  acknowledges  limitations  in  regard  to 
It 
the  quantification  of  pay  discrimination. 
highlights  the  need  to  collect  data  at  employer 
level  in  order  to  detect  discrimination  as  the 
available aggregate data do not have the necessary 
granularity  to  do  that.  Still,  statistical  analysis 
presented in the IA provides sufficient indications 
on  where  pay  gap  can  be  influenced  by  biased 
decisions,  e.g.:  part-time  workers,  managers, 
occupations  within  sectors,  fringe  benefits  –  that 
should  be  verified  at  employer  level.  Similarly, 
the  report  clarifies  that  only  employer  level  data 
can  determine  whether  pay  discrimination  affects 
more  certain  groups  of  workers  than  others  (e.g. 
by type of contract, by age). 
The  updated  report  addresses  these  concerns: 
sources  were  dropped,  replaced  or  presented  in 
more selective manner. 

The narrative of the report is now better aligned to 
the revised intervention logic. The report explains 
the  expected  positive  effect  of  pay  transparency 
measures  established  at  EU  level  which  allow  a 
more efficient operation of the labour market and 
enhanced  competitiveness  in  the  internal  market. 
It  also  emphasizes  that  the  intervention  respects 
different  models  of  labour  markets,  different 
levels  of  social  partners’  participation  in  the  area 
of wage setting as well as the autonomy of social 
partners.  

Specific comments 
1)  The  report  needs  to  be  clearer  about  the 
evidence of pay discrimination and its limitations. 
It  should  explain  to  what  extent  the  gender  pay 
gap  provides  an  indication  of  pay  discrimination 
and  use 
these  different  concepts  coherently 
throughout  the  report.  It  should  be  explicit  about 
the  extent  to  which  pay  differences  can  be 
and  non-
decomposed 
into  discriminatory 
discriminatory 
problem 
description  should  be  clear 
to  what  extent 
observed  pay  discrimination  concerns  not  being 
paid  equally  for  the  same  job  or  work  of  women 
and men not being valued equally. 
2)  The  report  should  analyse  whether 
the 
legal 
problems  are  linked 
framework, to its poor implementation, or to other 
factors. 

determinants.  The 

to  the  policy  or 

3)  With  a  view  to  designing  well  targeted 
measures, the report should include an analysis of 
where  pay  discrimination  takes  place.  It  should 
analyse  whether  pay  discrimination 
is  more 
widespread  in  certain  sectors,  occupations,  types 
of  companies,  countries,  etc.,  or  affects  certain 
groups of workers more than others (e.g. age, type 
of  contract,  etc.).  To  the  extent  possible,  this 
analysis should be quantitative. 

report 

should  better  explain 

4)  The  report  should  consider  using  a  more 
selective use of sources, focusing on those that are 
most  relevant.  More  careful  consideration  should 
be given to  whether the conclusions of  studies in 
particular countries can be generalised to the EU. 
If  evidence  is  not  available  or  is  incomplete,  the 
report should acknowledge this clearly. 
the 
5)  The 
intervention  logic,  linking  the  measures  to  the 
problems  and  the  objectives.  The  report  should 
present  a  more  analytical  description  of  the  links 
between pay transparency, pay discrimination and 
labour  market, 
their  consequences  on 
competition  and  productivity.  It  should  show  to 
what extent measures taken by individual Member 
States  have  resulted 
in  a  reduction  in  pay 
indicate  whether 
should 
discrimination. 
measures  were  implemented  at  the  employer, 

the 

It 

100 

 
 
sector or national level. 

6) The report should further elaborate on how the 
situation  would  evolve  under 
the  existing 
framework,  without  further  action.  It  could 
discuss future trends in wage setting and how they 
may affect pay discrimination. It should reflect on 
the  likely  impact  of  the  COVID-19  pandemic  on 
developments in pay discrimination. 
7) The report should better justify the  choice  and 
design  of  the  policy  options.  It  should  explain 
why  other  possible  options  were  not  considered, 
such  as  a  non-legislative  approach  of  issuing 
specific  recommendations  to  Member  States,  or 
an  option  with  a  less  comprehensive  coverage  of 
pay  transparency  measures.  It  should  indicate 
which  measures  are  alternatives  and  which  ones 
are  complementary.  It  should  better  justify  the 
inclusion of an obligation to report on the gender 
pay gap, as it is not part of the identified problem. 
8) The report should explain how the specific pay 
transparency measures in the two retained options 
were  selected.  It  should  clarify  the  difference 
between  the  two  and  whether  one  option  is  more 
ambitious than the other. 

9)  The  report  should  discuss  how  the  different 
parameters  were  decided,  e.g.  thresholds  for 
exemptions  or 
reporting  or 
frequency  of 
assessments.  It  should  analyse  for  each  measure 
why  it  does  not  take  into  account  the  size  of  the 
setting 
employer 
thresholds.  The  report  should  discuss  the  legal 
feasibility of the measures. 

(based  on 

turnover) 

for 

are  discarded  or  whether 

10)  The  report  should  clarify  whether  soft 
they 
measures 
complement  the  preferred  policy  option.  In  this 
case,  the  report  should  analyse  the  likely  impact 
of such measures in combination with the binding 
measures of the main options. 

101 

The report refers to the findings of the evaluation 
which  could  not  find  evidence  of  significant 
impact  of  pay  transparency  measures  on  pay 
discrimination, mostly because, as mentioned pay 
discrimination cannot be quantified.  
Additional  hypothetical  calculations  using  the 
EUROMOD  model  were  added  illustrating  the 
effect  of  a  GPG  reduction  on  income  ditrbiution, 
poverty rates and public budgets. 
These  considerations  have  been  included  in  the 
section on ‘How will the problem evolve’. 

The  choice  of  options  and  description  of  the 
discarded  options  has  been  substantially  revised. 
The  non-legislative  approach  of  issuing  specific 
recommendations to Member States is included in 
the baseline from which the options are assessed. 
The  complementarity  links  between  measures 
have  been  highlighted.  The  report  clarifies  in 
particular  the  peer  pressure  and  policy  oriented 
role  of  pay  reporting  of  the  gender  pay  gap  at 
employer level. 

during 

expressed 

The  definition  of  the  options  has  been  expanded. 
The report explains the choice of pay transparency 
options,  its  link  with  the  existing  2014  Pay 
transparency recommendation as well opinions of 
stakeholders 
consultation 
process.  It  explains  the  need  to  minimise  the 
administrative  burden  by  limiting  more  stringent 
pay  transparency  measures  only  to  employers 
where  potential  problems  have  been  flagged, 
aligning  pay  transparency  measures  to  employers 
with a  certain  number of  workers. It explains the 
complementary  nature  of  the  measures,  ensuring 
their effectiveness while avoiding the overlap. 
This  has  been  incorporated  to  the  report.  The 
thresholds  applied  to  tailor  the  design  of  the 
measures  are  linked  only  to  the  number  of 
employees  and  not  turnover  or  annual  balance 
sheet because the scope of the proposed Directive 
is  worker–oriented.  Therefore,  it  focusses  on  the 
enforcement  of  an  individual  fundamental  right, 
and it uses statistical methods for which only staff 
headcount  is  relevant  for  its  implementation. 
Moreover,  the  reference  to  headcount  simplifies 
the  implementation  by  avoiding  the  complexity 
and  administrative  burden 
the 
compliance criteria by Member States. 
to  non-binding  measures 
An  option  related 
included  as 
(Council  Recommendation) 
discarded  option  at  early  stage.  Soft  and  non-
legislative  measures  under  the  remit  of  the 
Commission  have  been  included  more  clearly  in 
the  baseline  (as  foreseen  in  the  Gender  Equality 
Strategy  2020-2025)  as  such  measures  on  their 
own  would  not  achieve  the  objectives  of  the 

in  verifying 

is 

 
11)  The  report  should  provide  a  comprehensive 
analysis  of  potential  impacts,  including  possible 
unintended  impacts.  It  should  substantiate  the 
expectation that pay transparency not only reduces 
pay  discrimination  but  also  has  wage  equalising 
effects.  It  should  provide  total  cost  estimates  for 
the  whole  EU,  at  least  for  those  measures  that 
entail significant obligations for business. 
12)  The  report  should  better  justify  the  selection 
of  the  preferred  option.  It  should  build  on  an 
improved  impact  analysis  and  better  balance 
experts’  views  with  evidence  and  stakeholders’ 
views.  The  analysis  should  cover  the  main 
stakeholder  concerns  (e.g.  on  data  protection, 
reward of high performers, etc.) and explain how 
each of these are addressed in the options. 
13)  The 
the 
exemptions  of  small  companies  from  certain 
obligations.  To  this  end,  the  report  should  show 
the  magnitude  of  the  problem  in  small  vs.  big 
companies,  possibly  differentiating  by  sector  and 
country  (problem  definition).  It  should  discuss 
whether these exemptions will have an impact on 
the effectiveness of the initiative. 

should  better 

justify 

report 

initiative. 
A  qualitative  assessment  of  possible  unintended 
effects  has  been  included  in  the  report  and 
discussed  for  each  option.  Updated  estimates  of 
the  costs  for  employers  (for  the  EU,  by  MS,  by 
size of employer and as average cost for employer 
by size) have been provided. 

The updated report highlights stakeholders’ views 
alongside  the  views  of  experts.  Their  main 
concerns, related to data protection, administrative 
burden, and social partners’ autonomy, have been 
incorporated 
impact  analysis.  The 
comparison between options has been developed. 

the 

in 

the 

exemptions,  measures 

The updated report clarifies the justification of the 
exemptions  for  small  employers  from  measures 
such  as  the  automatic  right  to  information,  pay 
reporting  and  joint  pay  assessment.  To  counter-
balance 
are 
complementary and an enhanced access to justice 
and  enforcement  is  considered.  For  instance, 
would  the  employer  not  reply  to  the  worker’s 
request  for  information,  this  would  trigger  a 
presumption of gender pay discrimination and the 
burden  to  prove  that  this  is  not  the  case  would 
automatically shift to the employer.  
Assessing  the  magnitude  of  the  problem  in  small 
vs. big employers is  not possible as the available 
data do not have the necessary granularity to reach 
conclusions  whether  pay  discrimination  is  more 
widespread  in  certain  sectors,  occupations,  or 
types of companies. 

4.  Evidence, sources and quality 

DG  JUST  commissioned  a  number  of  studies  in  support  of  this  Initiative,  namely  a 
dedicated support study used as main source for this Impact Assessment; a revised and 
expanded  version  of  the  Eurofound  study  on  costs  and  benefits  of  existing  pay 
transparency  systems;  a  behavioural  experiment  and  a  literature  review  of  behavioural 
economics carried by JRC(See Annex 5, section 5); additional material on administrative 
data sources and a simulation with the EUROMOD model of the impacts of a reduction 
of  the  GPG  also  by  JRC;  a  review  on  the  number  of  case  law  by  the  Legal 
Network/equality bodies.  

The  Commission  consulted  widely  and  received  input  from  various  sources  for  this 
impact assessment work.The consultation strategy included: 

Consultation of high-level representatives of Member States in the High-Level Group on 
Gender Mainstreaming, on 29 January 2020 and 15 September 2020. 

Targeted consultation of Member States through a separate specific questionnaire issued 
in March 2020. 

102 

 
 
 
 
Targeted  consultation  of  social  partners  organised  on  the  basis  of  a  separate  specific 
questionnaire issued in March 2020 (and a mini-survey for companies) and followed by a 
dedicated consultation hearing of social partners run by DG JUST and DG EMPL in June 
2020. 

A  public  consultation  launched  in  March  2020,  opened  for  12  weeks.  The  consultation 
covers  general  awareness,  experience  and  knowledge  of  citizens  and  stakeholders 
regarding pay transparency issues as well as views on the possible specific measures. 

Relevant previous consultation activities: 

In 2019, the Commission already carried out a number of consultation activities around 
the equal  pay principle.  This  process  started  as  part of the evaluation202 of the relevant 
provisions in Directive 2006/54/EC implementing the Treaty principle on 'equal pay for 
equal  work or work of equal  value' (and in  the 2014 Commission  Recommendation on 
strengthening the principle of equal pay between women and men through transparency). 
It  was  also  embedded  in  the  preparatory  work  on  the  future  EU  Strategy  on  gender 
equality and related consultation. In particular: 

From 11 January 2019 to 5 April 2019, a public consultation203 was carried out for the 
Evaluation  of  the  relevant  provisions  in  Recast  Directive  implementing  the  Treaty 
principle  on  ‘equal  pay  for  equal  work  or  work  of  equal  value’.  Among  others,  the 
consultation's  objective  was  to  collect  information,  views  and  experiences  on  problems 
appearing  from  gaps  and weaknesses of  existing pay transparency measures at  national 
and  EU  level.  Furthermore,  it  sought  evidence  on  the  extent  to  which  the  2014  Pay 
Transparency Recommendation had helped to reinforce the implementation of equal pay 
principle enshrined in Article 157 TFEU and Recast Directive. The respondents took the 
opportunity to share their views regarding forward-looking questions on relevant aspects 
of the transparency initiative including on the need for some further EU-level action on 
measures to address sex-based pay discrimination. 

The Evaluation process also included a targeted consultation survey and semi-structured 
interviews with representatives of national equality bodies, competent public authorities, 
trade  unions,  employers’  representatives,  labour  inspectorates,  NGOs  and  experts.  The 
Evaluation resulted in an online discussion with selected experts from different Member 
States. 

On  2019  International  Women's  Day,  a  public  consultation204  on  the  state  of  gender 
equality  in  the  EU  at  present  as  well  as  about  priorities  for  the  future  was  launched  in 
order  to  prepare  the  next  Commission's  gender  equality  policy  framework.  More  than 
1300  replies  were  gathered 
including 
academic/research  institutions,  business  associations,  company/business  organisations, 
consumer  organisations,  EU  citizens,  non-EU  citizens,  non-governmental  organisations 
(NGOs),  public  authorities,  trade  unions  and  others.  They  showed  considerable  public 

from  a  broad  range  of  stakeholders, 

202 SWD(2020)50 final. 
203  Available 
consultation_en. 
204Available 
consultation_en. 

at: 

at:  https://ec.europa.eu/info/law/better-regulation/initiatives/ares-2018-3415794/public-

https://ec.europa.eu/info/law/better-regulation/initiatives/genderequalitybrp/public-

103 

 
                                                           
interest in introducing measures to further support the principle of ‘equal pay for equal 
work or work of equal value’, such as pay transparency.205 

A  consultation  of  the  High  Level  Group  on  Gender  Mainstreaming  and  the  Advisory 
Committee  for  Equal  Opportunities  for  women  and  men  took  place  through  dedicated 
meetings in 2019. 

A dialogue between the European Commission and the social partners took place in May 
2019  during  a  thematic  seminar  on  the  role,  costs  and  benefits  of  pay  transparency 
initiatives.206  

Eurofound  has  compiled  information  on  the  ‘costs  of  pay  transparency  measures’  that 
focuses  on  EU  countries  that  have  already  implemented  pay  transparency  measures 
affecting  employer  level.207  A  small  set  of  interviews  (44  in  total)  was  conducted  with 
companies for each Member State present in the survey.  

205 The publication of the factual summary report is forthcoming. 
206  Available  at  https://ec.europa.eu/info/publications/eu-mutual-learning-programme-gender-equality-
equal-pay-iceland-27-28-may-2019_en. 
207  The  forthcoming  study  provides  a  nearly  complete  picture  of  gender  pay  transparency  in  Europe, 
namely on AT, DE, DK, EE, ES, FI, FR, SE and UK (not included in this selection were: BE, IE, LT, NL). 

104 

 
 
 
                                                           
Annex 2: Stakeholder consultation 

1.  Consultation Strategy  

The  objective  of  the  consultation  was  to  secure  stakeholder  inputs  in  relation  to  the 
proposed  legislative  initiative  on  strengthening  the  principle  of  equal  pay  between 
women  and  men  through  pay  transparency.  The  stakeholders  identified  for  the 
consultation  were:  the  general  public;  and,  specifically,  the  Member  States;  the  social 
partners; and individual employers.  

An online Open Public Consultation was targeted at the general public, over the period of 
5  March  2020  to  28  May  2020.  The  questionnaire  was  available  in  electronic  format 
only, and the official languages of the European Union (EU) were used, for answers and 
replies. The questionnaire included open-ended and closed questions. Some respondents 
sent individually formulated contributions by email.  

Three targeted surveys were implemented to complement the Open Public Consultation. 
They  addressed  the  Member  States,  the  social  partners,  and  individual  employers.  The 
engagement  with  the  social  partners  was  further  complemented  with  8  interviews  with 
European level social partner organisations, 4 employers’ organisations and 4 trade union 
organisations.  Information  gathered  during  interviews  are  integrated  here  in  social 
partners' sections. Finally, a dedicated consultation hearing was held in June 2020 with 
the participation of 25 employers and 25 trade unions’ representatives. The Commission 
also  received  7  position  papers  afterwards.  The  Commission’s  consultation  with 
European, national and local social partner organisations in March 2020 on binding pay 
transparency  measures  resulted  in  mixed  feedback  on  the  need  for  the  adoption  of  a 
legally binding measure on pay transparency. 

The  four  surveys  investigated  views  on  the  relevance,  effectiveness,  efficiency, 
coherence,  and  EU  added  value  of  pay  transparency  measures.  Information  on  the 
general state of play in relation to national measures and legislation on pay transparency 
was gathered from the Member States and the social partners. Information about attitudes 
and experiences in relation to pay discrimination was gathered from the general public, 
social partners and individual employers. Information on the level of pay transparency in 
organisations  was  gathered  from  individual  employers.  Looking  to  the  future, 
information  on  the  effectiveness  and  impact  of  possible  EU  initiatives  on  binding  pay 
transparency measures was gathered from the general public, the Member States, and the 
social partners.  

the  Council  Secretariat;  members  of 

Diverse information channels were used to maximise responses to the consultation, with 
information disseminated to: permanent representations (social attachés and counsellors) 
via 
the  High-Level  Group  for  Gender 
Mainstreaming and of the Advisory Committee for Gender Equality; 87 social partners’ 
organisations;  the  European  Network  of  legal  experts  in  Gender  Equality  and  Non-
Discrimination,  the  European  network  of  equality  bodies  (EQUINET);  members  of  the 
EU  Platform  of  Diversity  Charters; 
the  European  Economic  and  Social 
Committee(EESC); experts of the Scientific Analysis and Advise on Gender Equality in 
the  EU  (SAAGE)  network;  and  members  of  the  European  Women  on  Boards  (EWoB) 
network. 

Information  on  the  Open  Public  Consultation  was  posted  on  the  Facebook  and  Twitter 
accounts  of  the  Directorate-General  for  Justice  and  Consumers,  and  the  public 
consultation  was  referenced  in  a  video  disseminated  on  these  accounts.  Specific 
information was sent to individual journalists. 

105 

 
Six Member States, either in addition to the questionnaire or as an alternative, submitted 
position  papers  to  clarify  their  views,  and  a  number  of  international  organisations  and 
civil society organisations provided position papers. 

2.  Stakeholder Participation 

All  identified  stakeholder  groups  were  reached:  general  public;  Member  States;  social 
partners; and individual employers. 

The  Online  Public  Consultation  received  560  responses.  51.3%  of  respondents  were 
women,  21.4%  were  men,  0.5%  were  ‘Other’,  and  26.8%  did  not  identify.  The 
geographical distribution of responses was somewhat unbalanced: 39.3% of respondents 
were from Spain, with Germany following at a distance with 11.4% of respondents, and 
Italy  with  9.5%  of  respondents.  4.8%  of  respondents  were  from  Belgium,  4.1%  from 
France, 3.6% from Poland, and 3.4% from the Netherlands. 

Different  types  of  respondents  are  evident:  67.1%  of  the  responses  were  filed  by  EU 
individual citizens, 3.2% by non-EU citizens; 9% of respondents identified themselves as 
being  from  company/business  associations;  7%  as  being  from  non-governmental 
organisations; 5.5% as being from trade unions; 3.8% as being from public institutions; 
and 2.5% as being from academic/research bodies. 

The  targeted  survey  of  Member  States’  authorities  received  20  responses,  from  17 
Member  States:  Austria,  Czechia  (2),  Denmark,  France,  Germany,  Hungary,  Ireland, 
Italy, Latvia (2), Lithuania, Malta, The Netherlands, Portugal, Romania, Slovenia, Spain 
(2),  and  Sweden.  The  authorities  from  Croatia,  Estonia,  France,  The  Netherlands, 
Portugal, and Sweden submitted off-line responses as an alternative or in addition to on-
line  responses.  No  responses  were  received  from  Belgium,  Bulgaria,  Cyprus,  Finland, 
Greece, Luxembourg, Poland and Slovakia. 

The  targeted  survey  of  social  partners  received  80  on-line  responses  and  4  off-line 
responses. 41.3% of the respondents were employer associations, and 58.7% were trade 
unions. The majority of respondents, in both cases, operate at Member State level (63.6% 
of employers’ organisations and 78.7% of trade unions). Nearly 50% of responses came 
from five Member States: Germany (26.3%); Finland (7.5%); Belgium Czechia and Italy 
(5% each).   

The  targeted  survey  of  individual  employers  received  24  responses.  Nine  of  these 
respondents  operate  in  all  Member  States,  9  respondents  operate  only  in  one  Member 
State,  and  6  respondents  operate  in  several  Member  States.  12.5%  of  respondents  are 
associated with the manufacturing sector(s). 21% have between 50  and 249 employees, 
while 79% have at least 250 employees.  

3.  Analytical Methodology  

The  preparation  of  the  dataset  involved  the  creation  of  four  Excel  databases  to  analyse 
the  replies.  The  Excel  files  were  imported  in  the  Statistical  Package  for  Social  Science 
(SPSS) and elaborated using this professional statistical tool, which enabled checking for 
coherence and completeness, and control for duplications. 

Five-point  Likert scales  on attitudes and  expectations of respondents  regarding impacts 
and  effectiveness  were  systematically  recoded  in  three-point  Likert  scales  in  the 
quantitative  analysis,  as  responses  were  somewhat  dispersed  across  modalities.  All 
questions  were  analysed,  highlighting,  as  relevant,  differences  between  sub-groups. 
Differences had to  be interpreted as  they could  be attributed to  group distribution or to 

106 

 
the  natural  variance  in  responses.  Where  statistically  significant,  the  disaggregation  by 
sub-groups was reported. 

Inductive coding was used to derive themes from the answers in the qualitative analysis. 
This  was  conducted  on  qualitative  information  included  in  the  questionnaires,  on 
documentation  received  from  stakeholders  and  Member  States,  on  the  analysis  of 
documents  received  from  the  European  Commission  and  on  qualitative  interviews. 
Clusters of the most recurrent type of answers served as a starting point for the analysis. 
Additionally,  particular  answers,  albeit  not  recurrent,  were  included  if  considered 
particularly  original  and  relevant  by  the  experts  involved.  Essential  messages  were 
identified through a distillation of the responses. 

Each questionnaire had a similar initial section of information on the respondent, while 
the  questions  in  the  other  sections  differed  according  to  the  respondents  targeted. 
Responses  were  analysed,  grouped  by  the  themes  they  refer  to,  with:  presentation  of 
results  (frequency  and  breakdown  of  responses);  quantitative  analysis  for  closed 
questions; and qualitative analysis for open-ended questions. 

4.  Results  

Public Consultation  

The State of Play  

The gender pay gap is viewed as being particularly at issue in the private sector, in: micro 
(72%),  small  (71%),  medium-sized  (70%),  and  larger  (61%)  enterprises.  Nevertheless 
39% of respondents viewed it as being at issue in the public sector. 49% of respondents 
felt women and men have equal pay for the same work or for work of equal value in the 
organisation where they worked, however 39% felt that this was not the case.  

Costs  of  litigation  were  identified  as  a  relevant  enforcement  issue  by  respondents  in 
relation to pay discrimination. A very large majority of respondents (92%) considered the 
provision of support to individual workers to be important in order to lower these costs 
and enable legal action in pay discrimination cases to be undertaken.  

Future Measures  

The four measures presented, of the type not focused on strengthening victim rights, pay 
transparency measures, were each viewed as being effective by significant majorities of 
respondents:  obligation  to  include  equal  pay  matters  in  collective  bargaining  (81%); 
gender-neutral  job  evaluation  and  classification  systems  (80%);  employers  and 
employees’  representatives  analysing  pay  levels  and  gender  pay  gaps  in  regular  pay 
audits (79%); and regular employer reports on pay levels and gender pay gaps (78%).  

In respect of the different types of respondents, this consensus was shared to a high level 
by  individual  EU  citizens  and  non-EU  citizens,  and  by  respondents  from  trade  unions, 
academic/research bodies, and public institutions. Agreement was at a lower level among 
respondents from company/business associations. Nonetheless, the numbers of this type 
of  respondent  that  agreed  with  the  effectiveness  of  the  individual  measures  stood  at 
between 40% and 50%.  

In identifying the possible impacts of these pay transparency measures: 90% agreed they 
would raise awareness  about  equal  pay issues;  88% they should be part  of wider  equal 
pay policies; 86% they would reduce pay discrimination; 77% they would have a positive 
impact  on  employees'  motivation  and  productivity;  and  72%  they  would  improve  the 
work climate. The same pattern of consensus is evident in this across the different type of 

107 

 
respondents as for the effectiveness of prospective pay transparency measures, with low 
levels of agreement among respondents from company/business associations. 

Respondents  from  company/business  associations  were  more  likely  to  agree  that  such 
measures might make it difficult to reward high-performing employees (78%), they limit 
employers’  discretion  (76%),  and  they  create  a  significant  additional  burden  (74%). 
There was a low level of agreement from the other types of respondents that such impacts 
would result. 

The  four  measures  presented,  of  the  type  focused  on  strengthening  victim  rights, 
enforcement measures, were each viewed as being effective by significant majorities of 
respondents: employees have a right to access information on pay levels and gender pay 
gaps  (84%);  effective  and  proportionate  penalties  for  companies  and  compensation  for 
victims of discrimination (80%); reinforced mandate of labour inspectorates to intervene 
in  support  of  victims  (77%);  and  strong  mandate  of  equality  bodies  to  intervene  in 
support of victims (76%).  

The same pattern is evident in this consensus across the different type of respondents as 
with  the  first  type  of  prospective  pay  transparency  measures,  with  lower  levels  of 
agreement  from  respondents  from  company/business  associations,  where  agreement 
ranged from 28% to 40%. 

In identifying the possible impacts of these pay transparency measures: 91% agreed they 
would  help  enforce  the  right  to  equal  pay;  88%  they  would  be  a  powerful  tool  for 
equality  bodies/labour  inspectorates/social  partners  to  support  employees  in  defending 
this right; and 85% they would encourage employers to better implement the principle of 
equal  pay.  The  same  pattern  of  consensus  across  the  different  types  of  respondent  is 
evident  as  for  the  first  type  of  pay  transparency  measures,  with  respondents  from 
company/business associations expressing lower levels of agreement. 

There  was  significant  consensus  among  respondents  in  their  agreement  on  the 
effectiveness of the different modalities presented for implementation: the right to access 
information; job evaluation and classification systems; pay audits; and pay reporting. The 
only  modalities  that  had  low  level  of  agreement  related  to  sharing  of  information  with 
employee  on  request  (right  of  access  to  information,  pay  audits,  pay  reporting)  and 
gender  equality  labelling  (job  evaluation  and  classification  systems).  In  all  instances, 
agreement from respondents from company/business associations was significantly lower 
than the overall consensus.  In  general,  the measures were considered as  suitable for all 
sizes of organisations, except pay audits which few respondents considered suitable for 
micro and small enterprises. 

An  analysis  as  to  whether  significant  differences  could  be  observed  in  individual 
citizens’ response patterns across the EU Member States found only minor cross-country 
differences in the response behaviour of individuals. 

 EU Member States  

The State of Play  

Responses  from  the  Member  States  in  relation  to  the  current  situation  were  highly 
differentiated,  reflecting  different  contexts  across  the  Member  States.  Only  4  Member 
State  respondents  reported  that  current  legislation  was  influenced  by  the  EU  2014 
recommendation. Six respondents reported that pay transparency measures had not been 
introduced due to the low priority for this issue on the policy agenda. Few respondents 
reported  on  the  number  of  court  cases  on  equal  pay  in  the  past  year.  However,  most 

108 

 
respondents did not think the number of cases was a valid indicator of the relevance of 
the gender pay gap issue. Some respondents noted that not all cases of discrimination end 
up  in  court,  due  to  barriers  of  access  to  justice,  and  lack  of  information  among 
employees.  

Future Measures  

Members  State  respondents  reflected  some  consensus  in  their  agreement  with  the 
following options: employer reports regularly on pay level and gender pay gaps (82%); 
employees have a right to access information on pay levels and gender pay gaps (59%); 
employers who advertise a job vacancy to include information about expected salary or 
salary range (53%). The least favoured option was: forbidding confidentiality clauses on 
disclosing individual pay (35%).  

There  was  some  consensus  among  Member  State  respondents  on  the  roles  of  equality 
bodies/labour inspectorates in supervising equal pay measures as being to: impose fines 
for  non-compliance  (75%);  initiate  equal  pay  cases  on  behalf  of  individuals  (55%); 
represent  victims  in  legal  proceedings  (50%);  and  pursue  collective  equal  pay  claims 
(45%).  

In relation to the role of other national actors in implementing pay transparency measures 
there was significant consensus in agreement that organisations have a role in reporting 
on  pay  gaps  (70%).  There  was  some  consensus  in  agreement  that  labour  inspectorates 
have  a  role  in  performing  automated  checks  on  pay  gaps  based  on  employment,  tax  or 
social  security  registers  (55%);  and  that  employers’  organisations  have  a  role  in 
compiling  pay  statistics  (50%).  Only  25%  agreed  that  statistical  offices  have  a  role  in 
compiling pay reports; and 20% that equality bodies have a role in performing automated 
checks on pay gaps based on employment, tax or social security registers  

In  identifying  the  possible  impacts  of  these  pay  transparency  measures,  there  was 
significant  consensus  among Member State respondents: 100% agreed they  would  help 
enforce the right to equal pay; 90% they would contribute to raising awareness on equal 
pay  issues;  90%  they  would  reduce  pay  discrimination;  85%  they  would  improve  the 
for  equality  bodies/labour 
work  climate;  85% 
inspectorates/social  partners;  80%  they  would  have  a  positive  impact  on  employees' 
motivation and productivity; and 80% they would encourage employers to take action to 
better implement the principle of equal pay.  

they  are  a  powerful 

tool 

There was a low level of agreement that such measures: create additional administrative 
burden  on  organisations  (50%);  limit  employers’  discretion  (35%);  and  need  to  be 
tailored  to  size  of  organisation  (40%).  Only  25%  agreed  that  such  measures  should  be 
part of wider equal pay policies.  

Social Partners  

The State of Play  

The  social  partner  survey  points  up  different  perspectives  held  by  and  experiences  of 
trade unions and employer associations. Trade union respondents were more likely than 
employer associations to identify that gender pay discrimination is an issue and that pay 
discrimination  legislation  is  difficult  to  use.  Some  trade  union  respondents  noted  the 
different  levels  of  protection  and  of  implementation  of  EU  requirements  on  this  issue 
across the Member States. These results were also confirmed by interviewes.  

Most  employer  association  respondents  (81%)  believe  that  there  is  a  conflict  between 
General  Data  Protection  Regulation  (GDPR)  and  possible  pay  transparency  measures, 

109 

 
while  most  trade  unions  believe  there  is  not  (57%).  Most  trade  unions  reported  being 
often solicited by members in relation to gender equal pay (75%), while most employers 
had not often been solicited (79%). The comments received during the hearing as well as 
the  analysis  of  the  position  papers  received  after  the  hearing  confirm  these  different 
perspectives. 

Future Measures  

Five  legislative  options  at  EU  level  were  presented.  The  most  preferred  option  for 
employer association respondents was for the inclusion of expected salary in job postings 
(41%), which was supported by 78% of trade unions. The most preferred option for trade 
unions  was  for  regular  pay  audits  (96%),  which  was  supported  by  24%  of  employer 
associations.  A  similar  pattern  is  evident  across  the  other  options:  regular  employer 
reports  (29%  for  employer  associations  vs  89%  for  trade  unions);  employee  right  to 
access  information  (18% vs 89% respectively); and forbid  confidentiality clauses  (18% 
vs 76% respectively).  

Five  options  for  binding  pay  transparency  measures  involving  direct  social  partner 
participation  were  presented.  Trade  unions  were  significantly  supportive  of  all  options, 
bar  certification  related  to  job  evaluation  systems  (47%,  which  compares  to  21% 
employer associations) and self-regulatory measures linked to pay reporting (32%, which 
compares to 39% employer associations). The most preferred option for trade unions was 
for an equal pay plan (98%), which was chosen by 42% of employer associations, also 
their  most  preferred  option.  None  of  the  measures  were  considered  effective  by  a 
majority of employer associations.  

In  relation  to  standardised  solutions,  employer  associations  identified  employers’ 
organisations  compiling  pay  statistics  for  their  members  as  the  preferred  option  (42%), 
while  this  was  the  least  favoured  option  for  trade  unions  (87%).  The  most  favoured 
options  for  trade  unions  was  for  the  state  to  provide  IT  tools  to  organisations  (87%); 
social  partners  to  agree  on/develop  standardised  tools  (85%);  and  the  labour 
inspectorate/equality body to conduct automated checks based on tax, social security or 
employment registers (79%).  

When  it  comes  to  assessment  of  impact,  a  large  majority  of  employer  association 
respondents  agree  that  pay  transparency  measures:  create  additional  administrative 
burden on organisations (91%); limit employers’ discretion (82%); need to be tailored to 
size  of  organisation  (82%);  and  might  make  it  difficult  to  reward  highly  performing 
employees (79%). This assessment finds low levels of support among trade unions. 100% 
of trade union respondents agree that pay transparency measures: are a powerful tool for 
equality  bodies/labour  inspectorates/social  partners;  contribute  to  raising  awareness  on 
equal  pay  issues;  and  help  in  enforcing  the  right  to  equal  pay.  These  impacts  find  low 
support  among  employer  associations.  98%  of  trade  unions  agree  that  such  measures 
should be part of wider equal pay policy, a view shared by 52% of employer associations.  

In relation to raising awareness about equal pay legal provisions both trade union (96%) 
and  employer  association  (82%)  respondents  felt  awareness  campaigns  were  the  most 
effective.  Employer  associations  felt  an  information  webpage  and  online  guidebooks 
would  be  effective  (64%)  as  their  next  preferred  option.  Trade  union  felt  training  and 
guidance on pay reporting and auditing would be effective (96%) as their next preferred 
option.  

Difficulties in implementation of pay transparency emerged in the existing experiences in 
Member  States  led  to  a  request  for  the  Commission  to  develop  a  definition  of  work  of 
equal value in this new initiative on pay transparency.  

110 

 
As regards other obstacles in implementation, trade unions agree that measures should be 
applicable  in  all  sectors  with  no  exceptions  or  adaptation,  as  the  ultimate  goal  is  to  go 
beyond gender segregation of labour and value female-dominated sectors more, as they 
are usually less attractive because of lower salaries and career opportunities. Within the 
group  of  employers’  organisations  a  resistance  to  have  a  uniform  measure  emerged. 
Additionally they mention the positive role that collective bargaining may have towards 
closing the gap. Social partners agree on opposing an initiative dictating on the content of 
collective bargaining.  

In  regard  to  the  protection  of  privacy  and  the  right  to  access  salary  information,  the 
majority  acknowledge  that  privacy  can  be  protected  with  an  accurate  anonymisation  of 
all  pay  data  disclosed  to  employees.  So  this  cannot  be  an  obstacle  to  implementing  a 
measure.  

Finally as far as the added value of a European Union initiative employers' organisations 
argue that salaries are exclusively a national competence while trade unions mostly call 
for strong initiative from the Commission stating clear obligations can have the necessary 
impact  to  help  reduce  the  gender  pay  gap  in  Europe.  They  argue  that  a  measure 
protecting female workers and working to eliminate long-standing discrimination is long 
overdue, and to take advantage of this moment of change related to the COVID-19 crisis 
to build a more inclusive labour market.  

Individual Employers  

The State of Play  

Five respondents (21%) identify that gender pay discrimination may be an issue in their 
organisation,  all  of  which  were  companies  with  at  least  250  employees.  These  5 
respondents  reported  some  improvements  in  internal  policy  of  their  organisation  in  the 
last five years. 

13 respondents (54%) reported that their organisation had carried out at least one gender 
pay gap analysis. 10 of these respondents had at least 250 employees and 3 had between 
50 and 249 employees.  

All  respondents reported on the pay information  they make available. The level of pay 
transparency varies according to what part of salary is included.  

  9  respondents  provide  a  salary  range  at  the  point  of  hiring  and  information  on 
average  basic  salary  by  category  or  position  to  employees,  and  3  to  employee 
representatives, without request.  

  6  respondents  provide  information  on  average  variable  pay  components  in  cash 
by  category  of  employee  or  position  to  employees,  and  4  to  employee 
representatives, without request. 7 respondents have this information available on 
request.  

  4  respondents  provide  information  on  average  variable  pay  components  in  kind 
by  category  of  employee  or  position  to  employees,  and  2  to  employee 
representatives,  without  request.  13  respondents  have  this  information  available 
on request.  

  8  respondents  provide  information  on  pay  raises  by  category  or  position  to 
employees,  and  3  to  employees’  representatives,  without  request.  8  respondents 
have this information available on request.  

111 

 
  11 respondents (46%) reported an estimation of annual costs of this pay reporting: 
7 respondents costed it as less than EUR 1,000, 3 between EUR 1,000 and EUR 
6,000, and 1 above EUR 10,000.  

Further Contributions: International Organisations  

State of Play  

The United Nations  Entity  for Gender Equality  and the Empowerment  of Women (UN 
Women) identified a set of initiatives it regards as good practice that it has collected from 
G7  and  EU-based  companies  that  have  taken  steps  to  address  the  gender  pay  gap, 
including, in particular, pay transparency measures. These include measures such as job 
evaluation  systems,  pay  gap  assessments  and  reports,  annual  assessment  of  pay  equity 
and  gender  balance  in  company  leadership,  development  and  use  of  a  pay  assessment 
tool,  and  steps  to  ensure  pay  inequities  in  the  labour  market  are  not  imported  into  an 
organisation.  

Future Measures  

The  International  Labour  Office  (ILO)  highlighted  limitations  of  pay  transparency 
measures that only target large enterprises, as this results in a limited number of workers 
being  covered.  It  pointed  out  that  legislation  on  pay  transparency  should  be  part  of  an 
ecosystem  with  proactive  legislation  addressing  a  range  of  interconnected  issues 
including:  increasing  the  prevalence  of  women  in  leadership;  incentivising  women  to 
shift to higher-paid jobs; tackling violence and harassment; and redistributing unpaid care 
work, through improving care and family policies and services.  

The ILO emphasised the importance of direct access to information on pay differentials 
as a means of: ensuring transparency; monitoring the pay gap; and as a basis for remedial 
action, including through the development of an equal pay plan. It highlighted pay audits 
as  a  platform  for  change  in  helping  to  expose  pay  differentials  and  reveal  the  need  for 
structural  change  in  the  workplace.  It  noted  that  pay  audits  may  be  too  aggregate  to 
provide  sufficient  transparency,  and  the  importance  of  involving  trade  unions  or 
employee  representatives  in  the  process  and  making  the  results  publicly  available.  It 
pointed  to  a  value  in:  providing  practical  supports  to  assist  companies  to  implement 
measures;  making  company  action  plans  public;  involving  employers’  and  workers’ 
organisations  throughout  the process; recognising the effective contribution to  be made 
by collective bargaining; and strengthening complaint mechanisms.  

Further Contributions: Civil Society Organisations  

State of Play  

The  European  Women’s  Lobby  stressed  that  the  concept  of  work  of  ‘equal  value’ 
remains challenging. Criteria have not been provided in law to determine the meaning for 
work of ‘equal value’. This could usefully be a focus for a Europe wide study and would 
need to be addressed in pay transparency legislation. Make Mothers Matter identify the 
problematic of ineffective implementation and enforcement of equal pay legislation and 
identify the issue of definition of ‘pay’ and of ‘work of equal value’ as part of the reason 
for this.  

Future Measures  

The European Women’s Lobby (EWL) pointed to the need to introduce mandatory pay 
audits in  all companies,  regardless  of size. Smaller  companies  could  be supported with 
technical  assistance  and  financial  support  as  necessary.  It  expressed  confidence  that 

112 

 
GDPR would not be an obstacle to accessing information to ensure pay transparency. It 
emphasised  the  need  for  a  focus  on  recruitment  practices  and  non-discriminatory 
recruitment policies.  

The  Business  &  Professional  Women  organisation  emphasised  the  need  to  support 
companies with up to 500 employees with training and financial and human resources, to 
create a culture of reporting and auditing on gender issues in the workplace. Training on 
methodologies  should  be  compulsory  in  this  area  for  employer  associations  and  trade 
unions.  

Make  Mothers  Matter  underlined  that  more  detailed  reporting  measures,  along  with  a 
consistently applied enforcement system, is advisable.  

Confederation  of  Family  Organisations  in  the  European  Union  (COFACE)  emphasised 
that  pay  transparency  measures  need  to  include  reference  to  the  EU  legislative 
framework in the area of work and family in order to guarantee that all workers have the 
same rights. There is a need to take action on the causes of the gender pay gap, including 
unequal sharing of care duties, unequal take-up of parental leaves, and lack of affordable 
childcare.  

5.  Way Forward  

A public appetite for tackling this issue can be identified from the consultation. It clearly 
identifies that an issue of fundamental rights is at stake, pay discrimination. Not all EU 
citizens enjoy this right  fully. While a strong consensus is evidenced  for action and for 
particular  types  of  action,  there  is  no  full  consensus  on  this.  Respondents  from 
companies/business  associations  generally  did  not  share  the  same  high  level  of 
consensus.  

There are options which reach some level of consensus. These include: the obligation to 
adopt  an  equal  pay  plan  at  organisational  level;  employers’  requirement  to  report 
regularly on pay levels and gender pay gaps; employees’ right to access information on 
pay  levels  and  gender  pay  gaps;  and  for  employers  and  employees  representatives  to 
analyse information about pay levels and gender pay gaps. At the same time, the level of 
overall  consensus  evident  behind  the  full  range  of  proposals  put  forward  in  the 
consultation  suggests  that  there  is  room  for  some  further  ambition  in  responding 
definitively to this issue that to-date has proven so resistant to change.  

113 

 
 
Annex 3: Who is affected and how? 

1.  Practical implications of the initiative 

The  Initiatives  has  potential  implications  for  national  administration, 
social partners, companies and all workers. Direct costs are mostly on the 
employer, but in large part non recurrent. 

Table  1  summarises  the  main  aspects  of  legislative  options  on  pay 
transparency (see next page).  

114 

 
 
Table 1 – Summary of coverage, support by stakeholders, costs and main impacts of main pay transparency measures 

Option1A-
1/1B-1 

Transparency 
of salary 
information 
prior to 
employment 

All EU 
companies 

Unions 78% 
Business 41% 

20 million 
(100%) 

Measure 

Scope 

Overall 
support 
from 
consultations 
Nbr and % 
of companies 
impacted 
% of 
workers 
impacted 

Preferred option 

Other options 

Option 1B-2 

Option 2D-1 

Option 2D-2 

Option 1A-2 

Option 2A 

Option 2B 

Right of workers 
to receive 
individual 
information on pay 
compared to their 
category upon 
request 

Employer 
obligation to report 
on average 
differences in pay 
between female 
and male workers 
by worker category 

Employer obligation to 
carry out a joint pay 
assessment if pay 
reports show pay 
differences which 
cannot be justified by 
objective, gender-
neutral factors 

Employers’ obligation 
to provide all workers 
with individual 
information on pay 
compared to their 
category 

Equal pay 
certification 

Joint pay 
assessment 

All EU companies 

250+ workers 

250+ workers 

50+ workers 

50+ workers 

50+ workers 

EU citizens 88% 
Unions 89% 
Business 18% 
Member States 59% 

20 million (100%) 

EU citizens 78% 
Business 20% 
Member States 82% 

41 thousand  
(0,2%) 

Unions 95,6% 
 Business 23,5% 

Depend on number of 
employers subject to pay 
assessment 
Depend on number of 
employers subject to pay 
assessment 

EU citizens 88% 
Unions 89% 
Business 18% 
Member States 59% 

Unions 
95,6% 
Business 
23,5% 

249 thousand  
(1,1%) 

249 thousand 
(1,1%) 

249 thousand 
(1,1%) 

Option 
2C-1 

Employer 
obligation 
to carry 
out a joint 
pay 
assessment 

250+ 
workers 
Unions 
95,6% 
Business 
23,5% 
41 
thousand 
(0,2%) 

Option 2C-2 

Employer obligation to 
report on average 
differences in pay 
between female and male 
workers 

50+ workers 

EU citizens 78% 
Business 20% 
Member States 82% 

249 thousand (1,1%) 

100% 

100% 

33% 

50% 

50% 

50% 

33% 

50% 

Cost per 
employer 

Nihil 

Depend on number 
of requests 
(20EUR/request) 

min.379-508 EUR; 
max.721-890EUR 
the first year (costs 
would decrease the 
following years) 

min.1,180-1,724EUR; 
max.1,911-2,266EUR 
for the first year (costs 
might decrease or not be 
necessary in the 
following years) 

Communication costs: 
min. 32-135 EUR; max. 
53-262 EUR; 
possible additional cost 
for grouping workers : 
217-1080 EUR  

Cost per MS 

Nihil 

negligible 

Total Cost 
EU27 

Nihil 

Depend on number 
of requests 

400,000 EUR 
(82,000 EUR 
annual) 

26-50 million EUR 
for employers and 
10 million EUR for 
MS 

Average 
1,800-2,500 
EUR 
for the first 
year (lower 
for 
subsequent 
assessments). 

Average 
1,829-
2,175 EUR 

315-500 EUR 
yearly (100 EUR in the 
following years) 

negligible 

negligible 

400,000 EUR (82,000 
EUR annual) 

min. 5,791-
13,136 EUR; 
max. 8,301-
24,512 EUR 

One-off 
590,000 EUR 
(min. 50,000 
EUR annual) 

negligible 

negligible 

Depend on number of 
employers subject to pay 
assessment 

70-137 million EUR 
(+possible costs for 
grouping workers) 

2.2-3.4 billion 
EUR  

636-932 
million EUR 

90-125 
million 
EUR 

131-214 million EUR 
for the first year (This 
decreases in the following 
years to between 20 and 
36 million) 

115 

 
 
  
  
 
2.  Summary of costs and benefits 

I. Overview of Benefits (total for all provisions) – Preferred Option 

Description 

Amount 
Direct benefits 

Promote 
efficiency 

employee 

Concerns  victims  of  gender  pay 
discrimination/undervaluation 
by 
gender 

Comments 

Not possible to quantify. 

Help  firms  present  better 
image 

Potentially  all  employers  appling  the 
mesaure 

Not possible to quantify. 

Motivate 
groups 

lower 

paid 

Concerns  victims  of  gender  pay 
by 
discrimination/undervaluation 
gender 
specific 
– 
workplace situation 

depends 

on 

Awareness raising 

All workers 

aimed 

Facilitation 
at 
uniform  application  of 
key concepts 

All workers benefit from knowing that 
their  rights  are  better  protected  – 
potential 
benefit  more; 
Employers  redress  the  bias  in  pay 
structures and valuation 

victims 

Procedural improvement 

Potentially all workers 

Strenghtened remedies 

Potentially all workers 

Promote 
efficiency 

employee 

Decreasing overall gender 
pay gap 

Behavioural change 

Decrease in the at-risk-of-
poverty rate 

Indirect benefits 

Potentially  for  all  workers  but  real 
extent depends on specific situation in 
the workplace 

A  potential  reduction  of  3  p.p.  of  the 
unexplained  GPG  has  been  taken  as 
reasonable estimate  

This  is  a  likely  impact  of  a  potential 
increase  of  previously  discriminatory 
low salaries 

Not possible to quantify. 

Not possible to quantify. 

Not possible to quantify. 

Not possible to quantify. 

Not possible to quantify. 

Not possible to quantify. 

Lacking precise information on the 
extent  of  pay  discrimiantion  the 
potential  impact  of  the  measure  is 
difficult to assess  

Not possible to quantify. 

From  the  initial  16.3%  on  average 
in the EU27 to around 14.6%, with 
important  heterogeneities  across 
countries and by household types 

(1)  Estimates  are  relative  to  the  baseline  for  the  preferred  option  as  a  whole  (i.e.  the  impact  of  individual 
actions/obligations of the preferred option are aggregated together); (2) Please indicate which stakeholder group is 
the main recipient of the benefit in the comment section. 

116 

 
 
 
 
 
 
II. Overview of costs – Preferred option 

Citizens/Consumers  

Businesses 

Administrations 

One-off  Recurrent 

One-off 

Recurrent 

One-off 

Recurrent 

negligible 

negligible 

Negligible 
____ 

Negligible 
____  

n.a. 
____ 

n.a. 
____ 

negligible 

negligible 

Overall: not 
possible to quantify 
(depends on the 
number of requests 
from employees) 

Not possible to 
quantify 
(depends on the 
number of 
requests from 
employees) 

For employers 
250+: negligible 
(partly covered 
under measure 2D 
below). 

The cost of a single 
request was 
estimated at 20 
EUR 

Direct 
costs 

Information 
prior to 
employment  
____ 

right to receive 
information on 
pay upon 
request for all 
workers  
(Sub-option 1B) 

Indirect 
costs 

n.a./ 
negligible 

n.a./ 
negligible 

n.a./ 
negligible 

n.a./ 
negligible 

n.a./ 
negligible 

n.a/ 
negligible 

Strengthened 
Pay reporting 
for 250+  
(Sub-option 2D) 

Direct 
costs 

n.a./ 
negligible 

n.a./ 
negligible 

Overall: 26 - 50 
million EUR 

Per employer: 
between min. 379-
508 and max; 721-
890 EUR 
depending on the 
size 

Expected to 
decrease in any 
subsequent 
exercises 

400,000 
EUR 

82,000 
EUR 

Indirect 
costs 

n.a./ 
negligible 

n.a./ 
negligible 

n.a./ 
negligible 

n.a./negligible 

n.a./neglig
ible 

n.a./ 
negligible 

Joint pay 
assessment in 
case of 
unjustified 
gender pay 
differences 
(Sub-option 2D) 

Direct 
costs 

Expected to 
decrease in any 
subsequent 
exercises 

Overall: not 
possible to quantify 
(depends on the 
percentage of 
employers subject 
to pay assessment) 

Per employer: 
between min. 
1,180-1,724 EUR 
and max.1,911 and 
2,266 EUR 
depending on size. 

n.a./ 
negligible 

n.a./ 
negligible 

n.a/ 
negligible 

n.a/ 
negligible 

Indirect 
costs 

n.a./ 
negligible 

n.a./ 
negligible 

Not possible to 
quantify 

Not possible to 
quantify 

n.a./ 
negligible 

n.a/ 
negligible 

117 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Facilitation and 
enforcement of 
the existing 
legal 
framework 
(Option 3) 

n.a./ 
negligible 

n.a./ 
negligible 

Direct 
costs 

Only for employers 
not yet compliant 
with the equal pay 
principle  

n.a.  

n.a./ 
negligible 

n.a./ 
negligible 

Indirect 
costs 

n.a./ 
negligible 

n.a./ 
negligible 

If non compliant 

n.a. 

n.a./ 
negligible 

n.a./ 
negligible 

(1) Estimates to be provided with respect to the  baseline; (2) costs are provided for each identifiable action/obligation of  the 
preferred option otherwise for all retained options when no preferred option is specified; (3) If relevant and available, please 
present  information  on  costs  according  to  the  standard  typology of  costs  (compliance  costs,  regulatory  charges, hassle  costs, 
administrative costs, enforcement costs, indirect costs; see section 6 of the attached guidance). 

118 

 
 
 
 
 
 
3.  Coverage of entreprises and workforce by employer threshold applied 

Entreprise - number (by size of company) 

0 to 9 

10+ 

50+ 

250+ 

TOTAL 

EU28 
EU27 

22.600.000 

1.739.195 

283.993 

47.810 

24.378.356 

20.000.000 

1.526.409 

249.216 

41.491 

22.234.234 

Entreprise coverage (by 
threshold) 

10+ 

7,1% 

6,9% 

50+ 

1,2% 

1,1% 

250+ 

0,2% 

0,2% 

675 

960 

693 

416 

388 

546 

169 

545 

0,2% 

1,5% 

0,2% 

0,8% 

0,2% 

0,8% 

0,1% 

0,1% 

0,7% 

0,4% 

1,5% 

0,1% 

0,8% 

0,2% 

1,3% 

0,2% 

1,6% 

0,5% 

2,9% 

0,3% 

2,0% 

8,4% 

5,2% 

4,0% 

5,6% 

3,9% 

9,1% 

4,5% 

7,8% 

8,9% 

3.409 

6.719 

1.619 

8.514 

4.965 

5.243 

4.470 

3.362 

3.249 

2.277 

4.059 

2.932 

3.565 

1.198 

17,9% 

11,3% 

75.788 

40.806 

28.658 

33.038 

25.194 

43.896 

13.527 

27.920 

20.778 

69.069 

20.921 

19.369 

23.063 

73.773 

12.139 

340.487 

631.819 

223.360 

719.492 

149.324 

264.734 

198.166 

311.829 

598.781 

978.967 

124.349 

135.797 

148.932 

194.095 

103.316 

688.217 

243.956 

449.277 

2.055.093 

1.019.773 

2.659.644 

3.712.043 

2.661.427 

3.517.178 

2.783.993 

2.512.494 

2.504.371 

BE 
BG 
CZ 
DK 
DE 
EE 
IE 
EL 
ES 
FR 
HR 
IT 
CY 
LV 
LT 
LU 
HU 
MT 
NL 
AT 
PL 
PT 
RO 
SI 
SK 
FI 
SE 
UK 
Source:  Own  calculations based  on Eurostat  -  Annual  enterprise  statistics  by  size  class  for  special  aggregates  of  activities  (NACE 
Rev. 2) [sbs_sc_sca_r2] – 2017 or latest available or estimate 

1.108.718 

1.160.015 

1.672.365 

1.744.285 

1.931.336 

2.144.122 

188.376 

536.779 

289.874 

826.908 

431.910 

134.614 

457.439 

210.392 

673.255 

212.786 

112.867 

202.522 

570.005 

332.755 

868.079 

485.215 

142.153 

471.691 

230.879 

712.144 

10.245 

18.965 

34.777 

29.471 

14.146 

26.419 

33.226 

51.297 

42.881 

71.920 

41.171 

53.305 

14.252 

20.487 

38.889 

52.657 

33.741 

28.615 

12,7% 

12,9% 

11,0% 

1.632 

2.616 

5.451 

1.639 

6.551 

1.127 

3.464 

6.365 

9.776 

1.663 

1.415 

3.098 

3.542 

6.558 

1.031 

6.319 

9.551 

4.270 

2.196 

7.539 

5,2% 

6,5% 

8,5% 

7,0% 

5,8% 

7,7% 

4,4% 

4,1% 

4,7% 

5,3% 

3,0% 

8,9% 

5,5% 

9,9% 

0,6% 

0,1% 

0,3% 

1,0% 

0,2% 

1,4% 

0,2% 

1,3% 

0,2% 

2,5% 

0,5% 

1,0% 

0,2% 

1,4% 

0,2% 

0,9% 

0,1% 

2,0% 

0,3% 

1,1% 

0,2% 

0,7% 

0,1% 

2,0% 

0,3% 

1,0% 

0,2% 

0,7% 

0,1% 

1,5% 

0,3% 

0,9% 

0,1% 

1,6% 

0,3% 

839 

399 

194 

354 

156 

935 

883 

233 

581 

596 

80 

62 

119 

 
 
 
  
  
 
 
Persons employed - number (by size of company) 
50+ 

250+ 

10+ 

TOTAL 

0 to 9 

Employees coverage (by 
threshold) 

10+ 

50+ 

250+ 

41.412.18

3  103.817.204 

37.519.12
1 

87.774.384 

74.895.36
3 

62.599.77
8 

41.372.32

3  125.293.500 

50.629.94

6  145.229.381 

71% 

52% 

35% 

990.906 

1.881.042 

1.335.604 

904.881 

2.871.948 

599.212 

1.398.428 

929.386 

506.340 

1.997.640 

1.135.839 

2.586.951 

1.940.544 

1.234.241 

3.722.789 

343.768 

1.405.825 

5.684.119 

24.084.212 

949.689 
16.974.11
4 

595.198 
10.955.83
8 

1.749.593 

29.768.330 

138.956 

293.859 

188.101 

91.412 

432.815 

404.280 

1.052.111 

718.314 

424.577 

1.456.391 

1.137.741 

960.782 

527.077 

287.972 

2.343.485 

4.569.295 

7.535.644 

5.045.340 

3.412.672 

12.104.938 

4.010.604 

11.711.646 

9.338.792 

7.331.573 

15.722.250 

304.326 

720.158 

505.901 

316.868 

1.024.484 

6.496.451 

8.055.387 

5.021.082 

3.108.862 

14.894.596 

79.206 

146.192 

89.802 

42.891 

211.818 

280.194 

429.483 

273.943 

133.097 

690.488 

462.604 

240.695 

48.456 

226.717 

159.505 

90.897 

248.711 

641.301 

970.682 

275.173 

896.754 

1.818.105 

1.294.692 

845.206 

2.714.859 

44.635 

99.654 

65.020 

33.179 

148.277 

1.642.367 

4.150.148 

3.079.839 

2.021.325 

5.792.516 

714.956 

2.078.127 

1.400.732 

865.209 

2.850.280 

3.481.387 

5.752.561 

4.618.052 

2.994.835 

9.233.948 

1.321.714 

1.957.189 

1.289.142 

3.278.903 

921.117 

3.099.004 

2.235.795 

1.410.818 

4.020.121 

219.106 

675.515 

409.070 

292.845 

172.556 

628.176 

932.406 

708.125 

450.861 

1.607.921 

354.924 

1.132.914 

796.089 

511.995 

1.487.837 

792.516 

2.513.020 

1.155.531 

3.305.536 

1.779.581 
12.295.58
5 

70% 

65% 

70% 

69% 

80% 

81% 

68% 

72% 

41% 

62% 

74% 

70% 

54% 

59% 

67% 

71% 

82% 

67% 

67% 

72% 

73% 

62% 

60% 

77% 

65% 

58% 

76% 

76% 

50% 

47% 

47% 

52% 

54% 

57% 

43% 

49% 

22% 

42% 

59% 

49% 

34% 

36% 

43% 

48% 

58% 

48% 

44% 

53% 

49% 

50% 

56% 

47% 

44% 

54% 

54% 

33% 

32% 

25% 

33% 

34% 

37% 

21% 

29% 

12% 

28% 

47% 

31% 

21% 

17% 

21% 

25% 

33% 

31% 

22% 

35% 

30% 

32% 

39% 

35% 

27% 

28% 

34% 

35% 

EU2
8 
EU2
7 

BE 
BG 
CZ 
DK 

DE 
EE 
IE 
EL 
ES 
FR 
HR 
IT 
CY 
LV 
LT 
LU 
HU 
MT 
NL 
AT 
PL 
PT 
RO 
SI 
SK 
FI 
SE 

3.893.062 

UK 
9.257.623 
Source: Own calculations based on Eurostat - Annual enterprise statistics by size class for special aggregates of activities (NACE Rev. 
2) [sbs_sc_sca_r2] – 2017 or latest available or estimate 

16.042.820 

19.935.881 

80% 

46% 

62% 

120 

 
 
 
 
  
  
  
  
 
Annex 4: Analytical methods 

1. 

In-depth analysis of the gender pay gap using SES microdata 

level  of  remuneration  and 

Data set – The analyses were conducted based on the Structure of Earnings Survey for the 
reference  year  2014  (EU-SES).  The  objective  of  the  survey  is  to  provide  accurate  and 
harmonised  data  on  earnings  in  EU  Member  States  and  Candidate  Countries,  for 
policymaking  and  research  purposes.  The  2014  SES  gives  detailed  and  comparable 
information  on  relationships  between 
individual 
the 
characteristics of employees and their  employers.  The SES  collects  the  earnings actually 
received by an employee of a business in the reference month and year. The information 
collected relates to the earnings paid to each ‘job holder’. It does not cover earnings by the 
same  employee  elsewhere  in  a  second  or  third  job.  The  SES  results  are  produced  in 
accordance with the relevant international classification systems. The main classifications 
used  in  this  study  are:  (a)  Economic  activity  (industry):  Industrial  classification  of 
economic  activities  within  the  European  Communities  (NACE  Rev.  2)  –  Results 
disseminated at the 2 digit level; (b) Occupation:  International Standard Classification of 
Occupations  (ISCO-08)  –  Results  disseminated  at  the  2  digit  level,  and  (c)  Educational 
Level:  International  Standard  Classification  of  Education  (ISCED  2011)  –  Results 
disseminated  in  groupings  as  specified  by  EUROSTAT  (basic  education,  secondary 
education,  tertiary  education  of  up  to  4  years  length  and  tertiary  of  more  than  4  years 
length). All results are based on the scientific-use file (SUF) of SES 2014.3 Information is 
available  for  22  EU  countries  –  Belgium  (BE),  Bulgaria  (BG),  Cyprus  (CY),  Czechia 
(CZ), Germany (DE), Estonia (EE), Spain (ES), Finland (FI), France (FR), Hungary (HU), 
Italy (IT),  Lithuania (LT),  Luxembourg (LU),  Latvia (LV), Malta (MT), the Netherlands 
(NL),  Poland  (PL),  Portugal  (PT),  Romania  (RO),  Sweden  (SE),  Slovenia  (SI),  Slovakia 
(SK) – and Norway (NO) and the United Kingdom (UK). 

Sample description - The sample regularly includes enterprises which are from sections C 
to O of the Statistical Classification of Economic Activities in the European Community 
(commonly  referred  to  as  NACE).  However,  public  administration  is  excluded  in  some 
countries,  leading  us  to  drop  employees  from  this  sector  in  our  analysis.  Moreover,  we 
exclude  apprentices  from  the  analysis.  Given  these  restrictions,  we  are  left  with  24 
countries (BE, BG, CY, CZ, DE, EE, ES, FI, FR, HU, IT, LT, LU, LV, MT, NL, NO, PL, 
PT, RO, SE, SI, SK and UK) and 8 831 219 individual observations (4 303 411 men and 4 
527 808 women). 

Data analysis - The analysis involved looking at gender pay gaps reported on the country 
level,  for  the  whole  workforce  (univariate  analyses)  and  for  selected  subgroups  within 
countries  (bivariate  analyses).  Bivariate  relationships  are  likely  to  mask  notable  within-
group heterogeneity. Multivariate analysis isolates the contributions of single factors to the 
overall gender pay gap, controlling for the contributions of other (statistically measurable) 

121 

 
 
 
factors  while  univariate  and  bivariate  analyses  offer  an  helpful  first  overview.  The  three 
complementary aspects are all relevant for policy implications. The results are presented in 
Annex 5, section 2. 

2.  Assessment of legal proposal – methodology 

Three  assessment  criteria  guided  the  ex-ante  evaluation  of  the  envisaged  transparency 
measures:  a) effectiveness  (degree to  which the options are likely to  meet the initiative’s 
objectives), b) efficiency (costs benefits and their distribution across stakeholders) and c) 
coherence  (with  other  main  EU  policies/legislation).  The  assessment  took  into  account 
social  and economic208 impacts  for different  stakeholder groups and employer sizes. The 
necessary  data  and  information  was  collected  through  an  extensive  literature  review, 
interviews  with  stakeholders  at  the  EU  level,  several  analyses  of  data  on  the  gender  pay 
gap  from  the  Eurostat  Structure  of  Earnings  Survey  (SES),  and  country  studies  in  all  27 
EU member states, as well as specific data collection in Iceland, Norway, and Australia.  

The  effectiveness  and  institutional  coherence  have  been  explored  using  the  conceptual 
framework  of  ‘feasibilities’  as  developed  by  De  Wispelaere  and  Noguera209.  These 
‘feasibilities’  are:  Firstly,  strategic  feasibility  (i.e.  political  actors  support  for  a  given 
modality); secondly, institutional feasibility (i.e. whether for the policy option to achieve 
its stated aims the existing policy framework would first need to be modified (coherence)); 
third  psychological  feasibility  (i.e.  general  public  support);  and  finally,  behavioural 
feasibility  (i.e.  whether  the  behavioural  incentives  the  policy  would  establish  align  with 
aims or undermine the viability of the policy (effectiveness)). These four types of political 
feasibility are interlinked with specific national constraints and agency that different actors 
possess in relation to novel policy development.  

This framework allows to consider the coherence and effectiveness of policy measures in 
the  context  of  heterogeneous  availability  of  data  and  thus  systematically  analyse  the 
constraints, possibilities and impacts  at the national level.  The constraints are considered 
both  in  a  prospective  way,  i.e.  the  probability  of  adoption  of  the  policy,  and 
retrospectively, i.e. potential issues affecting the functioning and resilience of the possible 
policy.  The  feasibility  framework  therefore  provides  a  means  of  structuring  the  experts' 
analyses  in  a  variety  of  contexts  and  states  of  national  advancement  in  relation  to  pay 
transparency. Experts were thus able to assess pay transparency modalities in a systematic 
manner even with the limited development of such measures in some national contexts and 
relative  absence  of  empirical  evidence.  Finally,  experts  also  offered  insights  on  the 
interaction  between  the  feasibilities  at  the  national  level  and  on  the  likely  behaviours  of 

208 No environmental impacts are expected. 
209 De Wispelaere, J., Noguera, J. A., ‘On the Political Feasibility of Universal Basic Income’ in Caputo, K., 
Basic Income Guarantee and Politics. International Experiences and Perspectives on the Viability of Income 
Guarantee, 2012. 

122 

 
 
 
                                                           
different  key  stakeholders  –  workers,  managers  and  HRM  professionals,  social  partners 
and equality bodies and labour inspectorates.  

Before the actual assessment of different options, a baseline against which the impacts of 
those options could be assessed was developed. In democratic societies strategic feasibility 
depends on psychological feasibility – that is, political actors and general public support. 
This psychological feasibility also helps inform the assessment of the baseline scenario at 
the  Member  State  level  in  the  case  of  no  additional  EU-level  measures  or  actions.  In 
addition,  the  Baseline  scenario  was  elaborated  by  exploring  the  existing  situation  in 
Member States and their responses to the 2014 Recommendations as well as the economic 
environment and in particular, the potential consequences of the COVID crisis.  

Drawing  upon  the  Baseline  Scenario  each  expert  was  required  to  score  the  overall 
desirability of a each modality and its overall feasibility (in relation to the national context) 
on  a  common  grid.  Further,  each  expert  scored  the  coherence  of  the  measure  using  the 
institutional  and  psychological  feasibility  for  each  of  the  stakeholders  (8  measures  in 
total). Similarly, in addition to the qualitative comments on the likely consequences of pay 
transparency  measures,  the  effectiveness  was  scored  by  the  expert  for  each  of  the 
stakeholder  groups  (4  measures).  Expert  scores  varied  from  1  to  5  low  to  high  and  this 
scoring system was used to construct indicators based on the averages across stakeholder 
groups  both  within  and  across  countries.  These  indicators  summarise  the  overall  expert 
assessment  for  each  measure  and  are  reported  below  in  relation  to  each  of  the  Option  4 
measures.  

As  for  the  legal  coherence,  the  legal  analysis  of  measures  addressing  the  lack  of 
transparency focused on coherence with EU law and selected instruments of international 
law. It also inventorised obstacles as well as existing practices at the national level. Legal 
coherence was assessed through a literature review and review of legal cases in particular 
in  order to  inventorise obstacles as well as existing practices at  the national  level.  When 
assessing  measures  related  to  the  lack  of  legal  clarity,  the  legal  analysis  focused  on  the 
legal  concepts  of  ‘equal  pay’,  ‘equal  work’,  ‘equal  value’  and  ‘comparator’.  A  separate 
analysis was conducted for compliance with the GDPR. 

Procedural measures were assessed from a legal point of view. Their assessment looked 
at  coherence  with  existing  practice  and  legislation  while  identifying  obstacles  to  the 
implementation.  This  assessment  was  based  on  literature  review,  existing  case  law,  and 
experience of stakeholders concerned by enforcement of the equal pay principle.  

Finally,  costs  and  benefits  included  compliance  and  administrative  costs  for  companies 
and  economic  and  social  impacts  for  all  relevant  stakeholder  groups.  Specific  attention 
was  paid  to  a  possible  increase  of  compliance  and  administrative  cost  burdens  on 
employers,  as  the  Public  Consultation  supporting  this  study  shows  this  to  be  one  of  the 
major  arguments  brought  by  businesses  forward  against  introducing  pay  transparency 

123 

 
 
 
measures. This assessment was also supported by a review of costs of existing measures 
carried out by Eurofound for this Impact Assessment (Eurofound, 2020). The results of the 
multiple  perspectives  –  legal,  economic,  institutional  –  are  integrated  to  provide  a  final 
overall assessment for each option. 

3.  Methodology for computing direct costs for companies  

looking  at 

its  feasibility, 

The discussed above, the starting point of the analysis was a qualitative assessment of each 
legal  analysis  and  cost-benefit  assessment210, 
measure 
stakeholders’ views gathered through the consultation process, studies by the Commission 
and  the  results  of  evaluations  and  impact  assessments  carried  out  in  individual  Member 
States. The computation was limited to pay transparency measures, since from the scoping 
exercise  they  were  assessed  as  being  those  most  likely  to  bear  costs  for  employers,  and 
bring  biggest  changes  compared  to  the  current  situation  in  Member  States.  From  a 
methodological point of view they are also the estimate most likely to be quantified with 
some degree of reliability. 

A fully fledged cost-benefit analysis should in principle entail: 

-  The  mapping  of  all  direct  and  indirect  costs  and  benefits  likely  generated  by  the 
intervention (including distinguishing between one-off and recurring costs) for all 
stakeholders and in line with the intervention logic of each policy option 
-  A suitable timeframe to discount the flow of costs and benefits over time 

Such quantification exercises are very challenging with reference to this intitiative, given 
the great level of uncertainty surrounding the actual materialisation of costs and benefits of 
the  different  policy  options  (especially  indirect/second  order  ones),  as  well  as  their  size 
and direction. This is also acknowledged in the Better Regulation framework which states 
that within impact assessments ‘all relevant impacts should be assessed qualitatively and 
quantitatively  whenever  possible  (i.e.  if  they  are  susceptible  of  being  quantitatively 
estimated through a sound methodology and if the required data exists and can be collected 
at a proportionate cost.). Quantification of impacts will not be possible in all cases […].’211 
Detailed calculations were performed narrowing down the scope to only to cover the direct 
costs  to  firms.  This  focus  ensures  greater  reliability  of  estimates.  Indirect,  second-order 
effects such as changes to the wage-setting curve as well as corrective actions needed to 
ensure equal pay for work of equal value are assumed away.  

210  Costs  have  been  estimated  by  extrapolating  the  costs  of  similar  measure  introduced  in  Member  States 
taking into account an assessment of the extent to which the effects observed in one Member State can also 
be expected to materialise in other Member States. 
211  European  Commission,  Better  Regulation  Guildelines,  2017  (Chapter  III  ‘Guidelines  on  impact 
assessment’, 
at 
the  most 
https://ec.europa.eu/info/sites/info/files/better-regulation-guidelines-impact-assessment.pdf. 

impacts’).  Available 

significant 

‘Assess 

section 

2.5.3 

124 

 
 
 
                                                           
The final outcome of this exercise are the estimates reported in the following tables. They 
include the total direct costs by Member States and in the total EU-27 calculated based on 
disaggregated  information  and  costs  by  firm-size  (small,  medium,  large  according  to 
Eurostat  definitions).  Total  direct  costs  are  presented  in  the  form  of  range  of  values  to 
better reflect the variability in the forecasts whenever necessary.  

The  point  of  departure  for  the  exercise  is  the  equation  below.  It  presents  the  Total  costs 
calculated according to the formula: 

Where 

C  =  Hourly  cost  of  work  inputs  needed  for  fulfilling  the  possible  option 
requirements by one firm of a given size in a given Member State 
N = Hours of work needed for each inputs to  fulfill  the possible requirements by 
one firm of a given size n in a given Member State 
A = the total number of firms existing in each Member State for each size 
i = the number of the considered inputs 

To estimate the direct costs, the following steps were carried out: 

1.  A  mapping  of  direct  costs,  identified  based  on  information  from  a  few  Member 
States which have already implemented similar measures and then transformed into 
EU level averages (in the form of ranges whenever necessary). To this end, current 
experiences  e.g.  with  the  pay  reports,  pay  audits  etc  in  some  Member  States  and 
their costs were reviewed in detail to ensure that only the costs which are directly 
entailed  by  the  (‘direct  costs’)  Directive  are  attributed  to  it  across  the  different 
policy options. This means that we excluded any additional burden likely generated 
by the way in which Member States have implemented, say, a pay report measure 
which  does  not  necessarily  stem  from  the  text  of  the  policy  options  discussed  in 
this study and their modalities. All  costs have been harmonised as hours  of work 
necessary  to  carry  out  the  different  activities.  This  ensures  a  comparatively 
homogeneous basis for consistent cross-country estimations.  

2.  A customisation of costs by firm size. In general, unit costs are assumed to grow 
along  with  firm  size  given  the  increasing  complexity  of  the  phenomena  under 
observation, but at a decreasing pace (decreasing marginal costs), in line with the 
standardisation  of  procedures  and  materialisation  of  economies  of  scale.  The 
starting point for this differentiation remains that of existing experiences  with the 
few  Member  States  having  already  experimented  measures  which  resemble  those 
suggested by the different policy options. The fact that enterprises of different sizes 

125 

 
 
 
 
 
 
 
have  been  interviewed  allow  to  construct  a  progression  of  costs  throughout 
different size classes.  

3.  A  customisation  of  costs  at  the  Member  States  level,  according  to  three  main 

elements: 

a.  Additionality  of  the  costs  that  might  be  generated  in  each  Member 
State,  that  is,  the  actual  additional  costs  entailed  to  comply  with  the 
Directive’s  requirements  with  respect  to  the  existing  framework  in  each 
Member  State.  The  key  consideration  here  is  that  baselines  differ  among 
Member States. For instance, in Italy there is an obligation to produce pay 
transparency  reports  that  is  line  with  Sub-option  2B,  but  it  is  limited  to 
companies with over 100 employees. In such case, the cost of complying is 
zero for all firms except those with less than 100 employees. 

b.  Differences  in  labour  costs:  labour  costs  might  differ  substantially  in 
different member states, and so might the cost of specific services (e.g. pay 
audits).  As  the  main  driver  of  these  costs  is  essentially  the  hourly  cost  of 
labour,  we  used  such  information212  to  monetise  the  cost  of  the  hours  of 
work needed to comply with the directive requirements across the different 
policy options. 

c.  The  complexity  of  the  labour  law  and  payroll  arrangements:  this  is 
proxied,  especially  for  costs  linked  to  in-depth  audit  and  analyses,  by  the 
international tax competitiveness index, and particularly the average hours 
needed for businesses to comply with Labour taxes in 2018213. 

4.  Aggregation of costs at the Member State Level. EU level averages of costs by 
policy  option  at  the  firm  level  have  then  been  calculated  by  firm  size  and 
contextual  Member  State  factors  as  per  point  2  and  3.  These  averages  have  been 
multiplied by the number of firms per each size class in each Member State.214 
From the outset, a distinction was made between one-off costs and recurring ones. 
This distinction resulted into two different tables being produced: 

o  Costs for the first year (one-off costs + recurring costs for the first year), 

which include the typical familiarisation, training, software adaptation and 
design costs 

o  Cost for the subsequent years (only recurring costs). 

The results of the calculations are presented in Annex 5, section 11. 

212  Eurostat,  Labour  cost  levels  by  NACE  Rev.  2  activity  [LC_LCI_LEV],  Labour  cost  for  LCI 
(compensation  of  employees  plus  taxes  minus  subsidies),  Services  of  the  business  economy.  This  figure 
covers both HR specialists as well as external consultants.  
213 Based on PwC’s ‘paying taxes 2018' component of the ‘Doing Business’ report from the World Bank. See 
https://taxfoundation.org/labor-tax-complexity-europe-2019/  
214 The most consistent dataset from Eurostat (Annual enterprise statistics by size class for special aggregates 
of  activities  (NACE  Rev.  2)  [SBS_SC_SCA_R2])  is  available  for  2017  (several  missing  data  for  2018), 
hence this was the main database used in the estimations.   

126 

 
 
 
 
                                                           
 
 
 
4.  Estimated  impacts  on  household  income  distribution,  inequality,  poverty  risk  and 

government budgets based on the EUROMOD microsimulation model 

is 

the  European  Union 

The  estimates  of  the  impacts  of  reducing  the  adjusted  gender  pay  gap  (AGPG)  on 
household  income  distribution,  inequality,  poverty  risk  and  on  government  budgets  of 
reducing the AGPG are obtained with the EU-microsimulation model EUROMOD model.  
EUROMOD 
(see 
combines 
https://euromod-web.jrc.ec.europa.eu/about/what-is-euromod).  EUROMOD 
country-specific coded policy rules with representative household microdata (mainly from 
the European Union Statistics on Income and Living Conditions database, EU-SILC 2018 
for  this  exercise,  which  refers  to  2017  incomes).  and  its  underlying  microdata  based  on 
EU-SILC 2018 (which refers to 2017 incomes).  

tax-benefit  microsimulation  model 

EUROMOD  allows  the  simulation  of  tax-benefit  reforms  and  provides  their  overnight  
fiscal  impact  as  well  as  indicators  on  their  distributional  impact,  by  household  or 
individual groups according to socio-economic variables of interest. The model generates 
disposable  individual  and  household  incomes,  applying  countries´  tax  codes  and 
calculating theoretical benefit entitlements and tax liabilities based on the original market 
income (including gross wages) reported by households in EU SILC. The model employs 
information  on  countries’  tax  codes  and  on  household  characteristics  and  economic 
circumstances  to  simulate  tax  liabilities  and  cash  benefit  entitlements.  The  model 
simulations take into account the role played by each tax-benefit instrument, their possible 
interactions,  and  generate  the  disposable  (i.e.  income  after  taxes  and  cash  benefits) 
household215  income. Therefore, the model results are particularly suitable for the analysis 
of  the  distributional,  inequality  and  poverty  impact  of  reforms,  by  household  or  by 
individual  groups  according  to  socio-economic  variables  of  interest.  EUROMOD 
simulations also provide estimations of the budgetary effects. Cross-country comparability 
is enabled by coding the policy systems of the EU Member States according to a common 
framework. 

It should be kept in mind that EUROMOD simulations do not incorporate any behavioural 
eﬀ ects  that  may  also  aﬀ ect  the  fiscal  as  well  as  the  distributional  outcome  of  a  reform. 
Thus,  the  model  is  static  and  delivers  the  first-round  effects  (`the  morning-after  effect'). 
Changing hourly wages may have labour supply and labour demand effects which are not 
captured in this modelling framework.  

The impact of a rise in the gross hourly wage of women can affect disposable income and 
distributional  outcomes  in  different  ways  and  by  a  different  magnitude,  depending  on 

215 The main income inequality and poverty indicators which are used to evaluate the impact of reforms are 
generally based on equivalised household disposable income, considering economies of scale in consumption 
within the household: equivalised income refers to the fact that household members are made equivalent by 
weighting them according to their age, using the so-called modified OECD equivalence scale. 

127 

 
 
 
                                                           
several factors, such as: i) the tax benefit system (personal income tax progressivity, joint-
taxation  considering  pooled  taxable  income  at  the  couple  level,  means-tested  benefits, 
etc.),  ii)  the  relative  position  of  working  women  through  the  income  distribution  (which 
depend also on other households members income), iii) household composition. 

The analysis performed assumes the closing of the adjusted gender pay gap (AGPG), i.e. 
considering the difference in wages between women and men of different subgroups of the 
working  population.  Groups  are  defined  by  occupation,  sector,  education  and  working 
experience  (36  groups  are  considered  to  account  for  sample  size  representativity).  The 
narrowing of the  gap is  done by keeping men´s  wages unaltered and lifting up women´s 
wages to the new target gross hourly wage which (ex-ante) closes the gap by the intended 
amount per group. Notably, wages of women who in the starting point earn more than the 
new reference wage are not reduced. For the subgroup of women affected by the increased 
wages (those below the reference wage at the starting point), the reduction of the AGPG 
nears the targeted amounts. However, theThis implies an overall generous total final effect 
of  changes  in  women’s  gross  earnings  leads  in  many  cases  to  an  ex-post  closing  of  the 
overall gender pay gap larger than the targeted one. . 

The simulations are carried out for a reduction of the AGPG by 3pp, and alternatively by 1 
and 5 pp, on account  of the pay transparency measures. The  results are  provided for the 
whole  EU  as  well  as  per  country.  .  The  results  of  the  simulated  scenarios  of  AGPG 
reduction  are  compared  against  the  baseline  (i.e.  the  policy  systems  in  place  in  Member 
States in 2019). 

Main results: Rising women´s gross hourly wages in order to close the gap would lead to 
an overall increase of total gross earnings  of 6.9% on average at the EU level, and a 
reduction of inequality in market income (i.e. income before taxes and benefits) for all 
Member  States.  Due  to  the  interaction  of  the  tax-benefit  systems,  the  reduction  of 
inequality in disposable income (i.e. income after taxes and benefits) would occur for 18 
Member States.  

The at-risk-of-poverty rate would drop from the initial 16.3% on average in the EU27 to 
around  14.6%,  with  important  heterogeneities  across  countries  and  by  household  types. 
The  risk  of  poverty  rate  would  be  mostly  reduced  for  the  single  parent  households, 
which are mostly women. 

The reduction of the gender pay gap would generate a positive budgetary impact due to 
a  rise  in  government  revenues  (higher  collection  of  income  taxes  and  social  insurance 
contributions)  and  a  small  decline  in  social  (cash)  transfers  (mainly  explained  by  a 
reduction of means-tested cash benefits). At the EU population-weighted average level, the 
shrinking  of  the  gap  would  lead  to  a  rise  in  government  revenues  from  direct  taxes  and 
social contributions of about 7.5%, while the reduction of social transfers (cash benefits) 
would be of approximately 0.4%.  

128 

 
 
 
The  results  substantially  differ  across  Member  States.  The  growth  in  total  market 
incomes and government revenues is estimated to range from around 4% to 14%. It would 
be particularly high in some countries, such as BG, EE, LT and LV (in between 10% and 
14%), whereas it would be less pronounced for EL, NL, MT and IT (about 5%). 

Sensitivity  analysis:  overall,  the  larger  the  reduction  of  the  gap,  the  larger  the  effects, 
although  in  general  the  gains  from  moving  to  the  5  pp  closing  of  the  gap  scenario  are 
rather similar to the 3pp closing scenario (especially for reduction of poverty rates). 

4.1 Country specific results 

The  rise  in  women  gross  hourly  wages  that  would  close  the  AGPG  by  1,  3  or  5pp 
would increase both market and household disposable incomes. Figure 1 below depicts 
the  estimated  changes  in  the  equivalised  disposable  income  by  deciles  for  each  Member 
State.  Changes  in  disposable  incomes  are  expected  to  be  clearly  progressive  for  some 
countries - lower deciles would benefit more than the top ones - (e.g. ES, FR, HU, SE). In 
some  others  countries  the  change  follows  an  inverted  U  shape,  where  middle  incomes 
would gain more from the change (e.g. CY, HR, LT, RO, ). In BE, the impact is expected 
more left skewed, affecting incomes at the top more than at the bottom.  

Figure 1. Change in equivalised household disposable income for three scenarios of AGPG reduction (i.e. 
closing the adjusted gender pay gap by 1, 3, 5 pp), by decile  

129 

 
 
 
 
 
130 

 
 
 
 
 
 
131 

 
 
 
 
 
 
Note: Plots show the mean annual equivalised disposable income by decile (% change with respect to the baseline). The scaling of y-
axis differs across countries. Source: European Commission, Joint Research Centre, based on the EUROMOD model. 

The extent to which changes in market income (driven by the simulated changes in gross 
hourly wages of some women) would be translated into changes in household disposable 
income depends on several issues.  

First, on the initial distribution of wages and gender gaps across income deciles, and shares 
of  working  women  in  each  decile.  For  example,  in  some  countries,  when  closing  the 
AGPG by 3 pp, incomes of women concentrated in the middle of the income distribution 
may be changed relatively more than at the top (and vice versa). The share of employed 
women across the income distribution helps explain some of the country differences (see 
Figure  6):  a  stronger  effect  in  the  lower  part  of  the  income  distribution  is  expected  in 
countries in which the share of women employed in the first decile is higher (e.g. DK, HU) 
compared to countries where this share is lower (e.g. BE, RO, IE).  

132 

 
 
 
 
 
  
 
 
Figure 2. Share of employed women by income deciles  

133 

 
 
 
Source: European Commission, Joint Research Centre, based on the EUROMOD model. 

Secondly,  the  structure  of  personal  income  taxes  (e.g.,  progressivity  of  the  personal 
income  tax,  existence  of  different  allowances,  tax  credits,  joint  assessment  of  taxable 
income, etc.) and the interactions within the tax-benefit system also impact the translation 
of market income changes into disposable income changes. 

Finally,  some  other  things,  such  as  household  composition,  might  also  play  a  role,  as 
incomes used for inequality measures are assessed at the household level, i.e. accounting 
for the number of household members living in a household. 

Because of the higher gross earnings of women when the AGPG narrows, market income 
inequality -measured by the Gini coefficient - would be reduced for all countries for all 
scenarios  (Figure  3).  However,  this  inequality-reducing  effect  in  market  income  would 
not always translate into lower inequality in disposable income. The Gini coefficient of 
equivalised  disposable  income  would  be  reduced  in  18  out  of  27  EU  Member  States 
(Figure 4). According to the simulations, the disposable income inequality is expected to 
increase, although to a different extent depending on the scenario, in BE, EL, FI, IE, LT, 
MT, PL, RO and SI. These inequality results were expected given the distributional tables 
shown above,  as  in  a country like  BE the upper  tail  of the income distribution benefited 
from  the  changes  more  than  the  lower,  while  all  other  mentioned  countries  showed  an 
inverted U shape (middle-top deciles benefit more than the lower ones). 

Figure 3. Change in market income inequality (Gini coefficient) for three scenarios of AGPG reduction  

Source: European Commission, Joint Research Centre , based on the EUROMOD model. 

134 

 
 
 
 
 
Figure 4. Change in disposable income inequality (Gini coefficient) for three scenarios of AGPG reduction 

Source: European Commission, Joint Research Centre, based on the EUROMOD model. 
The impact on inequality of the different scenarios of AGPG reduction does not seem to be 
linear:  the  scenarios  simulating  1  and  5pp  reduction  of  the  AGPG  would  often  lead  to 
higher changes in the Gini inequality of disposable income than the 3 pp scenario.  

The closing of the AGPG by 1, 3 or 5 pp would lead to a reduction in the at-risk-of 
poverty rate for all countries, more so for EE, ES and HU. The countries with the lowest 
decline  in  poverty  risk  would  be  BE,  EL,  FI,  IE,  MT  and  RO  (Figure  5).  As  a  rule,  the 
more the AGPG is closed (or the more women´s gross hourly earnings increase), the more 
the poverty risk would be reduced. For some countries, moving from 1 to 3 pp closing of 
the AGPG would strengthen the effect of poverty risk reduction; but there would be little 
change when going from 3 to 5 pp of AGPG narrowing (e.g., AT, BE, FR, IE, IT, LV and 
PL). This  means that a small  increase  would suffice to  lift up women above the poverty 
line, while further increases in gross earnings  would matter for their financial situation but 
not  for  the  poverty  indicator.  In  addition,  the  impact  on  poverty  rates  depends  on  how 
many working women fall below the poverty line. Most often, people below the poverty 
line have no or little market income. For instance, in RO the change in at-risk-of poverty 
rates  would    always  be  small  or  remain  unchanged:  this  is  because,  as  seen  from  the 
distributional tables, the lowest decile would not be affected by the changes, as  there are 
virtually no working women in the first decile (and only 2 and 5% in the second and third 
deciles), (see Figure 6 below showing the shares of working women across deciles).  

Figure 5. Change in the at-risk-of poverty rates for three scenarios of AGPG reduction  

135 

 
 
 
 
 
Note: The  at  risk of poverty  rate is the  share  of people with an equivalised disposable income (after taxes 
the 
and  social 
national median equivalised disposable income. The poverty line is fixed/anchored in the baseline.  
Source: European Commission, Joint Research Centre, based on the EUROMOD model. 

is  set  at  60%  of 

the at-risk-of-poverty 

threshold,  which 

transfers)  below 

The  overall  change  in  the  at-risk-of  poverty  rates  hides  important  variations  by 
household  type.  Figure  6  provides  estimates  for  households  with  and  without  children 
separately.  The  increased  wages  of  working  women  would  have  almost  no  effect  for 
elderly  households  as  their  main  source  of  income  is  pension  benefits,  which  remain 
unchanged. On the contrary, single parent households  – that most often are women  – 
would benefit the most. The poverty is expected to be reduced by 8 pp in DE, ES, HU, 
LT, LV and even by 16 pp in EE. The other two groups that would experience a significant 
decrease in poverty risk are two adult with three or more children households (decrease by 
more than 6 pp in MT, SE) and three or more adults with children (drop of 5 or more pp in 
ES, HU, NL). DK stands out as a country where the poverty would be reduced more for 
single adults below 65 than for any household with children. 

Figure 6. Change in the at-risk-of poverty rates for the 3pp AGPG reduction scenario, by household type 
(in pp with respect to the baseline). 

136 

 
 
 
  
 
 
Note: The poverty line is fixed in the baseline. The first graph depicts changes for different households without children 
and the second for households with children. The scaling of y-axis differs for the two graphs. 
Source: European Commission, Joint Research Centre, based on the EUROMOD model. 

1.2 Budgetary effects 

Estimates  obtained  with  EUROMOD  simulations  suggest  that  the  reduction  of  the 
AGPG  would  generate  a  positive  budgetary  impact,  due  to  a  rise  in  government 
revenues  (higher  revenues  from  the  personal  income  taxes  and  social  insurance 
contributions)  and  a  small  decline  in  social  (cash)  transfers.  Note  that  this  is  an 
expected outcome that results from the methodological approach taken in the simulations 
to reduce the AGPG, ie women’s gross hourly wages are only increased for some women 
(lower earning women), and the distribution of men´s earnings is left unchanged. Different 
results would be obtained if the approach to close the gender pay gap was different.  

Figure 7 shows how changes in market income and government budgets would differ 
substantially  across  Member  States.  The  growth  in  total  market  incomes  and 
government revenues would range from around 4% to 14%. It is particularly high in some 
countries,  such  as  BG,  EE,  LT  and  LV  (in  between  10%  and  14%),  whereas  the  impact 
would be smaller in  EL, NL, MT and IT (around 5%).  

Figure 7. Changes in market income, government revenues and expenditures for the 3 pp AGPG reduction 
scenario  

137 

 
 
 
 
 
 
Note: EU* is the weighted average for the EU 27 countries (weights: population size). 
Source: European Commission, Joint Research Centre, based on the EUROMOD model.  

At the EU population-weighted average, the scenario of 1 pp reduction would imply a rise 
in government revenues from direct taxes and social insurance contributions of 6.5% while 
the scenario of 5 pp would suggest a rise of 7.6% (which is very close to the one estimated 
for the 3 pp scenario, of 7.5%).  

Figure 8. % change in government revenues for the three scenarios of AGPG reeduction  

Note: Government revenues from direct personal income taxes and social insurance contributions. 
Source: European Commission, Joint Research Centre, based on the EUROMOD model  
Comparing results for the alternative scenarios (Figure 8), it seems that closing the AGPG 
by either 1 or 3 pp would have rather different impact for government revenues (the more 
the gap closes, the larger the positive impact on revenues). But that is not the case for the 
further reduction of the AGPG by 5 pp, as government revenues seem to stabilize. 

138 

 
 
 
 
 
 
 
5.  Behavioural experiment 

In  order  to  investigate  the  behavioural  implications  of  transparency  on  pay  levels,  the 
Competence  Centre  on  Behavioural  Insights  (hereinafter  CCBI  -  part  of  the  Foresight, 
Modelling,  Behavioural  Insights  &  Design  for  Policy  Unit  JRC  I.2)  is  undertaking  a 
behavioural study aimed at identifying the effects of different policy options to support the 
proper enforcement of the equal pay principle.  

Following  a  preliminary  literature  review  on  gender  pay  transparency,  reporting  key 
behavioural  insights  into  gender  pay  transparency  policy  with  an  attempt  to  assess  the 
potential  impact  on  labour  market  outcomes,  the  CCBI,  with  the  support  of  an  external 
contractor  (The  Behaviouralist  Ltd)  is  currently  implementing  an  incentivized  online 
experiment.  

In  terms  of  geographical  scope,  the  experiment  is  being  conducted  in  three  EU  member 
states:  Poland,  Spain,  and  Germany.  Further,  two  samples  within  each  member  state  are 
being recruited: a representative sample of the employed adult population, and a sample of 
HR  professionals  and  managers.  The  first  sample,  representing  employees  in  the 
experiment, will be representative in terms of age, gender, and region. The second sample, 
representing  employers  in  the  experiment,  will  be  drawn  from  a  cross-section  of  sectors 
and companies of different sizes and will be balanced in terms of gender.  

Employees  and  employers  will  form  a  company  and  interact  within  the  experimental 
design.  In  particular,  employers  will  know  the  gender  and  have  incomplete  information 
about  the  potential  performance  of  prospective  employees.  Employers  will  also  set  the 
wages and career promotions under a budgetary constraint. Employees will work for their 
employers, deciding the level of effort they wish to exert, and receive a wage in exchange. 

The experimental methodology translates the envisaged policy options into the following 
experimental conditions: 

The  devised  labour  market  experiment  translates  policy  options  in  the  following 
treatments: 

-  Option 0: No change of policy (baseline scenario).  
-  Option 1: Right of employees to information on pay levels. Employees receive 
information  on  their  wage  and  role,  how  many  man  and  women  work  for  the 
employer, and the average wage overall and by gender, but only for their role. This 
information could be provided automatically [a] OR only upon the request of 
employees [b]. In the experiment the request for information has a monetary cost, 
representing the real life effort required by the employee to request the information 
to the employer. 

-  Option  2:  Reporting  on  Pay.  Employees  receive  information  on  their  wage  and 
role,  how  many  man  and  women  work  in  the  employer,  and  the  average  wage 
overall and by gender, for every role in the employer.  

139 

 
 
 
The study aims at investigating the following outcome variables: 

–  Average  level  of  gender  pay  discrimination  under  each  treatment  (employer’s 

behaviour); 

–  Employees productivity and inferred effort; 

–  Employees gathering of the information (request or search for available info); and 

–  Employee’s (costly) action against employer (contentiousness). 

At  the  end  of  the  experiment  a  post-experimental  survey  is  administered  to  respondents. 
The  post-experimental  survey  consists  of  a  set  of  closed  general  socio-demographic 
questions,  not  sensitive in  nature  (i.e.  gender, age, employment  status,  hours worked per 
week,  education).  Furthermore,  a  number  of  behavioural  measures,  such  ask  risk 
preferences,  fairness,  reciprocity,  and  intrinsic  motivation,  are  included.  Lastly,  the 
elicitation  of  beliefs  on  one’s  own  and  others’  performance,  as  well  as  others’  strategic 
behaviour, is incorporated by means of incentivised introspection. 

140 

 
 
 
 
Annex 5: Initiative specific annex 

1.  Employers’ rationality and discrimination 

A  common  misconception  is  the  assumption  that,  given  the  perfect  rationality  of 
employers  and  their  intent  to  maximize  profit,  the  possibility  to  pay  women  (or  other 
groups) less than men for the same work (though illegal) would result in crowing out the 
male labour force. While this might be the case in low paying female segregated sectors, 
and  going  beyond  the  simple  consideration  that  salary  might  not  be  the  one  and  only 
reason  to  hire  someone,  from  an  economic  point  of  view,  discrimination  is  difficult  to 
rationalize: it is costly for companies and workers alike because by restricting the pool of 
choices results in less productive or more expensive employees to be employed. It should 
therefore not exist. But given that it does exist, economists have struggled to explain it. 
Beyond  the  simple  issue  of  ‘bounded  rationality’,  i.e.  the  idea  that  rational  behaviour 
must  be  necessarily  compatible  with  the  access  to  information  and  the  computational 
capacities in a specific environment,216 economists have identified two major reasons for 
discrimination:  personal  prejudice  and  statistical  discrimination.  The  first  occurs  when 
employers tend to hire only from certain groups, employees prefer to work with specific 
co-workers (e.g. some white male workers might quit employers who employ women or 
people  with  a  minority  background),  or  customers  prefer  certain  groups  (e.g.  trusting 
more a white male doctor).  

Statistical  discrimination  occurs  in  turn  due  to  a  lack  of  information.  When  trying  to 
predict  the  potential  productivity  of  job  applicants,  employers  rely  on  information  not 
related to productivity or that does not apply to a specific worker. Broadly speaking this 
can be quite common: for instance, employers may rely on a prestigious degree for their 
hiring decisions whilst that degree does not necessarily ensure higher productivity. In the 
case of gender, the expectation that motherhood will negatively influence job attachment 
on  the  part  of  women  is  a  common  example.  These  findings  have  been  confirmed  by 
experimental  economics.  The  evidence  indicates  that  employers  have  a  specific  gender 
preference for certain jobs, especially for stereotypical jobs. Kuhn and Shen (2013) found 
that  employers’  relative  gender  preference  for  employees  occupation-  and  job-specific 
and  more  strongly  related  to  the  employers’  preferred  age,  height,  and  beauty  of  the 
potential employee than to their job skill levels in China.217 

There is experimental evidence as regards hiring discrimination suggesting that it is due 
to incorrect beliefs about the women’s ability (Reuben E. et al., How stereotypes impair 

216  See:  Simon,  H.  A.,  ‘A  Behavioral  Model  of  Rational  Choice’,  Quarterly  Journal  of  Economics, 
February 1955, 69(1), pp. 99-118 also as developed looking at ‘systematic biases that separate the beliefs 
that people have and the choices they make from the optimal beliefs and choices assumed in rational-agent 
models’.  Kahneman,  D.,  ‘Maps  of  Bounded  Rationality:  Psychology  for  Behavioral  Economics’,  The 
American Economic Review, 93(5), 2003. 
217  See  Kuhn,  P.  &  Shen,  K.,  ‘Gender  Discrimination  in  Job  Ads:  Evidence  From  China’,  The  quarterly 
Journal of Economics, 2003, pp. 287-336. 

141 

 
 
                                                           
women's  careers  in  science.  Proceedings  of  the  National  Academy  of  Sciences  of  the 
United States of America. 111. 10.1073/pnas.1314788111). Other studies point out that 
hiring discrimination is not specifically about stereotypes, but employers are simply less 
willing  to  hire  a  worker  from  a  group  that  performs  worse  on  average,  even  when  this 
group is defined by a non-stereotypical characteristic. (See Coffman, K. et al. ‘The Role 
of Beliefs in Driving Gender Discrimination.’ Harvard Business School Working Paper, 
No. 18-054, December 2017). 

2.  Statistical analysis of the gender pay gap 

Figure 1 depicts the gaps in 22 EU countries plus NO and the UK. For these 24 countries, 
a mean gender pay gap of 13.8% can be observed; 9 countries (including the UK) range 
above; and 15 countries (including NO) range below this cross-country average. 

In  2014,  the  overall  gender  pay  gap  varied  substantially  across  European  countries, 
ranging from 1% in RO to 23.5% in EE.  
CZ, DE, EE, FI and UK are the ‘Top Five’ with the highest overall gaps of over 17%. In 
six countries (BE, HU, IT, LU, RO, SI), the gap is quite low; it ranges below or around 
5%.  
In between the two poles, a group of 5 countries show rather modest gaps between 6% 
and 10% (BG, CY, LT, PL and MT), while the remaining group of 8 countries (ES, FR, 
LV, NL, NO, PT, SE and SK) features notable gaps between 11% and 16%.  

Figure 1: Unadjusted gender pay gaps per country (in %, 2014)  

The gender pay gap in the EU has been declining but at a very slow pace (Figure 2). The 
pattern of change has also been variable among member states: between 2010 and 2014, 
13  of  the  EU27  countries  reduced  their  gaps,  but  11  increased  them,  whilst  three 
registered no change, and from 2014 to 2018 most countries (18) reduced their gaps, one 
remained constant, and nine widened them. 

142 

 
 
 
 
 
 
 
The  discussion  of  GPG  trends  is  however  not  straightforward,  as  it  also  depends  on 
employment  patterns  and  on  the  structure  of  the  labour  force  participation.  In  the 
financial  crisis,  gender  pay  gaps  in  some  contexts  narrowed,  as  men’s  earnings  were 
pushed  down  more  than  women’s  (Karamessini  and  Rubery  2013).  Likewise,  trends  in 
the  Covid  recovery  may  be  difficult  to  predict  as  it  is  possible  that  more  lower  paid 
women may lose employment, thereby ‘improving’ the gender pay gap. 

Figure 2: Trends in the unadjusted gender pay gap 2010-2018  

Note: 2018 values for Greece, Ireland, and Italy are not available. The values for IE and IT under column 2018 are 
from 2017 and the value for Greece from 2014  
Source: Eurostat- structure of earnings survey methodology [earn_gr_gpgr2]  

The factors included as potential explanations for gender pay gaps include personal 
characteristics  such  as  education  and  age,  but  also  job  related  characteristics  such  as 
occupation,  hours  of  work,  temporary  contract,  tenure,  and  coverage  by  a  collective 
agreement. Also included are employer characteristics such as sector, firm size, and the 
type  of  financial  control  (public  or  private)  over  the  employer.  The  unexplained  part 
shows the residual portion that cannot be explained with statistically observable factors. 
It  comprises  the  wage  differences  arising  from  characteristics  not  included  in  the 
statistics,  as  well  as  different  remunerations  of  women  and  men  for  the  same 
(un)observed  characteristics,  including  remuneration  on  the  basis  of  sex  (see  Boll  and 
Lagemann, 2018, for an interpretation).  

Figure 3 shows the degree to which each factor contributes to the GPG. Factors may have 
a  negative  contribution  if  the  data  suggest  women  should  earn  more  than  men,  for 
example if women’s educational level is higher. 

143 

 
  
 
 
Figure 3: Decomposition of the gender pay gap in SES (in %, 2014)  

The unexplained gap constitutes the highest portion of the overall gap in 21 out of 24 
countries  under  investigation  -  the  exceptions  being  DE,  BE  and  NL.  Within  the 
explained part, sector affiliation and hours of work are the most important characteristics 
that  drive  the  gaps,  referring  to  the  EU  average.  Other  factors  (education,  age,  tenure, 
occupation (as associated with sector), temporary contracts, public control, firm size and 
collective pay agreements) are of only minor importance even on the country level. Eight 
countries had in fact negative explained (HU, IT, LT, LU, MT, PL, RO, SI) reflecting the 
fact  that  due  to  gender  differences  in  statistically  observable  characteristics,  women 
would  earn  higher  wages  than  men  in  CEE  countries.  In  these  cases  the  unadjusted 
gender pay gap is in fact less than the unexplained gap.  

To a certain  extent it can be said that  higher overall gaps are associated with higher 
largest gaps on the sectoral level. Among the Top 6 countries with the highest overall 
pay  gaps  are  4  (CZ,  DE,  EE    and  SK)  whose  highest  pay  gaps  at  sector  level  are  also 
among the Top 6 across countries.  

EU  countries  differ  significantly  with  respect  to  pay  gap  dispersion  across  sectors. 
While gaps are rather compressed in the Nordic countries, they show a great diversity in 
other  countries.  The  Top  3  sectors  with  the  largest,  second  largest  and  third  largest 
gender pay gap per country are (Table 1): 

• 

• 

• 

Administrative and Support Service Activities: this sector occurs most 
frequently as the one with the largest gender pay gap; 

the Information and Communication sector; 

Manufacturing. 

The fourth  position is  shared by two sectors, namely ‘Transportation  and Storage’, and 
‘Professional, Scientific and Technical Activities’. 

144 

 
  
 
 
Table 1: Top 3 sectors* with the highest gender pay gaps per country 

Largest gap  2nd largest gap  3rd largest gap 

BE  N 
BG  H, J, N 
CY  C 
CZ  H, J, N  
DE  K, M 
EE  H, J, N 
ES  R, S 
FI  K, M, N 
FR  C 
HU  C 
IT  M, Q 
LT  H, J, N 
LU  N 
LV  H, J, N  
MT  M, Q 
NL  C 
NO  R, S 
PL  C 
PT  N 
RO  C, J 
SE  K, M, N 
SI  C 
SK  H, J, N 
UK  K, M, N 

R, S 
E 
K, M, N 
C 
M 
C 
C 
M, Q 
N 
C 
R, S 
C 
K, M, Q 
D, E 
P 
H, J, N 
K, M, N 
H, J, N 
C 
C 
H, J, N  
R, S 
C 
P 

C 
C 
M, Q 
C, J 
C 
C 
N 
N 
R, S 
C 
C 
M, Q 
I 
N 
I 
K, M, N 
C 
C 
R, S 
C 
R, S 
C 
C 
F 

* Sections to which the divisions with the largest, second largest and third largest gender pay gap refer to 
(based on NACE rev. 2); Sources: SES 2014.  

followed  by  sections  J 

As Table 1 shows, among sections with the largest gender pay gap on the country level, 
section N ‘Administrative and Support Service Activities’ is most frequently named (12 
counts), 
‘Information  and  Communication’  and  C 
‘Manufacturing’  (7  counts  each).  Sections  H  ‘Transportation  and  Storage’  and  M 
‘Professional, Scientific and Technical Activities’ rank fourth (6 counts each). Section K 
‘Financial  and  Insurance  Activities’  (4  counts),  S  ‘Other  Service  Activities’  and  Q 
‘Human Health and Social  Work Activities’ follow with  2 counts each. For the second 
and  third  largest  gaps,  the  same  sections  prove  to  be  relevant.  Additionally,  sections  E 
‘Water  Supply,  Sewerage,  Waste  Management  and  Remediation  Activities’,  D 
‘Electricity, Gas, Steam  and Air Conditioning Supply’, P  ‘Education’, F ‘Construction’ 
and I ‘Accommodation and Food Service Activities’ were named a few times (maximum 
2 counts each). Further, section H is among the Top 5 sections with the highest gaps in 
both studies. 

The  decomposition  of  pay  gaps  at  sectoral  level  shows  that  the  unexplained  part  is  a 
major  driver  of  sector-specific  gaps.  A  second  major  driver  is  occupation.  Since 
occupation  and sector have high correlation, usually the association of occupation with 
the  pay  gap  is  often  not  visible  in  statistical  analysis.  The  analysis  conducted  for  this 

145 

 
 
 
section however shows  occupation to  be highly  relevant  for the  gender  pay  differential 
within sectors. 

The participation of women and men in cash bonus payments shows a geographical 
divide.  There  are  11  countries  where  more  men  than  women  receive  monetary  fringe 
benefits (9 within the EU:  BE, DE, ES, FI, FR, NL, RO, SE, SK and 2 outside the EU: 
NO  and  UK).  Interestingly,  only  one  Eastern  European  country  (RO)  is  among  those 
countries where men are advantaged in access to bonuses. The much higher participation 
of men in cash fringe benefits in the Nordic countries NO and SE as well as the UK is 
striking.  In  11  other  countries,  the  opposite  holds  true  (BG,  CY,  CZ,  EE,  HU,  IT,  LT, 
LV,  MT,  PL  and  SI).  Countries  where  women  are  advantaged  belong  to  Eastern  and 
Southern  Europe  without  exception.  In  two  countries  (LU  and  PT),  gender  parity  in 
participation  is  observed.  The  level  of  participation  differs  tremendously  between 
countries.  While  only  9%  to  19%  of  women  and  men  receive  cash  bonuses  in  SE,  this 
applies to 98% to 99% in IT.  

However, for those women and men who receive monetary fringe benefits, gender gaps 
in monetary fringe benefits are much higher than gender gaps in (regular) wages (Figure 
4). Only in CY and FR is the magnitude of gaps roughly the same. In 22 countries, the 
magnitude  is  1.5  to  10  times  higher  for  fringe  gaps  than  for  wage  gaps.  Analogous  to 
wages,  gender  gaps  in  monetary  fringe  benefits  also  vary  notably  across  countries, 
althought the country order is different.  

Figure 4: Unadjusted gender pay gaps in terms of monetary fringe benefits (in %)  

Further analysis shows provides some more detailed insights:  

  Among  graduates,  cash  bonus  gaps  tend  to  be  even  larger  than  wage  gaps 
(this applies to EE, ES, LT and LV, with the only exception being RO). At the 
same time, cash bonus gaps seem to be less important than wage gaps among 
the medium educated groups (as shown in the BG, HU, MT, NL, NO, SE and 
UK)  and  low  educated  groups  (as  shown  in  IT,  LU,  MT,  NL  and  SI).  Note 
that this information does not relate to magnitude in absolute numbers, but to 
the relative size of gaps across educational groups.  

146 

 
  
 
  The  very  young  (aged  14  to  19)  tend  to  be  less  affected  by  gender  gaps  in 
terms of cash bonuses compared to gender wage gaps. On the contrary, older 
employees  aged  50  or  older  seem  to  be  more  affected  by  cash  bonus  gaps 
compared to wage gaps.  

  Occupational  patterns  in  cash  bonus  payments  resemble  those  in  wages 
throughout countries. However, in half of the countries, negative bonus gaps 
are higher than wage gaps and/or the number of occupations in which women 
have a lead over men in terms of bonuses is higher than the respective number 
of occupations where this is the case for wages.  

3.  Overview of existing pay transparency measures in the Member States  

The following overview is based on information mainly gathered through various studies 
and reports of the European Equality Law Network, the study carried out for this impact 
assessment, and the 2020 Eurofound report. It inevitably presents a simplified overview 
of  what  can  be  complex  measures  at  national  level,  focussing  only  on  elements 
considered  relevant  for  the  present  initiative  and  without  taking  into  account  the  broad 
variety of modalities related to the implementation of the measures concerned. 

Table 2: Overview of existing pay transparency measures in the Member States 

Right/obligation in place in some 
form 

Right/obligation not in place  

CY, DE, ES, FI, IE, LV, PT, NL, RO, 
SE 

AT, BE, BG, CZ, EE, EL, FR, HR, HU, 
IT, LT, LU, MT, NL, PL, SI, SK   

Right to request 
information on pay218 

Pay Reporting 

AT,  BE,  DE,  DK,  ES,  FR,  IT,  LT, 
LU, NL, PT 

CZ,  FI,  EE,  HR,  IE,  BG,  CY,  EL,  HU, 
LV, MT, PL, RO, SE, SI, SK 

Joint Pay Assessment (or 
Pay audit) 

BE, DK, DE, ES, FI, FR, PT, SE 

AT, BG, CY, CZ, EE, EL, HR, HU, IE, 
IT,  LT,  LU,  LV,  MT,  NL,  PL,  RO,  SI, 
SK 

218 Including through a third party. 

147 

 
 
 
 
 
 
 
 
                                                           
4.  Theoretical outputs/outcomes/impacts of pay transparency  

Only  few  studies,  mostly  related  to  the  Anglo-Saxon  world,  explore  the  impact  of  pay 
transparency  laws  on  employer  and  employee  behaviour  and  outcomes  and  even  less 
directly  focus  on  the  gender  wage  gap.  Nevertheless,  some  studies  find  statistically 
significant  reductions  of  around  2-3  p.p.  of  the  reference  gender  wage  gap  due  to  pay 
transparency measures219.  

The literature review shows that the effect of transparency measures on the gender pay 
gap  and  firm  outcomes  is  ultimately  an  empirical  question.  The  effects  depend  on  the 
kind of measure that is taken, the involved sanctions and their enforcement, the targeted 
group of workers, the institutional and labour market settings in the respective country, 
and the time window that is taken into consideration.  

The expected effects can be tentatively summarised as follows: 

First,  pay  transparency  should  decrease  the  scope  for  taste-based  discrimination. 
Since firms exhibiting large pay gaps are liable to suffer reputational damage in the eyes 
of consumers, investors and potential employees employers who ‘prefer’ to pay more a 
specific group suffer economic damages (Bryson, A., et al., 2020220).  

transparency  arguably  decreases 

statistical 
Second,  pay 
discrimination.  Transparent  mechanisms  of  wage  setting  will  highlight  wage 
determinant,  e.g.  tenure,  type  of  education,  skills  particularly  for  managerial  positions 
and, in the long term will see behavioural changes to unfold.  

scope 

the 

for 

Third, pay transparency may combat wage discrimination in monopsonistic labour 
markets and improve  overall efﬁciency in labor  markets.  Information  on wages that 
effectively circulates among peer workers can reveal monopolistic profits. Further, due to 
the  fact  that  in  monopsonistic  markets,  it  is  labour  supply,  not  demand,  that  defines 
effective  employment,  female  employment  deductions  in  the  course  of  reform-driven 
wage  increases  should  be  circumvented  (depending  on  the  structure  of  the  local  labour 
market). This is because in general pay transparency should allow smarter job searching 
and  improve  the  quality  of  job  matches,  and  therefore  it  may  lead  to  shorter 
unemployment spells for workers. Moreover, information about job application processes 
improves the diversity of applicant pools by boosting in particular the number of female 
job applicants.  
Fourth, fairer compensation should in principle increase women’s attachment to the  
labour  market  in  multiple  dimensions  (employment,  hours  of  work  and  managerial 
positions). 

219 For instance, Baker et al. (2019) find a statistically significant 2 p.p. reduction in the gender gap linked 
to the public sector salary disclosure laws on university faculty salaries in Canada (corresponding to a 30% 
reduction. Vaccaro (2018) finds that a  reduction of the mean unexplained wage gap in companies with at 
least  50  workers  declined  by  3.5  p.p.  after  the  introduction  of  the  anti-discriminatory  policy  Logib 
introduced in Switzerland in 2006. For the UK, Manning (1996) identified a rise in the relative earnings of 
women  due  to  the  introduction  of  the  UK  Equal  Pay  Act  of  1970. Bennedsen  et  al.  (2019)  find  a  2  p.p. 
reduction of the gender pay gap (corresponding to a 13% reduction) due to a legislation change in Denmark 
in  2006  with  average  decline  more  pronounced  at  the  bottom  and  the  middle  of  the  wage  distribution. 
Finally,  Kim  (2015)  finds  that  wages  are  higher  for  women  in  states  that  have  outlawed  pay  secrecy, 
especially among women with college or graduate degrees. They experience an earnings increase by 3%, 
reducing the gender wage gap by 5% to 15%.  
220 Bryson, A., et al., ‘A Short History of the Gender Wage Gap in Britain’, IZA, 2020. 

148 

 
 
                                                           
Theoretically, the design of the measures must include: full and anonymous disclosure, 
information  on  pay  criteria  and  automatic  disclosure.  To  reach  the  goal  to  reduce  the 
gender  wage  gap,  pay  transparency  measures  have  to  be  accompanied  by  policies  that 
support  women’s  awareness  on  the  matter  and,  second,  equip  them  with  better 
negotiation  skills,  as  well  as  strong  enforcement  mechanisms.  Moreover,  if  well-
designed,  pay  transparency  measures  could  support  other  measures  promoting  gender 
equality in  the labour market  such  as  female quotas for board members  or measures  to 
better reconcile work and family tasks.  

Finally, potential costs for companies are expected to be low and decreasing after initial 
years.  Eurofound  carried  out  a  review  on  these  aspects  that  confirms  this  expectation 
based on a review among its network and targeted interviews.  

5.  Behavioural effects of pay transparency 

By  favouring  unawareness,  pay  opacity  influences  employees  behaviour  e.g.  as  for 
salary/rise  negotiations  and  acceptance  of  a  lower  wage,  also  depending  on  their  risk 
aversion  (Eckel  and  Shurchkov,  2018221,  Kim,  2015;  Burn  and  Kettler,  2019222; 
Bennedsen et al., 2019). Experimental bargaining studies show that offers become more 
egalitarian  under  transparency  (Bohnet  and  Zeckhauser,  2004223;  Cullen  and  Pakzad-
Hurson,  2019).  Measures  mandating  the  employers  to  report  gender  pay  information 
publicly  seems  the  most  effective  in  terms  of  wage  offers  and  the  implementation  of 
transparency measures (Werner, 2019224). 

Pay  transparency  measures  enable  workers  to  observe  discriminatory  pay.  The  workers 
who  become  aware  that  they  receive  a  lower  wage  than  co-workers  might  reduce  their 
effort  level  (Clark  et  al.,  2010225;  Gächterand  Thöni,  2010226;  Greiner  et  al.,  2011227; 
Charness  et  al.,  2016228)  and  labor  supply  (Bracha  et  al.,  2015229;  Bosmans  et  al., 
2020230). They also become more likely to quit (Card, et al., 2012231) or initiate collusion 
with  colleagues  (Maas and Yin, 2018232). The transparency of pay disparity also  harms 

221 Eckel, C.C., Shurchkov, O., ‘Gender differences in Behavioural Traits and Labour Market Outcomes’, 
The Oxford Handbook of Women and the Economy, 2018. 
222 Burn, I., Kettler, K., ‘The more you know, the better you’re paid? Evidence from pay secrecy bans for 
managers’, Labour Economics, 2019.  
223  Bohnet,  I.,  R.  Zeckhauser,  ‘Social  comparisons  in  ultimatum  bargaining’,  Scandinavian  Journal  of 
Economics, 2004.  
224  Werner,  P.,  ‘Wage  negotiations  and  strategic  responses  to  transparency’,  German  Economic 
Association, 2019. 
225  Clark,  A.  E.,  Masclet,  D.,  Villeval,  M.  C.,  ‘Effort  and  comparison  income:  Experimentaland  survey 
evidence’. ILR Review, 2010. 
226 Gächter, S., Thöni, C., ‘Social comparison and performance: Experimental evidence onthe fair wage–
effort hypothesis’, Journal of Economic Behavior & Organization, 2010. 
227 Greiner, B., Ockenfels, A., Werner: P., ‘Wage transparency and performance: A real-effort experiment’. 
Economics Letters, 2011. 
228  Charness,  G.  et  al,  ‘Social  comparisons  in  wage  delegation:  Experimental  evidence’,  Experimental 
Economics, 2016. 
229 Bracha, A., Gneezy, U., Loewenstein, G., ‘Relative pay and labor supply’. Journal of labor economics, 
2015. 
230  Bosmans,  K.,    Gagnon,  N.,  Riedl,  A.,  ‘The  Effect  of  Unfair  Chances  and  Gender  Discrimination  on 
Labor Supply’, IZA, 2020. 
231  Card,  D.;  Mas,  A.;      Moretti,  E.;  Saez,  E.,  ‘Inequality  at  work:  The  effect  of  peer  salaries  onjob 
satisfaction’. American Economic Review, 2012.  
232  Maas,  V.  S.,  Yin,  H.,‘Finding  Partners  in  Crime?  How  Internal  Transparency  Affects  Employee 
Collusion’ (paper), 2018. 

149 

 
 
                                                           
cooperation among peers (Breza et al., 2018233; Bamberger and Belogolovsky, 2017234). 
However,  since  the  evidence  indicate  that  pay  transparency  encourages  employers  to 
offer equal wages, we speculate that the adverse impact of the policy that emerges due to 
the observed discrimination may disappear in the long run. 

Fair compensation practices increase the reputational capital of companies and facilitate 
attracting and retaining the best talent, avoding the costs of high turnover235. Employees 
can  accept  differences  in  pay  if  these  are  explained  to  them  in  a  fair  context  of  clear 
information  sharing  on  the  criteria  behind  remuneration.  The  literature  in  the 
compensation  field  supports  salary  transparency  because  it  has  been  found  to  foster 
greater  trust  in  management,  enhance  employee  engagement,  encourage  extra  effort  by 
employees,  reduce  turnover,  and  contribute  to  competitive  advantage  in  the  labour 
market.236 

Employees  that  feel  they  receive  a  fair  compensation  will  feel  valued  and  likely  to  be 
more  productive.237-238  A  large  survey  by  PayScale  (71,000  U.S.  employees)  found  that 
workers who are paid less than the market rate for their jobs were more satisfied if their 
employer  was  transparent  about  their  pay,  even  more  if  someone  talked  to  them  about 
compensation and the reasoning behind it: their job satisfaction doubled, rising from 40 
percent to 82 percent. 

Pay confidentiality erodes trust in the management: employees might question the wage 
distribution  even  if  it  is  fair,  i.e.  accurately  reflects  differences  in  productivity.  As  a 
consequence, their motivation can be affected. Moreover, this inefficiency on the labour 
market will prevent employees to maximise their value on the market and the employer 
to find the best fit for the job. 

On  the  other  hand,  pay  confidentiality  makes  it  easier  for  companies  to  avoid  direct 
conflicts  and  HR  managers  will  not  feel  compelled  to  keep  pay  differences  artificially 
low and maintain a larger margin to compensate the top talents. Indeed, high performers 
desire  pay  confidentiality  more  than  low  performers  (Schuster&  Colletti,  1973239) 
because they think to be (rightly) paid more than others, and want to avoid conflicts (and 
are  not  interested  in  other  salaries  because  they  think  those  are  lower).  For  the  same 
reasons, they prefer avoiding shrinking of the wage range (again because they think to be 
on the upper end). Finally, for very specialised companies, pay confidentiality can reduce 
turn-over  and  improve  the  return  of  costly  specialised  training;  on  the  other  side, 

233 Breza, E., Kaur, S., Shamdasani, Y., ‘The morale effects of pay inequality’. The Quarterly Journal of 
Economics, 2018. 
234  Bamberger,  P.;  Belogolovsky,  E.,  ‘The  dark  side  of  transparency:  How  and  when  pay  administration 
practices affect employee helping.’, Journal of Applied Psychology 102(4), 658, 2017. 
235  Gulyas, A. et al. analysed the effect of the  2011 Austrian Pay Transparency Law and found that policy 
led to an increase in the retention rate of workers. ‘Does Pay Transparency Affect the Gender Wage Gap? 
Evidence from Austria’, Discussion Paper Series – CRC TR 224, 2020. 
236  Richard  G.  et  al.  found  that  the  main  factor  for  employee  satisfaction  is  whether  or  not  staff  think 
they’re being paid fairly—not if they’re actually being paid fairly.  
237 See  Smith, D.,  ‘Most People Have No Idea Whether They’re  Paid Fairly’,  Harvard Business Review, 
2015. Available at: https://hbr.org/2015/10/most-people-have-no-idea-whether-theyre-paid-fairly. 
238  Businesses  could  significantly  improve  productivity  ‘simply  by  providing  workers  with  information 
about  the  earnings  of  their  peers’.  See  Huet-Vaughn,  E.,  Do  Social  Comparisons  Motivate  Workers?  A 
Field Experiment on Relative Earnings, Labor Supply and the Inhibitory Effect of Pay Inequality,Working 
paper, 2015. 
239 Colletti, J. A., Schuster, J. R., ‘Pay Secrecy: Who Is for and against It?’, The Academy of Management 
Journal, 1973. 

150 

 
                                                           
employees with firm specific skills (that cannot be sold outside) will not find comparable 
pay  information  on  the  market  and  therefore  can  only  guess  that  they  are  being  paid 
fairly. 

6.  Summary of trends pre- and post-COVID-19 crisis 

Trends pre and post-COVID pandemic in female pay and employment and in women’s 
potential contributions to more resilient and productive societies  

Pre COVID-19 pandemic 

Post COVID-19 pandemic 

a.  Trends in gender pay gap and gender-related wage discrimination   

Gender pay gap   Slight  overall  narrowing;  variations  among 
member  states  and  size  of  gender  pay  gap 
female 
may  be 
employment gaps (composition effects)  

lower  due 

to  higher 

Trends in wage 
setting  

in 

of 

coverage 

Reduction 
bargaining  associated  with  decline 
extension of legal collective agreements  
Rise in minimum wages as percent of median 
wages (46.4% to 50.6% 2008 to 2019a)  

collective 
in 

Gender-related 
wage 
discrimination  

Evidence is  variable across countries; higher 
minimum  wages  may  have  reduced  some 
undervaluation  but  growth  of  individualised 
pay  and  bonuses  may  have  increased  scope 
for gender pay discrimination  

Trends  difficult  to  predict  as  may 
narrow  if  more  low  paid  women  lose 
work. There  may be benefits for some 
women  if  COVID-19  leads  to  an 
upward valuation of care work.  

Recognition  of  value  of  key  workers 
in  value 
could  prompt  changes 
attached 
jobs; 
to 
alternatively  crisis  may  lead  to  lower 
increase  in  pay  including  minimum 
wages or even pay cuts  

key  worker 

Trends  may  be  variable  – 
lower 
minimum  wages  or  constraints  on 
public  sector  pay  could 
increase 
undervaluation  but  recession  could 
reduce  bonuses.  High  unemployment 
may  lead  to  lower  bargaining  power, 
less focus on equality issues  

b.  Trends related to household division of labour and female employment   

Gender division 
of labour and 
women’s 
economic 
independence  

High but stable gender gap in care activities/ 
improvements 
financial 
resources  

in  women’s 

Mixed possible trends  in opportunities 
for  sharing  care  (could  be  positive 
from  increased  telework,  but  negative 
if care provision declines)  
Women’s access to financial resources 
may  decline  if  face  disproportionate 
loss of employment.  

Female 
employment rates  

Steady 
increase  and  closing  of  gender 
employment  gaps-  headcount  and  FTE  but 
declining rates among lower educated.  

Likely  reversal  in  levels  of  female 
employment  rate  and  risk  of  widening 
gender employment gap  

Adoption of new 
technologies  

Risks of job displacement for routinised jobs 
(impact  on  lower  educated)  but  women’s 
employment  prospects  potentially  protected 
in areas where social skills important.  

Risks to jobs if automation accelerated 
in  key  service  areas/  reduction  in  face 
to 
also  wider 
opportunities 
flexible  working 
arrangements/teleworking  

face  work  but 

for 

Public services 
and childcare 
infrastructure  

Barcelona  childcare  targets  met  for  EU  as  a 
whole  but  only  in  13  member  states,  with 
affordability and accessibility still an issue.  
Provision of public services on which women 
rely  more  than  men  eroded  under  austerity 
measures post the financial crash in 2008  

Risk of return to austerity and negative 
impact  on  public  service  provision 
including  childcare 
longterm 
care)  

(and 

c.  Trends towards a more resilient economy and society  

Supporting an 
ageing 

High  increase  in  employment  rates  of  older 
workers  particularly  women  and  small 

151 

increased 
Likely 
employment  rate  for  older  workers 

halting 

in 

 
 
 
population  

improvement in gender pension gap  

Poverty rates and 
women’s 
employment  

Stable  but  still  higher  risk  of  poverty  than 
men since 2012 and still higher than 2005.  
Small  decline  in  children  at  risk  of  poverty 
and social inclusion  

Trends in 
productivity  

Sluggish  productivity  growth  post  financial 
crisis and even before associated with switch 
to services and other factorsb  

Effective 
utilisation of 
female talent  

jobs, 

Women  have  been  investing  more  in  their 
education and achieving more entry into high 
level 
firm 
performance  but  also  facing  glass  ceilings 
such that the gender pay gap is largest among 
graduates in all countries  

potentially 

boosting 

including  women  and  risk  to  pension 
improvements  for  both  women  and 
in  gap  depend  on 
men  - 
employment trends  

trends 

Overall 
increased  risk  of  poverty- 
impact by gender depends upon trends 
in employment.  

Move to reduce direct labour contact in 
services  could  increase  productivity 
but, at least temporarily, at expense of 
jobs.  However  the  crisis  may  lead  to 
postponement of investments.  

The expansion of telework may enable 
women to access  more high level jobs 
or  could 
to  new  forms  of 
segregation possibly further depressing 
women’s pay in higher level jobs.  

lead 

a Schulten, T. and Luebker, 2019.  
b Bauer, P. et al., 2020 

152 

 
 
 
 
7.  Experts’ recommendations on priority actions 

Experts’ Recommendations on priority actions 

1.  Improvements to procedures:   

Simplification of the process 
Shortening the legal procedures  
Clearer rules on the division of the burden of proof 
Lower costs for procedures 
Longer limitation periods  
Improve access to information to prove a claim 
Standard pay information and IT processing  

2.  Improvements to Compensation rules:  

Higher level of compensation 
Compensation proportionate to size/ turnover 
Reinforce rules against victimization 

3.  Effectiveness of the measure:  

NL 
AT, CY, LV 
LV, NL 
NL  
CY, HU, LV  
NL, RO  
ES, IE 

AT, CZ, IE, IT, LV, NL, RO 
CZ, EE, LV 
EE, MT 

Legally binding pay transparency measures 
Allow collective claim /class actions  
Legal standing for NGO, equality commissioner, trade unions, etc. 
on behalf victims: 
Legal standing for NGO, equality commissioner, trade unions, etc. 
in their own name 
Adequate  resources  to  Labour  inspectorates  and  monitoring 
bodies 
Awareness  campaigns  on  equal  pay  rights  and  role  of  Labour 
inspectorate and other bodies 
Reinforce  coordination  and  collaboration  between 
inspectorates and other organisms 
Link pay transparency to the ability to win public contract/public 
procurement:  

labour 

BG, CY, DE, HR  
DE, EE, FR  
CZ, HU, RO  

EE 

IT, LU, PL  

RO  

IT  

FR 

4.  Avoid tick boxing exercise 

Effective monitoring of the process and the outcome 
Assess feasibility and administrative capability 
Independent audit 
Training of stakeholders 
Adequate resources to labour inspectorates and other 

5.  Scope of the measure:  

Public and the private sectors 
Measures applied to all size of companies 
Broad definition of ‘employee’/’workers’ 
Broad definition of pay 

BE, DE, ES, PT, SK 
EL, PT 
FR  
CY, CZ, DE, HR, LU  
IT, PT 

BG, FI  
EL, IE, IT  
IE 
IE 

153 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
8.  Indications of the change to the legal systems introduced by the initative 

The  table  shows  for  each  Member  State  whether  the  new  initiative  intervenes  on  an 
already  (partly)  regulated  policy  area.  For  countries  that  already  have  some  legal 
provisions  in  this  area,  the  table  indicates  changes  the  new  initiative  would  require 
depending on the exact form the measures introduced by the initiative will take. 
This assessment was made by the country experts that conducted the country studies. The 
score provided here is the average of the individual scores for the four options assessed 
under  Strand  A.  The  average  scores  per  option  (across  countries)  are  similar,  with  the 
exception  of  option  2  which  has  a  higher  average  than  the  three  other  options.  The 
assessment of the four options per country may also vary.  

Already 
regulated* 
Yes 

Conditions under which the initiative widens the scope of the 
existing Member State regulation 
The regulation would apply to companies with less than 150 employees. 

Acronym 

AT 

BE 

BG 
CY 
CZ 
DE 

DK 

EE 
EL 
ES 

FI 

FR 

HR 

Yes 

No 
No 
No 
Yes 

Yes 

No 
No 
Yes 

Yes 

Yes 

Yes 

HU 

Yes 

IE 

Yes 

(i)  The  pay  reporting  duties  would  apply  to  companies:  both  in  the 
public and private sector; with less than 50 employees. (ii) The biennial 
pay audit applicable in this Member State wouldn’t be kept confidential 
and would be used for creating general statistics or national policy plans. 

(i)  The  evaluation  of  pay  schemes  and  equal  pay  at  employer-level 
would  be  legally  binding;  (ii)  The  legal  entitlement  for  information  on 
pay differences would be extended to smaller companies with less than 
200 employees. 
The initiative could improve the rather low degree of pay transparency, 
in particular in small companies, but also in workplaces where there are 
few employees within a certain job-category. 

to  pay 

for  employees  and 

Pay  audit  would  be  conducted  also  in  employer  with  less  than  50 
employees; under the condition that it would improve monitoring on pay 
transparency in all the companies. 
(i) The regulation (pay reporting and audit obligations)  would apply  to 
companies with less than 30 employees. (ii) The regulation would ensure 
the  accessibility 
their 
information 
representatives.  Under  the  condition  that  pay  transparency  would  be 
guaranteed in private companies, too. 
(i)  Pay  transparency  would  be  compulsory.  (ii)  The  regulation  would 
ensure pay transparency (reporting duties, collective bargaining, etc.) in 
companies with less than 50 employees. 
Pay  transparency  would  be  compulsory  and  that  public  discussions, 
campaigns  and  trainings  on  pay  transparency  would  be  ensured  for 
public  administrations  of  employees,  trade  unions,  lawyers,  judges  in 
order to improve their awareness of gender based discrimination in pay. 
Since, according to the national expert, as the number of cases reported 
to  the  Equal  Treatment  Authority  are  decreasing  ‘the  visibility  of 
advocacy efforts to achieve gender equality and the infringement activity 
have  decreased’  (see  national  fiche),  the  proposed  measures  would 
improve such aspects. 
Adopt  binding  transparency  measures.  Under  the  conditions  to  address 
discrimination in wage collective bargaining.  

154 

 
 
 
 
 
 
 
 
 
 
Acronym 

IT 

LT 

LU 
LV 
MT 
NL 
PL 
PT 

RO 
SE 

SI 

SK 

Already 
regulated* 
Yes 

Yes 

No 
No 
No 
No 
No 
Yes 

No 
Yes 

No 

No 

Conditions under which the initiative widens the scope of the 
existing Member State regulation 

Recognise  reporting  duties  also  in  companies  with  less  than  100 
employees. 
Collective bargaining will improve its potentialities in guaranteeing pay 
transparency and address pay discrimination.  

Pay  reporting  duties  would  apply  to  companies  with  less  than  50 
employees. 

Pay  surveys  could  be  carried  out  and  used,  that  specific  actors  would 
provide efficient supervision, and legislation would follow up. 
In  the  case  a  pay  transparency  right  would  be  recognized  to  the 
employee  and  eventual  measures  of  strand  C  would  ensure  its 
enforceability. 

* The pay transparency measures envisaged under the new EU legal initiative (Strand A) are already to a 
lesser or greater extent regulated by the legal framework in the country. 

9.  The Icelandic Equal pay standard 

The  Equal  Pay  Standard  (Standard  ÍST  85:  2012  –  Equal  Pay  Management  System  – 
Requirements and Guidance) was published by Icelandic Standards in December 2012. It 
aims to create a system to confirm that women and men, working for the same employer, 
were paid equal wages for the same jobs or jobs of equal value and it is applicable to all 
companies  and  institutions,  regardless  of  their  size,  field  of  activity  and  staff  gender 
composition.  In  2008,  the  Iceland’s  Ministry  of  Welfare,  along  with  the  Icelandic 
Confederation  of  Labour  and  the  Confederation  of  Icelandic  Employers,  began  to 
develop the Equal Pay Standard under the supervision of Icelandic Standards (IST), and a 
dedicated Technical Committee (TC). In 2018 it was made mandatory for all companies 
with  more  than  25  employees.  Full  implementation  was  delayed  one  year  and  is  now 
foreseen for the end of 2022. 

The process starts with an assessment of pay policies, classifying jobs, according to equal 
value and formalizing policies and processes related to  pay decisions. The organisation 
can then apply for certification. 

Iceland  Customs  was  the  first  organisation  to  receive  the  certification  in  2016,  when  it 
was  not  yet  mandatory.240  It  first  set  up  a  project  HR  group  tasked  to  come  up  with 
preliminary definitions for job classifications, and criteria for job classifications. Then, a 
focus group with the managers approved the definitions and criteria, ensuring a common 
understanding of all the elements. Finally, the actual job classifications were applied and 
all  jobs  were  categorized  in  terms  of  their  comparability  and  equal  value.  As  a 
consequence 10% of workers received a pay rise, 9 p.p. were women. 

240  According 
calculator-closing-the-gender-pay-gap. 

to  BBC,  available  at: 

  http://www.bbc.com/news/av/magazine-41516920/the-skills-

155 

 
 
 
 
 
 
 
 
 
 
                                                           
 
Source: https://mag.wcoomd.org/magazine/wco-news-83/gender-equality-through-equal-pay-iceland-
customs-takes-the-lead/ 

10.  Main literature findings on the impact of a reduction of the GPG 

A study from PwC (2018) estimated that the benefits resulting from closing the gender 
pay gap in OECD countries would result in a 23% increase (at least) in women’s annual 
earnings.  Also,  Gradin  et  al.  (2010)  found  that  reducing  the  gender  wage  gap  would 
result  in  a  reduction  of  the  poverty  rate  by  between  0.3%  and  1.1%.  Under  complete 
wage  equality,  therefore,  2.4%  –  10.5%  of  the  poor  population  would  be  lifted  out  of 
poverty. Reducing poverty would significantly decrease the need for low income benefit 
payments  to  women  and  would  thereby  lead  to  a  related  reduction  in  the  pressure  on 
public finances.241 

Improved gender equality may induce more women to participate in the labour market, 
having  a  positive  impact  on  the  gender  employment  gap.  The  literature  points  to  the 
positive effects of lower gender employment gaps on the economy, in three central ways: 
economic and  growth  gains,  saving effects  on welfare transfers,  and benefits  stemming 
from women taking-up managerial positions. For economic and growth gains, Ostry et al 
(2018)  estimated  the  welfare  gains  from  higher  female  labour  force  participation, 
deriving primarily from higher gender diversity in the labour force. They estimated that, 
in  Europe,  the  welfare  gains  would  be  a  1%  welfare  increase,  with  an  estimated  14% 

241 European Parliament,‘European  Added Value Assessment on the  application of the principle of equal 
pay for men and womenfor equal work of equal value’, EAVA 4/2013. 

156 

 
 
                                                           
output  increase  (different  estimates  depend  on  the  different  assumptions  made  for  the 
elasticity  of  substitution  between  women  and  men).242  Löfström  (2009)  estimated  that 
full  gender  equality  (in  employment,  part-time  work  and  productivity)  would  lead  to  a 
GDP  27%  higher  (on  average)  in  the  EU,  or  a  per-capita  GDP  higher  by  €6,800.243 
Similarly,  PwC  (2018)  estimated  that  reducing  the  gender  employment  gap  (which  in 
their  exercise  meant  bringing  the  female  employment  rate  in  each  country  to  the  same 
level  as  that  of  Sweden,  the  country  with  the  highest  female  employment  rate)  would 
result  in  12%  higher  GDP  in  OECD  countries.  Klasen  and  Minasyan  (2017)  estimated 
that the growth costs of the gender employment gap (thus the gains from closing it) for 
European countries would be around 8.3 p.p. loss in output over a decade. The growth 
costs are annual per capita growth costs of the country relative to the best performer in 
the  ratio  of  female-male  participation  rates  in  that  decade  (Finland  in  the  1970s  and 
1980s,  and  Sweden  in  the  1990s).  Eurofound  (2016)  estimated  that  the  gains  from 
closing  the  gender  employment  gap  would  be  €327  million.  This  stems  from  the 
additional earnings that would accrue to women who were not employed before. 

242 Their results are based on predictions using linear and non-linear least square estimation on macrodata. 
243 These results should be taken as upper-bound estimates of the potential gains from closing the gender 
gap.  The  author  warns  that  these  estimates  are  based  on  some  simplifying  assumptions.  For  example, 
men’s  and  women’s  labour  market  earnings  only  reflect  labour  productivity,  thus  higher  earnings  for 
women of a given percentage would result in a GDP increase by the same amount. 

157 

 
 
 
                                                           
11.  Summary of costs  

Sub-option 1A - Right to receive information on pay    

Communication cost per MS and class-size - Minimun cost - first year   
500≤N<1000  
0   
0   
2.916   
842   
15.859   
0   
0   
0   
3.944   
0   
0   
0   
3.257   
8.874   
9.908   
0   
0   
0   
1.420   
607   
36.059   
27.405   
0   
8.868   
0   
3.279   
4.697   

MS  
50≤N<250  
AT  
241.456   
BE  
220.871   
BG  
82.368   
CY  
21.762   
CZ  
300.174   
DE  
3.833.585   
DK  
0   
EE  
0   
EL  
114.939   
ES  
0   
FI  
0   
FR  
0   
HR  
64.763   
HU  
190.497   
IE  
243.481   
IT  
1.138.534   
LT  
0   
LU  
0   
LV  
46.793   
MT  
14.660   
NL  
841.495   
PL  
545.034   
PT  
0   
RO  
192.278   
SE  
0   
SI  
73.928   
90.437   
SK  
Source: own calculations on Eurostat data 
Note: costs take into account existing measures in the Member States. Microenterprises are excluded  

10<50  
2.156.369   
1.911.157   
303.270   
106.704   
937.223   
31.141.397   
917.716   
0   
752.644   
0   
0   
0   
261.000   
781.085   
925.482   
13.103.574   
112.994   
117.331   
171.792   
52.113   
2.676.043   
1.241.307   
1.103.284   
687.758   
1.055.137   
255.351   
267.180   

250≤N<500  
0   
0   
19.440   
5.616   
105.725   
0   
0   
0   
26.295   
0   
0   
0   
21.715   
59.161   
66.052   
0   
0   
0   
9.469   
4.046   
240.392   
182.698   
0   
59.120   
0   
21.860   
31.314   

N≥1000  
0   
0   
1.836   
530   
9.985   
0   
0   
0   
2.483   
0   
0   
0   
2.051   
5.587   
6.238   
0   
0   
0   
894   
382   
22.704   
17.255   
0   
5.584   
0   
2.065   
2.957   

158 

 
  
 
  
 
 
Sub-option 1A - Right to receive automatically information on pay    

Communication cost per MS and class-size – Maximum cost -first year  
10<50  
4.312.739   
3.822.315   
606.541   
213.408   
1.874.446   
62.282.794   
1.835.431   
0   
1.505.287   
0   
0   
0   
522.000   
1.562.169   
1.850.964   
26.207.149   
225.988   
234.661   
343.584   
104.226   
5.352.085   
2.482.615   
2.206.568   
1.375.516   
2.110.273   
510.703   
534.360   

MS  
AT  
BE  
BG  
CY  
CZ  
DE  
DK  
EE  
EL  
ES  
FI  
FR  
HR  
HU  
IE  
IT  
LT  
LU  
LV  
MT  
NL  
PL  
PT  
RO  
SE  
SI  
SK  
Source: own calculations on Eurostat data 
Note: costs take into account existing measures in the Member States. Microenterprises are excluded 

500≤N<1000  
0   
0   
5.508   
1.591   
29.955   
0   
0   
0   
7.450   
0   
0   
0   
6.153   
16.762   
18.715   
0   
0   
0   
2.683   
1.146   
68.111   
51.764   
0   
16.751   
0   
6.194   
8.872   

250≤N<500  
0   
0   
34.992   
10.109   
190.305   
0   
0   
0   
47.331   
0   
0   
0   
39.087   
106.490   
118.894   
0   
0   
0   
17.045   
7.282   
432.706   
328.856   
0   
106.415   
0   
39.347   
56.364   

50≤N<250  
402.427   
368.119   
137.280   
36.270   
500.290   
6.389.309   
0   
0   
191.565   
0   
0   
0   
107.938   
317.496   
405.802   
1.897.556   
0   
0   
77.989   
24.433   
1.402.491   
908.389   
0   
320.464   
0   
123.214   
150.729   

N≥1000  
0   
0   
3.564   
1.030   
19.383   
0   
0   
0   
4.821   
0   
0   
0   
3.981   
10.846   
12.110   
0   
0   
0   
1.736   
742   
44.072   
33.495   
0   
10.839   
0   
4.008   
5.741   

159 

 
 
  
Option  2A  -  Equal  pay  certification  -  cost  per  MS  and  class-size  - Minimun and 
maximum - Euro  

50≤N<250  

250≤N<500  

500≤N<1000  

N≥1000  

Min  
39.793.374   
35.040.663   
7.317.024   
1.933.191   
27.537.304   
769.426.962

Max  
57.039.658   
50.227.142   
10.488.192   
2.771.028   
39.471.857   
1.102.893.432

Min  

Max  

9.675.280    17.423.880   
9.190.603    16.551.043   
2.426.112   
1.347.192   
700.877   
389.189   

7.566.282    13.625.859   
319.344.796

177.328.481

Min  
1.004.060   
953.763   
139.806   
40.388   
785.197   

Max  
2.040.698   
1.938.470   
284.148   
82.087   
1.595.870   
18.402.414    37.401.895   

43.421.347   
2.643.429   
9.333.586   
94.109.125   

62.239.979   
3.789.080   
13.378.723   
134.895.631   

9.322.622    16.788.791   

914.890   
508.028   
2.999.805   
1.665.757   
23.129.595    41.653.297   

967.463   
52.721   
172.865   
2.400.293   

1.966.315   
107.153   
351.339   
4.878.464   

Min  
468.872   
445.384   
65.286   
18.860   
366.668   
8.593.480 

451.782   
24.619   
80.724   
1.120.879 

Max  
874.917   
831.089   
121.824   
35.194   
684.204   
16.035.47
6   
843.027   
45.940   
150.631   
2.091.565 

21.847.232   
172.720.092

31.315.732   
247.576.266   

5.171.999   
9.314.077   
48.652.074    87.615.857   

536.729   
5.048.911   

1.090.871   
10.261.633   

250.639   
2.357.718 

467.694   
4.399.514 

5.753.095   
19.458.675   
19.313.859   
239.620.472

8.246.463   
27.891.985   
27.684.406   
343.470.995   

2.710.057   
1.504.863   
8.489.866   
4.714.325   
4.087.400   
7.360.859   
45.977.993    82.800.195   

156.168   
489.233   
424.173   
4.771.405   

5.907.665   
4.889.401   
4.219.848   
1.302.252   
72.601.969   

8.468.023   
7.008.447   
6.048.713   
1.866.643   
104.067.362   

1.081.870   
1.306.797   
666.175   
280.353   

1.948.303   
2.353.366   
1.199.691   
504.878   

16.179.852    29.137.742   

112.272   
135.614   
69.133   
29.094   
1.679.078   

317.404   
994.339   
862.109   
9.697.619   

228.187   
275.628   
140.509   
59.132   
3.412.634   

72.927   
228.460   
198.079   
2.228.130 

52.428   
63.328   
32.283   
13.586   
784.089   

136.082   
426.307   
369.616   
4.157.702 

97.831   
118.171   
60.241   
25.352   
1.463.113 

51.778.145   

74.218.579   

13.539.829    24.383.416   

1.405.107   

2.855.803   

656.151   

1.224.381 

AT  
BE  
BG  
CY  
CZ  
DE  

DK  
EE  
EL  
ES  

FI  
FR  

HR  
HU  
IE  
IT  

LT  
LU  
LV  
MT  
NL  

PL  

24.079.064   
17.080.705   
42.213.258   
6.829.483   
7.755.195   

PT  
RO  
SE  
SI  
SK  
Source: own calculations on Eurostat data 
Note: costs take into account existing measures in the Member States. Microenterprises are excluded 

8.173.182   
4.538.473   
4.096.992   
7.378.132   
9.214.390    16.593.880   
2.836.979   
1.575.342   
3.772.381   
2.094.760   

34.514.831   
24.483.411   
60.508.309   
9.789.353   
11.116.264   

957.249   
864.132   
1.943.487   
332.269   
441.824   

470.984   
425.169   
956.231   
163.482   
217.385   

219.938   
198.543   
446.537   
76.342   
101.514   

410.405   
370.483   
833.240   
142.455   
189.425   

160 

 
 
 
 
   
   
   
   
   
   
   
   
  
  
  
   
  
  
   
  
  
  
  
 
Sub-option 2B – Joint Pay assessment - Cost per MS and class-size –  
Minimun and maximum - Euro      

50≤N<250  

250≤N<500  

500≤N<1000  

N≥1000  

Min  

Max  

Min  

Max  

Min  

Max  

Min  

Max  

14334574 

20904587 

2848134 

4300124 

365324 

486324 

133409 

173742 

12622528 

18407853 

0 

0 

2635776 

696384 

3843840 

1015560 

396576 

598752 

114566 

172973 

0 

50868 

14695 

0 

67716 

19562 

0 

0 

18576 

24192 

5366 

6989 

9919629 

14466126 

2227304 

3362792 

285692 

380316 

104329 

135870 

277166936 

404201781 

52200592  78812658 

15641461 

22810463 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

149549 

225790 

490353 

740336 

19182 

62897 

25536 

83729 

7005 

9123 

22969 

29913 

952230 

3362192 

1388668 

4903197 

33900473 

49438189 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

2072410 

3022264 

442990 

668828 

56821 

75641 

7009504 

10222193 

1387767 

2095255 

178006 

236963 

6957338 

10146117 

1203217 

1816622 

154334 

205451 

86317318 

125879422 

13534647  20434663 

1736062 

2311063 

633976 

825643 

2128090 

1761285 

1520095 

469104 

3103464 

2568541 

2216806 

684110 

318473 

480831 

384685 

580799 

196103 

296078 

82528 

124601 

40850 

49343 

25154 

10586 

54380 

65686 

33485 

14092 

14918 

18019 

9186 

3866 

19428 

23467 

11963 

5034 

26153054 

38139871 

4762900 

7191045 

610928 

813273 

223099 

290547 

18651790 

27200526 

3985751 

6017702 

511244 

680573 

186696 

243139 

0 

0 

0 

0 

0 

0 

0 

0 

6152899 

8972978 

1206041 

1820885 

154696 

205933 

56492 

73571 

7603138 

11087910 

0 

0 

2460152 

2793616 

3587721 

4074024 

463737 

700152 

616639 

931004 

0 

59483 

79095 

0 

79184 

105292 

0 

21722 

28884 

0 

28289 

37616 

0 

0 

0 

0 

0 

0 

20750 

65004 

56360 

27023 

84657 

73399 

AT  

BE  

BG  

CY  

CZ  

DE  

DK  

EE  

EL  

ES  

FI  

FR  

HR  

HU  

IE  

IT  

LT  

LU  

LV  

MT  

NL  

PL  

PT  

RO  

SE  

SI  

SK  

Source: own calculations on Eurostat data 
Note: costs take into account existing measures in the Member States. Microenterprises are excluded. 
The cost for employers with more than 250 employees is the same as for Sub-option 2C, Measure 1.  

161 

 
 
   
   
 
Sub-option 2B - Joint pay assessment - Cost per MS and class-size –  
Minimun and maximum - Euro  

50≤N<250  

250≤N<500  

500≤N<1000  

N≥1000  

Min  
7.167.287   

Max  
10.452.293   

Min  
2.848.134   

Max  
4.300.124   

0   
0   
3.843.840   
2.635.776   
1.015.560   
696.384   
14.466.126   
9.919.629   
277.166.936    404.201.781   

0   
0   
598.752   
396.576   
172.973   
114.566   
3.362.792   
2.227.304   
52.200.592    78.812.658   

0   

0   

0   

0   

149.549   
490.353   
0   
0   
0   
442.990   
1.387.767   

225.790   
740.336   
0   
0   
0   
668.828   
2.095.255   

Min  
365.324   

0   
50.868   
14.695   
285.692   
0   
0   

19.182   
62.897   
0   
0   
0   
56.821   
178.006   

Max  
486.324   

0   
67.716   
19.562   
380.316   
0   
0   

25.536   
83.729   
0   
0   
0   
75.641   
236.963   

Min  

Max  

133.409    173.742   

0   
0   
24.192   
18.576   
5.366   
6.989   
104.329    135.870   

0   
0   

7.005   
22.969   
0   
0   
0   
20.750   
65.004   

0   
0   

9.123   
29.913   
0   
0   
0   
27.023   
84.657   

AT  

BE  
BG  
CY  
CZ  
DE  
DK  

EE  
EL  
ES  
FI  
FR  
HR  
HU  

IE  
IT  
LT  
LU  
LV  
MT  

NL  
PL  
PT  
RO  
SE  
SI  

0   
3.362.192   
0   
0   
0   
2.072.410   
7.009.504   

6.957.338   
43.158.659   
0   
0   
1.520.095   
469.104   

26.153.054   
18.651.790   
0   
6.152.899   
0   
2.460.152   

0   
4.903.197   
0   
0   
0   
3.022.264   
10.222.193   

10.146.117   
62.939.711   
0   
0   
2.216.806   
684.110   

38.139.871   
27.200.526   
0   
8.972.978   
0   
3.587.721   

205.451   

154.334   

1.816.622   

73.399   
1.203.217   
13.534.647    20.434.663    1.736.062    2.311.063    633.976    825.643   
19.428   
23.467   
11.963   
5.034   

318.473   
384.685   
196.103   
82.528   

480.831   
580.799   
296.078   
124.601   

40.850   
49.343   
25.154   
10.586   

14.918   
18.019   
9.186   
3.866   

54.380   
65.686   
33.485   
14.092   

56.360   

4.762.900   
3.985.751   
0   
1.206.041   
0   
463.737   

7.191.045   
6.017.702   
0   
1.820.885   
0   
700.152   

610.928   
511.244   
0   
154.696   
0   
59.483   

813.273   
680.573   
0   
205.933   
0   
79.184   

223.099    290.547   
186.696    243.139   

0   
56.492   
0   
21.722   

0   
73.571   
0   
28.289   

37.616   

4.074.024   

2.793.616   

SK  
Source: own calculations on Eurostat data 
Note: costs take into account existing measures in the Member States. Microenterprises are excluded –  
Costs for the joint pay assessment under option 2C are the same for employers with more than 250 employees 

616.639   

931.004   

105.292   

79.095   

28.884   

162 

 
 
   
   
   
 
Sub-option 2c – Bazsic Pay reporting - cost per MS and class-size –  
Minimun and maximum - Euro      

50≤N<250  

250≤N<500  

500≤N<1000  

N≥1000  

Min  
2253593 
2061465 
768768 

Max  
3702331 
3386692 
1262976 

AT  
BE  
BG  

Min  

0 
0 
108864 

203112 
2801626 

333684 
4602672 

31450 
CY  
592059 
CZ  
DE   71560260  117563285  12684606 
0 
DK  
0 
EE  
147252 
EL  

0 
0 
1762393 

0 
0 
1072761 

ES  
FI  
FR  
HR  

HU

IE  
IT  
LT  
LU  

LV  

MT

0 
0 
0 
604453 
1777976 

0 
0 
0 
993030 
2920961 

2272493 
10626313 
0 
0 

436736 
136822 

3733382 
17457514 
0 
0 

717495 
224779 

0 
0 
0 
121605 
331304 

369892 
0 
0 
0 

53028 
22655 

Max  
0 
0 
171072 

49421 
930379 
19932952 
0 
0 
231395 

0 
0 
0 
191094 
520620 

581259 
0 
0 
0 

83330 
35600 

Min  
0 
0 
11988 

3463 
65197 
0 
0 
0 
16215 

0 
0 
0 
13391 
36483 

40732 
0 
0 
0 

5839 
2495 

Max  
0 
0 
19764 

5710 
107487 
0 
0 
0 
26733 

0 
0 
0 
22077 
60147 

67153 
0 
0 
0 

9627 
4113 

Min  
0 
0 
5184 

1498 
28193 
0 
0 
0 
7012 

0 
0 
0 
5791 
15776 

17614 
0 
0 
0 

2525 
1079 

Max  
0 
0 
7776 

2246 
42290 
0 
0 
0 
10518 

0 
0 
0 
8686 
23665 

26421 
0 
0 
0 

3788 
1618 

NL  

7853949 

12902917 

1346196 

2115450 

148242 

244399 

64105 

96157 

5086981 
0 
1794596 
0 
689999 
844082 

PL  
1023106 
PT  
0 
RO  
331070 
SE  
0 
SI  
122414 
175356 
SK  
Source: own calculations on Eurostat data 
Note: costs take into account existing measures in the Member States. Microenterprises are excluded. 

8357183 
0 
2948264 
0 
1133570 
1386706 

1607739 
0 
520253 
0 
192364 
275559 

185743 
0 
60105 
0 
22224 
31835 

112663 
0 
36457 
0 
13480 
19310 

48719 
0 
15765 
0 
5829 
8350 

73079 
0 
23648 
0 
8744 
12525 

163 

 
 
   
   
  
  
 
 
 
Sub-option 2D - Pay reporting full - cost per MS and class-size –  
Minimun and maximum - Euro  

50≤N<250  

250≤N<500  

500≤N<1000  

N≥1000  

Min  
3219419 
2944950 
1098240 

290160 
4002323 
102228944 
0 
0 
1532516 

0 
0 
0 
863504 
2539966 
3246419 

15180447 
0 
0 
623909 
195460 
11219928 

AT  
BE  
BG  

CY  
CZ  
DE  
DK  
EE  
EL  

ES  
FI  
FR  
HR  
HU  
IE  

IT  
LT  
LU  
LV  
MT  
NL  

Max  
5955924 
5448157 
2031744 

536796 
7404298 
189123546 
0 
0 
2835155 

0 
0 
0 
1597482 
4698938 
6005876 

28083827 
0 
0 
1154231 
361601 
20756866 

Min  

0 
0 
155520 

44928 
845799 
18120866 
0 
0 
210360 

0 
0 
0 
173722 
473291 
528417 

0 
0 
0 
75754 
32364 
1923137 

Max  
0 
0 
295488 

85363 
1607018 
34429645 
0 
0 
399683 

0 
0 
0 
330071 
899253 
1003992 

0 
0 
0 
143933 
61492 
3653960 

Min  
0 
0 
17172 

4961 
93390 
0 
0 
0 
23227 

0 
0 
0 
19182 
52259 
58346 

0 
0 
0 
8365 
3574 
212346 

Max  
0 
0 
32724 

9454 
177970 
0 
0 
0 
44263 

0 
0 
0 
36554 
99588 
111188 

0 
0 
0 
15940 
6810 
404660 

Min  
0 
0 
6912 

1997 
37591 
0 
0 
0 
9349 

0 
0 
0 
7721 
21035 
23485 

0 
0 
0 
3367 
1438 
85473 

7267115 
0 
2563708 
0 
985713 
1205831 

PL  
PT  
RO  
SE  
SI  
SK  
Source: own calculations on Eurostat data 
Note: costs take into account existing measures in the Member States. Microenterprises are excluded. 

13444163 
0 
4742860 
0 
1823569 
2230788 

1461580 
0 
472957 
0 
174877 
250508 

2777003 
0 
898619 
0 
332265 
475966 

161383 
0 
52222 
0 
19309 
27660 

307541 
0 
99518 
0 
36797 
52711 

64959 
0 
21020 
0 
7772 
11134 

Max  
0 
0 
12096 

3494 
65784 
0 
0 
0 
16361 

0 
0 
0 
13512 
36812 
41099 

0 
0 
0 
5892 
2517 
149577 

113678 
0 
36786 
0 
13602 
19484 

164 

 
   
   
   
   
 
 
 
Issue 
Issue of legal clarity 
on concept of equal 
pay for equal work or 
work of equal value 
Access to justice and 
defence of rights 

Compensation or 
reparation to victims  
Application of the 
reversed burden of 
proof  
Promotion, 
development and use 
of gender-neutral job 
evaluation and 
classification systems 
Clear powers and 
promotion of equality 
bodies 

Absent 
BE, IE, LU, 
NL, PL 

Limited 
CY, DE, ES, HR, 
PT, SE, UK 

Moderate 
FR, LV, MT, SK  

Significant 
AT, BG, CZ, DK, EE, EL, 
HU, IT, LT, SI, FI 

DK, FR, HU, IT, PT  AT, CY, ES, FI, IE, LT, 

MT, SE 

CY, ES, FR, IE, 
LU, MT 
SE  

BE, ES, IE, IT, LT, 
LU, NL  

AT, BE, BG, CZ, DK, 
FI, PT, RO, SE, UK 
BE, DE, DK, ES, FI, FR, 
HU, IE, IT, LT, LU, LV, 
MT, PT, RO, UK 
CZ, FI, HU, PL, RO, SE, 
SI, SK, UK  

BE, BG, CZ, DE, EE, EL, 
HR, LU, LV, NL, PL, RO 
SI, SK, UK 
DE, EE, EL, HR, HU, IT, 
LT, LV, NL, PL, SI, SK 
AT, BG, CY, CZ, EE, EL, 
HR, NL, PL, SI, SK 

AT, BG, CY, DE, DK, EE, 
EL, FR, HR, LV, MT, PT  

BE, CZ, FR, 
HU, LU 

DK, FI, HR, LT, 
NL, RO, SE 

CY, DE, ES, IT, LV, 
MT, SI  

AT, BG, EE, EL, IE, LU, 
PL, PT, SK, UK 

12.  Mapping of the issues by relevance 

Source: ICF country fiches (2019). 

13.  Qualitative assessment of costs in the 2020 Evaluation 

Type of cost 

s
n
e
z
i
t
i

C

s
e
s
s
e
n
i
s
u
B

Enforcement  and 
monitoring of the 
Recast Directive 

Promoting 
the 
use  of  gender- 
neutral 
job 
evaluation 
systems 

Development 
and  utilisation  of 
tools  (e.g.  wage 
calculators) 

r
e
b
m
e
M

s
e
t
a
t
S

0/* 

0/* 

* 

Explanation 

e
d
a
r
T

s
n
o
i
n
u

Some Member States (e.g. SE, ES, SK) reallocated resources. In 
others  (e.g.  EE,  PT,  NL),  stakeholders  consider  the  allocated 
resources  insufficient  to  guarantee  effective  implementation  of 
the legislation. 

In Luxembourg, the government finances training for employers 
on  job  classification.  Participation  in  the  training  is  voluntary. 
An  estimated  EUR  40,000  was  allocated  to  each  employer 
participating  in  the  programme.  In  Belgium,  the  Ministry  of 
Employment  reviews  all  collective  agreements  to  ensure  their 
gender  neutrality.  However,  no  additional  staff  have  been 
allocated, with the task absorbed by the existing staff.  

Some  Member  States  (e.g.  AT,  DE,  PL,  UK)  have  developed 
tools such as wage calculators to promote implementation of the 
legislation.  Information  on  the  costs  of  developing  these  tools 
could not be obtained but are assumed to be minimal. 

165 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Type of cost 

Explanation 

s
n
e
z
i
t
i

C

s
e
s
s
e
n
i
s
u
B

* 

* 

r
e
b
m
e
M

s
e
t
a
t
S

e
d
a
r
T

s
n
o
i
n
u

* 

* 

* 

Pay  information 
requests (cost per 
request) 

Pay 
discrimination 
complaints  (cost 
per complaint) 

In Germany, an impact assessment estimates that about 75,602 
requests  for information on pay  would be  made per year. Each 
request  would  take  70  minutes  of  time  for  an  employee  to 
compile.  To  employers,  fulfilling  a  request  for  information 
would cost on average 39 EUR per request.244  

The  costs  to  individuals  are  (primarily)  the  stigma,  risk  of 
retaliation  and  the  cost  of  filing  pay  discrimination  complaints 
(can  be  assumed  to  be  the  same  as  the  costs  of  filing  a  pay 
information request). The costs to employers are similar to those 
for pay information requests.  

Judicial 
procedures 

*** 

** 

* 

** 

Citizens  –  the  availability  of  legal  aid  to  offset  the  impact  on 
individuals is limited. 

Member States  - according to the stakeholders consulted, these 
costs should amount to no more than a few hundred euro.  

Businesses - may suffer a loss to their reputation. 

Trade  unions  –  costs  of  legal  representation  of  potential  pay 
discrimination victims in some countries.  

*/** 

** 

* 

For  businesses,  see  Table  49  (section  3.5.1.2).  These  costs 
include adapting the pay database and training staff.  

** 

* 

*/** 

* 

Member  States  –  and,  to  a  lesser  extent,  trade  unions  -  are 
involved  in  monitoring  the  pay  transparency  measures.  The 
the  monitoring  varies  across  Member  States, 
extent  of 
depending  on  the  measures  adopted.  Equality  bodies  have 
monitoring responsibilities in all countries, while in some cases 
work councils are also involved in monitoring activities.  

These  costs  are  higher  for  pay  audits  than  for  pay  reports  and 
are primarily driven by producing and analysing gender pay gap 
reports. 

The  OPC  provides  some  evidence  that  this  is  an  indirect  cost 
faced  by  employers.  It  could  also  be  a  cost  for  employees  if 
equal pay measures limit individual wage-bargaining power. 

Substantive 
compliance  costs 
for 
pay 
transparency 
measures 

Monitoring  costs 
of 
pay 
transparency 
measures 

Administrative 
burden  for  pay 
transparency 
measures 

Limited  freedom 
to 
negotiate 
wages 

0 none; * low cost; ** medium cost; *** high cost 

14.  Useful gender neutral tools for work evaluation245 

This  section  provides  information  on  tools  for  work  evaluation,  listed  by  organisation 
and/or country. In general, the process of  identifying equal work is carried out with the 

244  Deutscher  Bundestag,  Entwurf  eines  Gesetzes  zur  Förderung  der  Transparenz  von  Entgeltstrukturen, 
Gesetzentwurf der Bundesregierung, 2017. (Drucksache 18/11133). 
245 Extracted from Equinet, Handbook: How to build a case on equal pay, 2016. 

166 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
                                                           
help of job titles, job codes, job grade systems and the like. There are a number of tools 
and  instruments  in  the  labor  market,  both  in  the  private  and  public  sector.  The  various 
tools are provided both by private actors, for instance consultancies, and public organs. 
The process of identifying work of equal value is normally carried out with the help of a 
tool for work evaluation. Four criteria are used when determining work of equal value: 
skills, effort, responsibility and working conditions. 

GENERAL OVERVIEW:  

Austria, Wage calculation tool by the Austrian ministry for women’s affairs: 
A  German-language  tool  designed  to  indicate  average  salaries  in  particular  professions 
based on individualized parameters. 
www.gehaltsrechner.gv.at 

Belgium, Statistical calculation tool by the Belgian Institute for the Equality of Women 
and Men: 
This website provides a French and Flemish- language tool to calculate wage equality as 
well  as  a  checklist  on  gender  neutrality  in  job  evaluation  and  classification. 
http://igvm-iefh.belgium.be/fr/domaines_action/emploi/gelijk_loon/berekening/ 

Belgium,  Review  of  gender-neutral  job  classifications  by  the  Belgian  Federal  Public 
Service of Employment, Labour and Public Dialogue: 
This  website  offers  a  job  evaluation  scheme  to  ensure  that  sectoral  job  classification 
systems are gender-neutral as established by the law. 
http://www.emploi.belgique.be/defaultTab.aspx?id=8486#  

France,  Guide  on  non-discriminatory  job  evaluation  of  predominantly  feminine 
professions by the French Defender of Rights: 
A  French  language  guide  on  gender  neutral  job  evaluation  for  assessing  work  of  equal 
value 
http://www.defenseurdesdroits.fr/sites/default/files/atoms/files/ddd_gui_20130301_discri
mination_emploi_femme.pdf  

Germany, Gender neutral job evaluation ‘EG-Check’: 
This  German-language  webpage  provides  a  tool  to  check  whether  a  company  is 
complying with gender equal treatment in relation to pay for the German labour market. 
www.eg-check.de 

Holland, Loonwijzer, Equal pay test for employers and employees: 
This equal pay test tool enables employees to check whether they are being paid in line 
with the provisions of the Dutch Equal Treatment Act and also offers the possibility to 
employers to ascertain whether they abide by the act. 
www.loonwijzer.nl 

167 

 
 
 
 
 
 
 
 
Slovakia, Gender income calculator: 
This  Slovakian-language  website  offers  a  wage  calculator,  which  also  indicates  wage 
gaps in different professions. 
http://www.kedvyrastiem.sk/vsetko-o-kampani   

Sweden,  BESTA  job  evaluation  scheme  by  the  Swedish  Agency  for  Government 
Employers 
This widely used system allows employees to evaluate whether their job is in compliance 
with equality guidelines. 
https://www.arbetsgivarverket.se/globalassets/avtal-skrifter/skrifter/bestawebb.pdf  

15.  Pay transparency as a policy action on pay inequalities 

168 

 
 
 
 
DRIVERS 

Market failure:  
Asymmetry of 
information on pay 
between employee 
and employer 

Persisting bias in 
pay setting 
mechanisms and 
valuation of 
women’s work 

Regulatory failure:  
Inconsistent/ 
inadequate 
application of pay 
related concepts  
+  
Lack of access to 
justice and deficient 
enforcement: 
procedural obstacles 
and victims’ support 

Annex 6: Intervention logic 

OBJECTIVES 

MEASURES 

PROBLEM 

Failure to realize the 
fundamental right to 
equal pay in the EU, in 
particular because: 

1.  Workers cannot 
claim their right: 
lack necessary 
information to 
unveil pay 
discrimination and 
effective means to 
redress 
2.  Employer 

perpetuate gender 
bias in pay: have no 
incentive to assess 
pay systems; sub-
optimal human 
resources 
management. 

3.  Member States: Pay 
discrimination goes 
undetected; 
fundamental right is 
not enforced; labour 
market inefficiency. 

OVERALL OBJECTIVE 

Improve the implementation and 
enforcement of the principle of equal 
pay between women and men for 
equal work or for work of equal 
value  

Specific: Empower workers to 
enforce their rights to equal pay 

Specific: trigger action on the 
part of employers to eliminate 
gender bias in pay structures. 

169 

Transparency at individual level  
Transparency prior to employment 
+ 
Right to information on pay levels 

Transparency at employer level  
Regular reporting on pay 
differences between women and 
men 
+ 
Joint pay assessment 

Facilitation of the application of key 
concepts and development of tools 
to assess ‘work of equal value’ 

Removal of procedural obstacles on 
access to justice 
+ 
 strengthened remedies and 
penalties 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Annex 7: Subsidiarity grid 

1.  Can the Union act? What is the legal basis and competence of the Unions’ intended action? 

1.1 Which article(s) of the Treaty are used to support the legislative proposal or policy initiative? 

Article 157(3) TFEU. 
The EU principle of equal pay for equal work or for work of equal value between women and men was 
established by the founding Treaties as a fundamental support for the functioning of the internal market. 
Later on, the CJEU added that the social goal prevails on its economic function and that equal pay is a 
fundamental  right.  Articles  2  and  3(3)  TEU  clearly  refer  to  the  right  to  equality  between  women  and 
men as one of the essential values and objectives of the EU. 

1.2 Is the Union competence represented by this Treaty article exclusive, shared or supporting in 
nature? 

In  the  case  of  gender  equality  on  the  area  of  employment  and  occupation,  the  Union’s  competence  is 
shared.  

2.  Subsidiarity Principle: Why should the EU act? 

2.1  Does the proposal fulfil the procedural requirements of Protocol No. 2246: 

-  Has there been a wide consultation before proposing the act? 

Yes,  the  Commission  carried  out  a  number  of  consultation  activities  related  to  the  Initiative:  a 
consultation of Member States representatives in the  High-Level Group on Gender Mainstreaming, on 
29 January 2020 and 15 September 2020; a targeted consultation of Member States through a separate 
specific questionnaire issued in March 2020; a targeted consultation of social partners organised on the 
basis of a separate specific questionnaire issued in March 2020 (and a mini-survey for companies) and 
followed  by  a  dedicated  consultation  hearing  of  social  partners  run  in  June  2020;  a  12-weeks  public 
consultation launched in March 2020 covered general awareness, experience and knowledge of citizens 
and  stakeholders  regarding  pay  discrimination  and  pay  transparency  issues  as  well  as  views  on  the 
possible specific measures. Earlier, another public consultation was carried out for the evaluation of the 
relevant provisions in Recast Directive implementing the Treaty principle on ‘equal pay for equal work 
or work of equal value’ (from 11 January 2019 to 5 April 2019). 

- 

Is  there  a  detailed  statement  with  qualitative  and,  where  possible,  quantitative  indicators 
allowing an appraisal of whether the action can best be achieved at Union level? 

Limited  number  of  Member  States  have  followed  up  on  the  2014  Commission  Recommendation.  
22 Member States did not take any action regarding workers’ right to pay information, 14 regarding pay 
reporting, and 19 regarding joint pay assessment (for more information see SWD (2020) 50 final). 

The  impact  assessment  (section  3)  includes  a  section  on  the  principle  of  subsidiarity  and  refers  to 
question 2.2 below.  

2.2  Does  the  explanatory  memorandum  (and  any  impact  assessment)  accompanying  the 
Commission’s  proposal  contain  an  adequate  justification  regarding  the  conformity  with  the 
principle of subsidiarity? 

The  implementation  of  the  EU  principle  of  equal  pay  has  been  established  at  EU  level  by  Founding 
Treaties (now in Article 157 TFEU) and detailed by Directive 2006/54/EEC. The fact that the founding 
members  of  the  European  Community  included  the  principle  of  equal  pay  as  a  goal  in  the  Treaty  of 
Rome  indicates  that  they  regarded  it  as  a  fundamental  value  of  the  Union.  Initially,  it  had  merely  an 
economic  function  aiming  at  avoiding  distortions  to  competition.  In  1976,  however,  the  CJEU 
recognised, together with its economic goal, the social objective of Article 119 EEC and its horizontal 
direct effect. Later on, the CJEU added that the social goal prevails on its economic function and that 

246 See https://eur-lex.europa.eu/legal-content/EN/TXT/HTML/?uri=CELEX:12016E/PRO/02&from=EN.  

170 

 
 
                                                           
equal pay is a fundamental right.  
As demonstrated in the 2020 evaluation, comparable level of promotion of pay equality between women 
and  men  throughout  the  Union  is  not  likely  to  happen  without  a  push  from  the  EU-level  instrument. 
There  is  a  need  for  coordinated  approach  to  the  issue,  as  lack  of  it  jeopardises  the  attainment  at  the 
national level of the pay equality between women and men, enshrined in Article 157(1) TFEU.  
As national measures regarding pay transparency are very fragmented and scarce, often lack ambition, it 
becomes ever more significant to establish a coherent and comprehensive European approach aiming to 
advance and enforce the implementation of the principle of equal pay.  
Proposed pay transparency and related enforcement measures are justified at EU level insofar as action 
solely  by  Member  States  in  response  to  the  lack  of  implementation  of  the  EU  principle  and  existing 
provisions would not necessary have the same level of the guaranteeing equal pay for women and men 
for  the  same  work  or  work  of  equal  value  and  would  risk  increasing  divergences  between  Member 
States with potential competition on the basis of social standards. Business would therefore continue to 
compete on an uneven playing field, which would hamper the operation of the internal market. 
The proposed Directive is based on a minimal degree of harmonisation of Member State systems which 
respects  Member  States'  competences  to  set  higher  standards  and  provides  the  possibility  for  social 
partners  to  vary  the  mix  of  material  rights  and  obligations  by  collective  agreement.  It  also  duly  takes 
into account a trade-off beetwen stronger protection of workers and easing of the administrative burden 
on employers, especially SMEs, in particular in the context of the economic difficulties faced by the EU 
companies during current COVID-19 crisis 

2.3  Based  on  the  answers  to  the  questions  below,  can  the  objectives  of  the  proposed  action  be 

achieved sufficiently by the Member States acting alone (necessity for EU action)? 

Analysis shows that Member States acting alone are not able to ensure the transparency of pay systems 
aiming to ensure the right to equal pay for the same work or for work of equal value for women and men 
across  the  EU.  The  2020  evaluation  concluded  that  there  is  limited  progress  on  enforcing  the  right  to 
equal pay and increasing pay transparency by Member States and evidenced, in particular, vastly distinct 
and  largely  inefficient  systems  operating  in  most  Member  States  –  making  equal  pay  an  inert  legal 
provision.  

(a)  Are  there  significant/appreciable  transnational/cross-border  aspects  to  the  problems  being 

tackled? Have these been quantified? 

Existing approaches (including any regulation in this area in a number of Member States) significantly 
different  across  the  EU  and  would  create  additional  costs  and  complexity  for  companies  operating 
across borders and therefore undermine the Single Market. 

(b)  Would national action or the absence of the EU level action conflict with core objectives of the 

Treaty247 or significantly damage the interests of other Member States? 

The  absence  of  the  EU  level  action  would  limit  the  progress  of  enforcing  the  principle  of  equal  pay 
enshrined in 157(1) TFEU and the implementation of the core objective of the Treaty related to combat 
social exclusion and discrimination. 

(c)  To what extent do Member States have the ability or possibility to enact appropriate measures? 

Member States had shown a relatively low level of response to voluntary measures such as the 2014 EU 
Recommendation  on  Pay  Transparency,  and  a  range  of  evaluations  suggested  that  for  progress  and  to 
move beyond a piecemeal approach action at the EU level is necessary. 

(d)  How does the problem and its causes (e.g. negative externalities, spill-over effects) vary across 

the national, regional and local levels of the EU?  

The relevance of the different factors contributing to gender-based pay discrimination can be influenced 

247 For more information: https://europa.eu/european-union/about-eu/eu-in-brief_en. 

171 

 
 
                                                           
by  the  distribution  of  workers  by  gender  and  by  the  socio-economic  context  (e.g.  sector,  size  of 
employer, number of workers covered by collective bargaining). 

(e)  Is the problem widespread across the EU or limited to a few Member States?  

No  precise  estimate  of  the  scale  of  gender  pay  discrimination  is  available;  however  if  we  look  at  the 
gender  pay  gap  as  a  broad  indicator  of  gender  discrimination  on  the  labour  market  we  see  that  it  is 
widespread across Europe with a very slow decline in the last 10 years. The absence of clarity on gender 
disparities in companies’ pay structures contribute to this persistence. 

(f)  Are Member States overstretched in achieving the objectives of the planned measure? 

There is a strong evidence of pay discrimination based on gender that needs to be addressed.  

(g)  How do the views/preferred courses of action of national, regional and local authorities differ 

across the EU? 

Member  State  respondents  in  public  consultation  and  targeted  Member  States  survey  conducted  in 
March-May  2020  showed  a  strong  consensus  that  pay  transparency  measures  would  help  enforce  the 
right  to  equal  pay  (100%),  contribute  to  raising  awareness  on  equal  pay  issues  (90%)  and  reduce  pay 
discrimination  (90%).  There  is  a  high  degree  of  consensus  among  Member  State  respondents  that 
regular employer reports on pay level and gender pay gaps is an effective option (82.4%). There is also 
some  agreement  that  employees  having  the  right  to  access  information  on  pay  levels  and  gender  pay 
gaps of categories of individuals performing the same work or work of equal value would be effective 
(58.8%). Among the general public, the results from the public consultation show clear consensus on the 
effectiveness of introducing binding measures on: obligation to include equal pay matters in collective 
bargaining  (80.7%);  gender-neutral  job  evaluation  and  classification  systems  (80.2%);  employers  and 
employees’ representatives analysing pay levels and gender pay gaps in regular pay audits (78.9%); and 
regular employer reports on pay levels and gender pay gaps (78.4%). The significant outlier group that 
did not share this consensus were respondents from company/business associations.  

2.4  Based  on  the  answer  to  the  questions  below,  can  the  objectives  of  the  proposed  action  be 
better achieved at Union level by reason of scale or effects of that action (EU added value)? 

A comparable level of promotion of pay equality throughout the Union is not likely to happen without a 
push from an EU-level instrument to create equal market conditions for fair competiton in the internal 
market.  EU  action  also  responds  to  an  obligation  to  act  in  the  Treaty,  implements  a  fundamental 
principle and right to equal treatment confirmed in the Charter of Fundamental Rights. 

(a)  Are there clear benefits from EU level action?  

Homogeneus  enforcement  of  the  equal  pay  right  and  prevention  of  unfair  competition  in  the  internal 
market. For workers, pay transparency empower them to claim their rights and has a  positive effect on 
job  satisfaction  and  worker  motivation.  Furthermore,  pay  transparency  measures  have  a  significant 
behavioural change effect for employers and  would help to address the issue of  the  undervaluation of 
women work. This would have positive impact on companies reputation and workforce participation and 
retention,  including  enhanced  career progression  for  women  across  the  EU.  For  society  as  a  whole,  it 
will benefit from the increased equality and better utilisation of talents. 

(b)  Are there economies of scale? Can the objectives be  met more  efficiently at EU level (larger 

benefits per unit cost)? Will the functioning of the internal market be improved? 

Since  the  measures  are  applied  at  employer  and  individual  level  there  are  no  clear  EU  economies  of 
scale for the provisions as such.  

(c)  What are the benefits in replacing different national policies and rules with a more homogenous 

policy approach? 

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The  initiative  would contribute  to achieving the  aim of improving  the  implementation,  promotion and 
enforcement of the equal pay principle by providing legal clarity to improve uniform aplication across 
the EU. The clarification of the concepts of ‘pay’, ‘work of equal value’ would be instrumental for more 
uniform  application  of  the  equal  pay  principle  across  the  EU,  ensure  that  remuneration  systems  are 
based on objective criteria such as educational, professional and training requirements, skills, effort and 
responsibility, work undertaken and the nature of tasks involved. This would help to tackle gender-based 
pay  discrimination  and  address  pay  inequalities  arising  for  biased  valuation  of  work  of  equal  value. 
Consequently,  this  would  have  positive  impact  on  workforce  participation  and  retention,  including 
enhanced career progression for women across the EU. 

(d)  Do the benefits of EU-level action outweigh the loss of competence of the Member States and 
the local and regional authorities (beyond the costs and benefits of acting at national, regional 
and local levels)? 

The  initiative  establishing  minimum  standards  regarding  pay  transparency  and  related  enforcement 
measures would set benchmarks to Member States and their relevant authorities in order to ensure that 
the principle of equal pay is properly implemented and enforced across the EU. Such an approach would 
leave room of flexibility to them to design concrete implementing measures in accordance with national 
circumstances, legal system and the level of participation of national social partners in matters relating 
to remuneration and job evaluation. The initiative also leaves the Member States the option of keeping 
or  setting  more  favourable  standards  for  workers  and  taking  into  account  features  specific  to  their 
national situations, and allows for modifications in the composition of the material rights by  means of 
collective agreements.  

(e)  Will there be improved legal clarity for those having to implement the legislation? 

The lack of clarity, of current EU law, for example, regarding definitions of ‘pay’, ‘work of equal value’ 
means that employers, and even courts,  may tend to exercise a wide margin of discretion in assessing 
whether  differences  in  pay  can  be  justified  by  differences  in  productivity.  The  lack  of  information  on 
structural  differences  in  the  treatment  of  employees  by  gender  prevents  the  identification  of  pay 
inequalities  and  uphold  the  possible  influence  of  unconscious  bias.  It  also  creates  a  vicious  circle 
challenging  equal  pay  enforcement:  to  establish  a  prima  facie  pay  discrimination,  one  would  need  to 
have some indication of whether or not there is a problem based on reliable pay information, which is 
most often not available. The initiative aims to address these issues and improve legal clarity in the light 
of the CJEU case law. 

3. Proportionality: How the EU should act 

3.1   Does  the  explanatory  memorandum  (and  any  impact  assessment)  accompanying  the 
Commission’s proposal contain an adequate justification regarding the proportionality of the 
proposal  and  a  statement  allowing  appraisal  of  the  compliance  of  the  proposal  with  the 
principle of proportionality? 

Article  5(4)  TEU  adds  that  ‘[u]nder  the  principle  of  proportionality,  the  content  and  form  of  Union 
action shall not exceed what is necessary to achieve the objectives of the Treaties’. 
The  existing  non-binding  2014  Recommendation  in  this  framework  is  not  sufficient  to  achieve  the 
intended objective (more effective implementation of the equal pay principle through pay transparency). 
The  Recast  Directive  2006/54/EC  needs  to  be  supported  by  a  further  directive  guaranteeing  pay 
transparency measures since the Recommendation had a limited follow-up by Member States . 
In particular, the initiative to adopt a binding legal measure is a proportionate response to the obvious 
need  for  operational  support  of  the  equal  pay  principle  and  does  not  go  beyond  what  is  necessary  to 
achieve this goal. The proposed directive does not impinge on national decision-making, legislation or 
enforcement activities,  which remain the competence of Member States. Moreover, it is left largely to 
the discretion of Member States how they make use of the possibilities put in place by the initiative and 
entrust the social partners with the transposition through collective agreements.  
Since  the  objective  of  the  proposed  legal  measure,  namely  to  improve  pay  transparency,  cannot  be 
sufficiently achieved by the Member States but can rather, by reason of the need to establish common 
minimum requirements, be better achieved at the EU level, the EU may adopt measures, in accordance 

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with  the  principles  of  subsidiarity  (set  out  in  Article  5(3)  TFEU)  and  to  the  extent  that  they  are 
proportionate (Article 5(4) TFEU).  
The proportionality principle is fully respected as the scope of the proposal is tailored to different sizes 
of  companies  to  maximally  limit  administrative  burden,  and  to  ensure  basic  rights  for  workers,  the 
absence of which could limit the possibility to detect gender-based pay discrimination and defend their 
right to equal pay in case of the alleged sex discrimination. The proposed Directive includes measures 
through established company size thresholds subject to types of pay transparency measures concerned. 
As indicated in the Impact Assessment, the costs are reasonable and justified in light of the accrued and 
longer-term benefits regarding more secure employment, workforce retention, better workers’ and firms’ 
productivity. It therefore affects positively business profitability, a better functioning of internal market, 
and matches the wider social ambitions of the EU as emphasised in the European Pillar of Social Rights, 
jointly proclaimed by the Commission, the European Parliament and the Council.  
The proposal leaves the Member States the option of keeping or setting more favourable standards for 
workers, and taking into account features specific to their national situations, and, in order to respect the 
diversity  of  labour  market  models  across  the  EU,  allows  Member  States  to  entrust  the  social  partners 
with  the implementation of the  Directive, provided that Member States take all the necessary steps to 
ensure that the results sought by this Directive are guaranteed at all times. 

3.2  Based  on  the  answers  to  the  questions  below  and  information  available  from  any  impact 
assessment,  the  explanatory  memorandum  or  other  sources,  is  the  proposed  action  an 
appropriate way to achieve the intended objectives? 

The  proposed  action  is  considered  and  an  appropriate  and  optimal  way  to  achieve  the  intended 
objectives concerning proper application of the principle of ‘equal opportunities and equal treatment of 
women  and  men  in  matters  of  employment  and  occupation,  including  the  principle  of  equal  pay  for 
equal  work  or  work  of  equal  value’  (Article  157(3)  TFEU).  The  initiative  aims  to  address  only  legal 
issues identified during the evaluation and previous assessments conducted by the Commission. Other 
root causes of gender pay gap remain beyond the scope of this initiative.  

(a)  Is  the  initiative  limited  to  those  aspects  that  Member  States  cannot  achieve  satisfactorily  on 

their own, and where the Union can do better? 

The initiative addresses legal issues and obstacles identified during the 2020 evaluation which relate to 
persisting problem of pay discrimination and effective enforcement of the principle of equal pay which 
cannot be achieved by Member States satisfactorily on their own and in systematic manner. Additional 
non-legislative measures addressing root causes other than pay discrimination based on sex, could also 
support  combating  the  overall  gender  pay  gap  –  they  are  tackled  in  the  EU  Gender  equality  strategy 
2020-2025. 

(b)  Is the form of Union action (choice of instrument) justified, as simple as possible, and coherent 
with the satisfactory achievement of, and ensuring compliance with the objectives pursued (e.g. 
choice  between  regulation,  (framework)  directive,  recommendation,  or  alternative  regulatory 
methods such as co-legislation, etc.)? 

As regards the choice of the legal instrument, regulation, amendments to the Recast Directive and new 
directive  were  considered.  A  regulation  would  impose  uniform  obligations  in  all  Member  States.  The 
use  of  such  an  instrument  to  achieve  the  objectives  set  was  evaluated  as  disproportionate,  as  the 
measures  considered  would  by  their  own  nature  very  much  depend  on  the  legal  and  administrative 
framework of each Member State, which should be respected. A revised Recast Directive was discarded 
for the reasons of wider scope of that directive and its entire logical structure would have to be revised. 
On  the  basis  of  the  conducted  evaluation  and  impact  assessment,  it  seems  that  a  new  directive 
establishing minimum standards regarding pay transparency and related enforcement measures will be 
an  optimal  form  of  the  initiative  which  will  complement  the  Recast  Directive  which  establishes  a 
general framework for gender equality in employment and occupation matters.  
A directive, laying down a framework to enhance the application of the equal pay principle through pay 
transparency and related reinforced enforcement mechanisms, which allows for some flexibility as to the 
means  each  Member  State  considers  appropriate  to  ensure  their  obligations  taking  into  account  the 
national context, seems to be a more appropriate instrument. It would also be in line with the approach 

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followed as regards similar obligations in the field of employment (posed workers) and discrimination 
(free  movement  of  workers).  Further  development  of  soft  measures  could  have  some  impact  on  the 
effectiveness of legal provisions in place, but it is unlikely that by itself they will motivate the laggard 
countries  to  bring  the  equality  issues  on  the  political  agenda  and  engage  in  setting  the  new  legal 
frameworks as advised under the 2014 Commission Recommendation. 

(c)  Does the Union action leave as much scope for national decision as possible while achieving 
satisfactorily  the  objectives  set?  (e.g.  is  it  possible  to  limit  the  European  action  to  minimum 
standards or use a less stringent policy instrument og approach?) 

Action  at  the  EU  level  establishing  minimum  standards  regarding  pay  transparency  and  related 
enforcement  measures  would  ensure  that pay equality  for the same  work and  for  work  of equal value 
between women and men, enshrined in Article 157(1) TFEU, is effective and that all citizens can claim 
their  rights  according  to  the  same  minimum  standards  applicable  in  all  Member  States.  This  is  a 
balanced  measure  at  the  EU-level  which  takes  into  account  existing  effective  examples  of  national 
measures  and  the  positions  of  Member  States,  social  partners  and  citizens  and  helps  addressing  the 
problem of pay discrimination ensuring a uniform approach across the Union. 

(d)  Does the initiative create financial or administrative cost for the Union, national governments, 
regional  or  local  authorities,  economic  operators  or  citizens?  Are  these  costs  commensurate 
with the objective to be achieved? 

The costs of the initiative concern mostly employers and are largely offset by the potential benefits of 
increased gender equality on the labour market. 
The proposed action takes into account a trade-off beetwen stronger protection of workers and easing of 
the administrative burden on employers, especially SMEs, in particular in the context of the economic 
difficulties faced by the EU companies during current COVID-19 crisis 

(e)  While  respecting  the  Union  law,  have  special  circumstances  applying  in  individual  Member 

States been taken into account? 

N/a 

175 

 
 
 
 
 
Annex 8: Job evaluation systems 

The 2020 evaluation found that the issue of promotion, development and use of gender-
neutral job  evaluation  and classification has significant relevance in 12 Member States, 
moderate significance in 8 and limited significance in 7 Member States. 

Actions 
to  promote  gender-neutral 
classification and evaluation since 2006 

job 

 Member States 

Since  2006,  national  legislation  included  the 
obligation  of  gender-neutral  job  evaluation 
and classification systems248 

Training  programmes  to  assist  employers  in 
job 
implementing 
systems250 
classification 

gender-neutral 

Establishment of guides and checklists for job 
evaluation  and  classification 
that  avoid 
gender bias251 

Reported  issue  of  lack  of  development  of 
gender-neutral  job  classification  system  in 
practice 

Source: ICF, 2019. 

BE249,  CY,  DE,  EL,  ES,  FR,  IT,  LT,  MT,  PT,  SE,  SI, 
SK, UK 

BE, CY, EE, LU, SE 

AT, BE, BG, EE, FR, LU, NL, PT, SE, UK  

AT, BG, CZ, DK, EE, EL, IT, LT, LV, MT 

248 In the Member States cited, changes in legislation have occurred since 2006 to include the obligation of 
gender-neutrality in job classification systems. 
249 Gender neutral job evaluation are safeguarded by collective agreements in BE. 
250 European Commission, Report on the application of Directive 2006/54/EC of the European Parliament 
and of the Council of 5 July 2006 on the implementation of the principle of equal opportunities and equal 
treatment of men and women in matters of employment and occupation (recast), 2013. COM(2013) 861. 
251 Guides and checklists mostly issued by gender equality bodies or by national authorities. 

176