Is equal pay for equal work just a pipe dream?

ABBL Published 17.03.2021

Women in the European Union still earn on average 16% less than men. In Luxembourg the gender pay gap is 7.1% (according to the recent STATEC publication of 1 March 2021).

Concerning the financial sector, STATEC reveals that whilst basic pay is aligned, the gender pay gap is largely the result of irregular remuneration (such as the 13th month or annual performance bonus).

On 8 March the ABBL signed the UN Women’s Empowerment Principals which promote gender equality, diversity and leadership of women in the financial sector.

Also in March, the European Commission published a proposal on pay transparency to ensure that women and men receive equal pay for equal work. The legislative proposal focuses on two key elements of equal pay:

  • measures to ensure transparency on pay for workers and employers
  • better access to justice for victims of pay discrimination.

The proposal establishes measures on pay transparency, such as pay information for jobseekers, the right to know the pay levels of workers doing the same job, as well as obligations for large companies to provide information on the gender pay gap.

Measures contributing to disclosure of non-financial and diversity information are already a must in the financial sector and part of a sustainable financial policy and are thus in line with what is required by the Luxembourg authorities in the financial sector.

However, the proposal also strengthens the tools for workers to enforce their rights and facilitates their access to justice. Employers would not be allowed to ask candidates about their pay history and would have to provide anonymised pay data at the request of the employee. Employees could also be entitled to compensation in the event of pay discrimination.

Such measures could be counterproductive and would certainly impact salary negotiations between workers and employers.

European Commission President Ursula von der Leyen said: “Equal pay for equal work. And to achieve equal pay, we need transparency. Women need to know if their employer is treating them fairly. And when they are not, they must be able to stand up for themselves and get what they deserve.”

Ms. von der Leyen’s statement may be politically correct, but this level of interference in the labour law of Member States could be a step too far.

Next steps

The proposal will now be submitted to the European Parliament and the Council for approval. Should the Directive be adopted, Member States will have two years to transpose it into national law and communicate the relevant texts to the Commission. The Commission will re-evaluate the Directive after eight years.

By Fabienne Lang

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