The Pay Transparency Directive

Key points Collective bargaining has a critical role to play in closing and tackling the structural causes of the gender pay gap.The Pay Transparency Directive contains new possibilities for trade unions and employers to use hypothetical comparisons in addressing the undervaluing of jobs predominantly carried out by women where there are no actual comparator, and to include this in collective bargaining.Trade unions should ensure that hypothetical comparators are used to show that if a man was employed in a job of equal value in the same workplace, the jobs carried out by women would still be lower paid, unblocking a significant obstacle to women’s pay.The longer-term challenge is for trade unions to facilitate cross-sectoral comparisons in their collective bargaining claims for equal pay for work of equal value.On 11 April 2023 the European Council adopted the Pay Transparency Directive. This was preceded by a long campaign by the ETUC and trade unions across Europe calling for greater pay transparency to address the underlying and structural causes of the gender pay gap and a strong role for trade unions and collective bargaining in ending pay inequalities between women and men.A lack of pay transparency impacts the gender pay gap and makes it impossible to identify, for example, whether there is discrimination or undervaluing of women’s work (Arabadjieva 2021). It is essential that unions have access to pay data in order to bargain effectively to close the gender pay gap (ILO 2022; Pillinger and Wintour 2019; Pillinger 2014). In the EU, it is estimated that ‘a comprehensive approach to pay transparency and integrating equal pay in collective bargaining could reduce the gender pay gap by between 1.65 per cent and 4.33 per cent’ (ILO 2022: 6).This Policy Brief discusses the hypothetical comparator provision in the Pay Transparency Directive, which is complex and rarely used in Europe. It looks at how this could be transformative for trade union action in tackling the undervaluing of work carried out in predominantly female-dominated jobs, drawing on international examples of how this principle can be applied in practice. It finishes with a call to action to trade unions to use these provisions in collective bargaining and in claims for equal pay for work of equal value.