3.1.

The European Economic and Social Committee (EESC) is a firm supporter of the principle of equal pay for men and women for equal work or work of equal value and recognises it as one of the fundamental rights and principles of the European Union. The EESC also supports the Commission’s objective to close the gender pay gap and to further promote the principle of equal pay. However, in order to address the gender pay gap, the root causes of the gap must be carefully assessed and correctly identified. The EESC believes that the Commission proposal on the pay transparency directive  (1) fails to properly recognize the principle factors behind the gender pay gap such as horizontal and vertical labour market segregation, following from individual educational and professional choices, full-time versus part-time work as well as unpaid care-related constraints as well the role of tax incentives. Therefore, instead of the proposed pay transparency measures, there are more efficient and proportionate measures than binding EU legislation to address these issues while at the same time ensuring that administrative burdens and costs for companies, in particular SMEs, are not increased. The EESC underlines that pay structures and wage setting are an essential part of collective bargaining and social dialogue that fall within the competence of Members States and social partners. The EESC finds that the proposed directive  (2) fails to fully respect the national wage formation competences and to sufficiently take into account the diverse national social and industrial relations models or judicial systems and legal traditions in the Member States. Furthermore, no consideration is paid to the fact that wage formation is also shaped by the concurrent demand and supply of skills in the labour market as well as available resources. Therefore, the EESC concludes that the Commission proposal on pay transparency is disproportionate and runs counter to the principle of subsidiarity. The Commission should reconsider or rework its proposal and the co-legislators are invited to take into account and address these concerns in the next steps of the legislative process.

3.2.

The EESC recognises that welcomes the Commission’s proposal, which aims to make it easier for workers to enforce the principle of equal pay where they consider that they have been the victims of pay discrimination, to contribute to greater transparency in pay structures and to strengthen the role of national bodies in enforcing this principle.

3.3.

However, the EESC considers that the proposal should be strengthened the possibility for Member States to accommodate their industrial relations models in various respects, particularly regarding the criteria to be used to determine the value of work and the coverage of some of the key transparency obligations, but also the role of the social partners and collective bargaining in the implementation of the principle of equal pay, the social partners being best placed to reassess the value of skills and occupations (3) . It is concerned that, otherwise, the benefits of the proposed measures will be limited for many workers, and the measures will not contribute sufficiently to the systemic changes required to eliminate pay discrimination and gender bias in pay structures.

4.2.4.

The EESC is critical about and questions welcomes the introduction of the option of using a hypothetical comparator or other evidence allowing alleged discrimination to be presumed, where no real comparator can be established. This will assist workers in highly sex-segregated workplaces to show discrimination where this exists, even if there is no real comparator. It is particularly important to ensure that women workers in highly sex-segregated workplaces can bring equal pay claims, since evidence suggests that there is a correlation between the degree of feminisation of a workplace and lower pay — that is, the higher the proportion of women, the lower the pay  (4) . It is unclear how this would work in practice, and it would create legal uncertainty for companies. It also ignores the dynamic developments in a company, where aspects which impact on pay, such as the general economic situation (economic performance, competitiveness, productivity, demand), as well as work tasks and organisation, change constantly. The EESC believes that potential pay discrimination must always be assessed in relation to the employees in a single company in comparable positions. In addition, the EESC points out that wage formation is mostly a prerogative of (collective) bargaining and subject to detailed professional advice and should not be regulated. Wages are formed in the labour market, paying workers for the tasks performed, as well as reflecting objective elements and the performance of the worker. Wages are set as part of a contractual relationship between two private parties or through collective agreement. The directive should respect these aspects and wage setting structures.

4.3.5.

The limitation of the requirement to report on pay gaps within the organisation to employers with at least 250 workers (Article 8(1)), which exempts all small and medium-sized enterprises (SMEs), will mean that only about a third of all workers in the EU can benefit from this measure  (5) . Furthermore, women are overrepresented in small firms  (6) , which means that an even smaller proportion of women workers will benefit from this measure. This threshold is a step back from the Commission’s 2014 Recommendation, which suggests reporting requirements for employers with at least 50 employees  (7).

4.3.6.

The EESC recognises that SMEs may have more limited resources to comply with their new obligations as they often lack human resources personnel under the proposed Directive. The proposal should be sensitive to concerns about additional burdens on SMEs, particularly given the significance that these may have in the post-pandemic recovery process, which may be on-going after entry into force of the proposed Directive. Nevertheless, t The Commission estimates that the costs of producing reports will be moderate (8) , however underestimating the overall financial consequences for employers. In fact, total costs cannot be assessed in advance, but will depend on the cost of producing new types of data and statistical compilations, the number of disputes, practical enforcement problems and effects on wage formation and collective agreements. A complete exemption of all employers with fewer than 250 workers is therefore to be supported not justified, but special rules at national level for SMEs could be appropriate. Therefore, Member States should be allowed to establish appropriate thresholds.

4.3.7.

Special rules reducing the required frequency of reporting for smaller enterprises would reduce costs, whilst requiring employers to identify and eliminate pay gaps for the benefit of workers. The threshold for reporting obligations should be no higher than 50 workers, but the frequency of reporting for enterprises with more than 50 but fewer than 250 workers could be reduced.

4.3.8.

A similar concern arises with respect to The EESC also welcomes the limitation of the requirement to conduct a joint assessment to employers with at least 250 workers (Article 9). The costs for producing a joint assessment are estimated to be somewhat slightly higher than for reports (9) , therefore but they still do not justifying a complete exemption for employers with fewer than 250 employees. Special rules for SMEs at national level could be justified.

4.3.9.

Member States should be required to provide support, training and technical assistance to employers, particularly SMEs, and to incentivize them to take up voluntary measures of comply with their pay transparency obligations, including by developing tools and methodologies for calculating pay gaps. Member States should, wherever possible and appropriate, also make use of the possibility in Article 8(4) to compile information on pay gaps across organisations themselves, particularly in respect of small and medium sized enterprises.

4.4.4.

The EESC welcomes that the proposal increases the possibilities for employees to enforce their rights regarding the principle of equal pay. The ability of trade union and workers’ representatives to act on behalf of workers should always be conditional on a clear mandate from the worker and should take place in accordance with national law and practice as well as systems of industrial relations. The right to request information on pay levels, broken down by gender, for categories of workers should not be automatically granted, but should always case-specifically justified and mandated by the worker. The ability of trade union/workers’ representatives to act on behalf of workers should be strengthened, including by giving trade union/workers’ representatives the right to request information on pay levels, broken down by gender, for categories of workers. Such information would enable trade union/workers’ representatives to identify pay discrimination and act to address it, including through collective bargaining.

4.5.5.

The EESC underlines that any form of discrimination based on gender should be corrected. There is a concern, however, that the requirement of full compensation, as stated in Article 14, could cause both legal uncertainty and practical difficulties regarding, inter alia, the period for which such compensation would be paid. The specific conditions for claiming and obtaining such compensation or reparation should therefore be specified at national level.

4.5.6.

The EESC notes that the provision in Article 16(2) on additional circumstances in which the burden of proof shifts to the employer, namely where an employer has not complied with the transparency obligations set out in Articles 5-9, may have far-reaching consequences if applied strictly. It should therefore be left to the Member States to determine the appropriate evidential rules when such non-compliance amounts to negligence of the expected duty of care.

4.7.2.

Article 27 seeks to ensure that the Directive will not affect the right of the social partners to negotiate, conclude end enforce collective agreements or take collective action in accordance with national law and practice. Their accords should be considered to guarantee the desired protection It should also be further specified that social partners can introduce provisions or apply collective agreements that are more favourable to workers than those laid down in the Directive.

4.7.3.

The EESC notes that Article 30 allows for implementation of the Directive by the social partners where they jointly request to do so, provided that the results sought by the Directive are guaranteed at all times. This provision ensures that the Directive allows for different means of implementation across different national systems, whilst guaranteeing the same level of protection for workers. In order to make this evidently clear it should be modelled on the directives on agency work and transparent and predictable working conditions which state that such implementation is allowed as long as the overall protection of workers is respected.

1.1.

The European Economic and Social Committee (EESC) firmly supports the principle of equal pay for men and women for equal work or work of equal value and recognises it as one of the fundamental rights and principles of the European Union. The EESC also supports the Commission’s objective to close the gender pay gap and to further promote the principle of equal pay. However, in order to address the gender pay gap, the root causes of the gap must be carefully assessed and correctly identified. The EESC believes that the Commission proposal on the pay transparency directive  (10) fails to properly recognize the principle factors behind the gender pay gap such as horizontal and vertical labour market segregation, following from individual educational and professional choices, full-time versus part-time work as well as unpaid care-related constraints as well the role of tax incentives. Therefore, instead of the proposed pay transparency measures, there are more efficient and proportionate measures than binding EU legislation to address these issues while at the same time ensuring that administrative burdens and costs for companies, in particular SMEs, are not increased. The EESC finds that the proposed directive  (11) fails to fully respect the national wage formation competences and to sufficiently take into account the diverse national social and industrial relations models or judicial systems and legal traditions in the Member States. Furthermore, no consideration is paid to the fact that wage formation is also shaped by the concurrent demand and supply of skills in the labour market as well as available resources. Therefore, the EESC concludes that the Commission proposal on pay transparency is disproportionate and runs counter to the principle of subsidiarity. The Commission should reconsider or rework its proposal and the co-legislators are invited to take into account and address these concerns in the next steps of the legislative process. The EESC welcomes the Commission’s proposal, which aims to make it easier for workers to enforce the principle of equal pay where they consider that they have been the victims of pay discrimination, to contribute to greater transparency in pay structures and to strengthen the role of national bodies in enforcing this principle.

1.3.

However, the EESC considers that the proposal should be strengthened the possibility for Member States to accommodate their industrial relations models in various respects, particularly regarding the criteria to be used to determine the value of work, the coverage of some of the key transparency obligations, and the role of the social partners and collective bargaining in the implementation of the principle of equal pay.

1.5.

While t The proposal is rightly sensitive to concerns about additional burdens on SMEs., t The EESC supports the Commission’s proposal to exempt does not find a complete exemption of all employers with fewer than 250 workers yet recognises that justified. S special rules at national level for SMEs might could, however, be appropriate. Therefore, Member States should also be required allowed to establish appropriate thresholds. Member States should also be required to provide support, training and technical assistance to employers, particularly SMEs, with their pay transparency obligations.