Closing the Gender Pay Gap: Why It Matters and What’s Next

The gender pay gap is one of those issues that just won’t go away. Despite decades of progress in the workplace, women in the EU still earn, on average, 13% less than their male colleagues. That’s not just a statistic; it’s a reality that affects millions of women every single day.

So, why is it so hard to close this gap, and what’s being done to fix it? Recently, the EU took a bold step forward with new directives aimed at finally turning the tide.

Simply put, the gender pay gap is the difference in average pay between men and women. This gap can be due to a mix of reasons. Sure, some of it comes down to factors like different career choices, part-time work, or breaks taken for childcare, but a big chunk is still unexplained. This is where things get tricky – because that unexplained gap often comes down to things like unconscious bias, discrimination, and outdated perceptions of what “men’s work” and “women’s work” should be.

The EU has been on this for a while, pushing for equal pay for equal work. And it’s not just about fairness; it’s good business. Studies show that more gender-diverse companies are more innovative, make better decisions, and even outperform their peers.

In April 2023, the EU introduced a new directive to make things a bit clearer - and hopefully fairer - when it comes to pay. The Pay Transparency Directive is the EU's latest move to ensure gender pay equity across member states. The main focus? Transparency. The thinking is that if companies have to be more open about their pay scales, it will shine a light on any unfair practices and force businesses to act. After all, it’s a lot harder to justify a pay gap when everyone can see it.

The directive applies to companies with over 100 employees. These companies will now be newly required to report under the directive and may need to make significant adjustments if they haven’t been previously subject to pay transparency regulations.

This is a huge step, as it lowers the previous threshold of 250 employees, meaning more companies are going to be under the microscope. More transparency = more accountability. In essence, the earlier threshold of 250 or more employees for gender pay reporting wasn't a unified EU requirement across all member states but rather emerged from a combination of the

The Non-Financial Reporting Directive (NFRD) and individual national regulations.

The directive was adopted by the EU in April 2023. Following this, EU member states have a three-year deadline to transpose it into their national laws, meaning implementation across the EU is expected by April 2026. This means that by 2026, companies within member states will be legally required to meet the transparency and reporting requirements outlined in the directive.

It’s easy to be cynical about new rules and regulations, especially when it comes to an issue as deep-rooted as the gender pay gap. But these changes could be a game-changer. Pay transparency forces companies to take a good, hard look at their pay structures and confront any disparities head-on. It’s also about shifting the culture - making sure that equal pay isn’t just a talking point but a reality.

There’s still a question mark over how quickly we’ll see results. It’s one thing to report on pay gaps, but it’s another to tackle the underlying issues that cause them in the first place. We need more women in leadership roles, more support for parents balancing work and family, and more programs that encourage girls to enter high-paying fields. That’s where the real, long-term change will come from.

Let’s face it: the pay gap is not just a women’s issue; it’s everyone’s issue. When women are paid less, it affects families, communities, and economies. Closing the gap could boost the European economy by billions of euros.

For businesses, it’s about staying competitive. In today’s world, talent is everything, and companies that can demonstrate a commitment to fairness will attract the best people. Plus, fair pay practices help build trust and loyalty among employees, leading to a more engaged and productive workforce.

The road to equal pay is still a long one, but with the Pay Transparency Directive, the EU is sending a clear message. By making pay more transparent and giving workers the tools they need to challenge unfair practices, the hope is that we’ll see a faster, more meaningful change.