EU proposal on Pay Transparency Directive

Last Updated on Sunday, 6 February, 2022 at 9:13 am by Andre Camilleri

Prof. JosAnn Cutajar

In 2017 the gender pay gap in Malta stood at 12.2% of men’s average gross hourly earnings (European Commission 2021). In spite of a number of EU directives and Maltese legislation already in place to protect women and other workers from being paid less for doing the same work as men (Maltese Constitution) and to ensure that they receive equal pay for work of equal value (Employment and Industrial Relations Act), the gender pay gap still persists.

The gender pay gap in Malta is below the EU average but is increasing slowly over time. There are a number of factors that explain why there is a gender pay gap. Women are more likely than men to have a part-time job as their primary source of income (in 2018, 23% of women worked part-time when compared to 6.5% of men in Malta) (European Commission 2021). This emanates from the unequal sharing of care and unpaid work, which leads women to work part-time or reduced hours to be in a position to juggle both (Rizzo 2006). Women are also more likely to be found in medium- and low-skilled positions. They are also less likely to be in decision-making positions (men held 70% of managerial positions in 2018) (European Commission 2021).

Other reasons include gender segregation in education, which then leads to labour market segregation. EIGE (2021) maintains that in 2018, around 50% of all female university students in Malta were enrolled in feminised fields, such as education, health, welfare, humanities and arts. When women work in occupations predominantly carried out by women, such as teaching, sales and health, the wages offered in these sectors tend to be lower than occupations predominantly carried out by men, even when the same level of experience and education is involved. This is where work of equal value comes in.

Experts also mention direct and indirect discrimination – all these factors together have a downward push on wages for women. Direct discrimination occurs when people are paid less on the basis of their gender (or race), even when the level of skills, experience and responsibilities are equivalent to those in masculinized jobs. Indirect discrimination takes place when an apparently neutral provision, criterion or practice puts people of the same gender (or race) at a disadvantage. For example, when an employer pays part-time workers less per hour and the majority of the part-time workers are women (or Third Country nationals).

The EU Pay Transparency Proposal (2021) came up with a number of suggestions to help member states rectify the gender pay gap. These include the right of job-seekers to be given information about the initial pay level and its range when applying for a job, something which prevails within the public sector in Malta but is not always prevalent in the private sector. This EU proposal also proposes that all workers should have the right to request information from their employer on their individual pay level and/or average pay levels, broken down by sex for categories of workers doing the same work or work of equal value. It also underlines that employers who employ 250 workers or more should be obliged to publish information on the pay gap between male and female workers working in their establishment.

The EU proposal also suggests that member states need to decide which job classification system to use to adjudicate work of equal value. Different countries in the EU and beyond make use of different job classification methodologies to compare jobs of different natures, for example manual with administrative jobs. These methodologies usually take into consideration the skills needed to do the job as well as the educational, professional, training requirements, the effort, the responsibility, work undertaken, the nature of tasks involved and working conditions (Wagner 2020) when it comes to adjudicate work of equal value. The unconscious bias of the adjudicator or the roles being scrutinised can undermine the whole exercise though. This means that this type of analysis should only be undertaken by professionals trained in this type of assessment. This type of pay assessment should be carried out, according to the EU proposal, when the gender pay gap surmounts 5% and the employer cannot justify the gap. What is positive about this proposal is that victims of pay discrimination can get compensation, including back pay, bonuses or payments in kind if the employer cannot provide valid reasons for the pay difference.

This EU proposal also suggests that member states establish specific penalties for those establishments which infringe on the equal pay rule. The penalties can include fines. When there are repeated violations, it is proposed that the company is excluded from being granted financial incentives for a certain period of time and/or participation in award procedures when it comes to public contracts and concessions.

One of the big limitations of this proposal is the proposal limit itself to addressing gender pay gap within big companies. In Malta there are 135 large companies, which amount to 0.1% of all registered companies. This means that such a proposal will not be equated with drastic changes. Rubery and Koukiadaki (2016) maintain that transparency is not enough when it comes to implement equal pay in the labour market. They maintain that the most effective pay changes will be achieved with the help of pay audits and action plans that involve trade unions in their implementation.

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