Many companies are still not transparent about pay, but new rules could change that in Europe.
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Many companies are still not transparent about salaries, much to the frustration of employees who want to make sure they are paid fairly.
But there are signs of change as pay transparency laws are enacted in places like New York And some companies engage to the sharing of wage brackets – which led to start-up problems like the sharing of companies huge pay ranges or find ways to circumvent the laws.
In the latest move towards more transparency, the European Union Parliament on Thursday approved new rules designed to help employees get key pay information.
“Wage secrecy will be banned,” said a press release from the European Parliament, explaining that employers cannot prevent their workers from splitting their wages or reviewing other people’s wages. This means that workers will have the right to access individual and average pay details, including a breakdown by gender.
“Salary structures for comparing pay levels should be based on gender-neutral criteria and include gender-neutral job evaluation and classification systems,” the statement said.
Research has shown that the salary transparency is key close the gender pay gap, as women are often less likely to negotiate their pay and tend to undervalue themselves. Knowing what their co-workers earn could help mitigate this.
EU companies with a gender pay gap of more than 5% will have to undergo a pay review with employee representatives and could be fined, according to the European Parliament statement. But what the exact consequences of too big a gender pay gap will be depends on each EU member country.
Anyone who has been negatively affected by unequal pay will be entitled to additional compensation, under the new rules.
“This legislation makes it clear that we do not accept any form of gender-based wage discrimination in the EU,” said Danish politician Kira Marie Peter-Hansen, who worked on the new legislation.
“Historically, women’s work has been undervalued and underpaid, and with this directive we are taking an important step to ensure equal pay for work of equal value,” she added.
Nearly half of the countries in the world do not have laws in place requiring companies to pay all men and women fairly. report by the World Bank emphasizes this. This can have a negative impact on economic growth, he adds.
And the effect is not limited to certain countries. A recent report by Moody’s found that the gender pay gap could actually costs the global economy up to $7 trillion.
The most recent official data shows that the gender pay gap in the EU was 13% in 2021. In the United States, federal data for that year showed that women working full time were paid 84 cents for every dollar of a man’s salary.
The new rules also cover the rights of non-binary people for the first time and tackle intersectional discrimination, points out Dutch EU politician Samira Rafaela, who also helped establish the new rules.
“Non-binary people have the same right to information as men and women. I am proud that with this directive we have defined intersectional discrimination for the first time in European law and included it as a circumstance aggravating when determining sanctions,” she said. .
The final step for the rules to become law in the EU is now formal approval by the European Council, which is made up of the heads of state or government of each of the EU member states.