Proposed E.U. Law Aims to Rectify Gender Pay Gap

BRUSSELS — Pushing member states to address salary disparities between men and women, the European Union revealed details on Thursday of a proposed law that would require companies to divulge gender pay gaps and give job candidates access to salary information in employment interviews. It also would provide women with better tools to fight for equal pay.

The move comes as female workers across the world have been disproportionately affected by the economic repercussions of the coronavirus crisis, and it could lead to sanctions on companies that do not comply.

The proposed law would also empower women to verify if they are being fairly compensated in comparison with male colleagues. The European Commission, the bloc’s executive arm, wants to provide workers with the ability to seek proper compensation in case of discrimination.

Under the proposed law, those who believe they are victims could take action through independent monitors of compliance with the equal-pay requirement. They could also press gender-based pay grievances through workers’ representatives, either as individuals or in groups.

“For equal pay, you need transparency,” said Ursula von der Leyen, the commission’s president, who had pledged to make pay transparency binding after she came into office in December 2019. “Women must know whether their employers treat them fairly. And when this is not the case, they must have the power to fight back and get what they deserve.”

Although theoretically the principle of equal pay for equal work is one of the founding values of the 27-nation European Union, the difference in salaries of men and women doing the same work stands at 14.1 percent, and the difference in pensions is 30 percent, the commission said. According to the European Institute for Gender Equality, a research group, female managers earn a quarter less than male ones.

Despite several efforts to enforce equal pay in practice, for more than 60 years it seemed out of reach for women across the bloc, which presents itself as the beacon of human rights and equality. So far, only 10 European countries, including Austria, Germany, Italy, and Sweden, have introduced national legislation on pay transparency.

The proposed E.U.-wide law requires approval by member countries and the European Parliament. There are concerns that it might be blocked by national governments, as happened with the European Commission’s proposal to introduce gender quotas on management boards. Wary of these potential obstacles, Vera Jourova, the bloc’s top official for values and transparency, called the proposal on pay “pure pragmatism and good economic calculations,” underlining that gender equality at work benefited businesses.

“We see quite limited appetite from some member states, and surprisingly from those which already introduced such measures,” Ms. Jourova said. “What gives me hope is that this is heavily needed.”

Companies with more than 250 workers would have to publicly disclose their gender pay gap, reflecting concern for smaller organizations, which have suffered a serious economic blow because of the coronavirus.

“I am aware that this proposal in times of an economic downturn and uncertainty caused by the pandemic may come across as ill-timed for some,” said Helena Dalli, the bloc’s commissioner for equality, highlighting that the law was “duly proportional.”

Under the draft law, national governments would be obliged to punish companies that flout the equal pay measures. The governments could decide on the penalties imposed, including financial sanctions, which must be effective and proportionate, the commission said.

The proposal comes as researchers warn that the virus could significantly delay women’s progress at the workplace. According to the 2020 Women in Work Index, compiled annually across 33 developed countries by PricewaterhouseCoopers, a consultancy, economic damage from the pandemic, as well as repercussions from government policies, are disproportionately affecting women. This has reversed the steady trend of gains for women in employment and has led to what the consultancy calls a “shecession.”

Women’s rights groups welcomed the commission’s initiative. “Information is power: pay transparency would enable employees to know the value of their work and negotiate salaries accordingly,” said Carlien Scheele, director of the European Institute for Gender Equality. “This would help tackle discrimination in the workplace, which can only be a boon for gender equality.”

Employers, aware of the proposal’s possible legal and economic repercussions, were careful in their assessment, blaming what they described as deep underlying reasons for gender inequalities.

“Reasonable requirements on pay transparency can be part of the answer,” said Markus J. Beyrer, head of BusinessEurope, a lobbying group. “However, the key to improve gender equality is to address the root causes of inequalities, especially gender stereotypes, labor market segregation and insufficient provision of child care.”

Mr. Beyrer said the commission must respect “national social partners’ competences” and should not “complicate human resources management with excessive administrative burdens and open the way to undue litigation.”

According to Ms. Jourova, f “binding rules” are required, not just reliance on the social responsibility undertaken by companies. “We see that it doesn’t lead anywhere,” she said.