Adopted in April 2023, the Pay Transparency Directive allows employers and trade unions to establish new data in situations where workers have no actual comparator. It will help to address occupational segregation in the labour market and the gender pay gap, which in the EU is 12.7 per cent, while the pension gap is far wider at 30 per cent.
‘The problem of unequal pay for work of equal value is structural and can be addressed only if feminised jobs can be compared with jobs in other higher paid sectors’, explains Jane Pillinger, author of an ETUI policy brief entitled ‘The role of hypothetical comparators in determining equal pay for work of equal value’.
In practice, by permitting comparisons to be made with a hypothetical comparator, the Pay Transparency Directive enables workers to establish unequal pay based on how a worker ‘would’ have been treated in a comparable situation in which there is no actual comparator in the establishment. This will unblock a significant barrier to the achievement of equal pay for work of equal value where workers in undervalued, low paid, female-dominated jobs are unable to claim equal pay because they have no comparator.
ILO data, for instance, shows that the higher the proportion of women in an enterprise, the lower their wages compared with similar sectors with similar numbers of employees and coverage of collective pay agreements. When women exceed 65 per cent of the waged workforce, their pay declines relative to more mixed workforces in similar enterprises; and it declines even further when women represent over 90 per cent of the workforce in an enterprise.
Precedents exist for hypothetical comparators in the EU
Hypothetical comparators are already permitted, at EU level, under the EU anti-discrimination and the Agency Work Directive. In Belgium, the restriction of the interpretation of the concept of work of equal value to the same establishment led the Institute for Equality between Women and Men (2021) to recommend the development of a tool to establish work of equal value across sectors. In France, a cross-sectoral study by the CFDT (2019) helped to reveal one of the problems in measuring the gender pay gap: that of the domination of jobs in one sector by one gender or the other. It is also interesting to consider the approach taken in New Zealand and Canada, working from an assumption that women’s jobs are undervalued, by allowing for hypothetical or proxy comparators.
A vitally important tool and a long-term challenge for trade unions
Collective bargaining has a critical role to play in tackling the structural causes of the gender pay gap and then in closing it. It is critical that the provision of a hypothetical comparator in practice ensures valid cross-sectoral comparisons for jobs predominantly carried out by women, for example in care, retail and cleaning work. In this case, as the ETUC has already argued, while the Pay Transparency Directive and the European Court of justice (via the Lawrence case) recognise this in principle, it is essential that it not be left to employers to decide which jobs can be selected for comparison.
Read the full policy brief here: The Pay Transparency Directive: The role of hypothetical comparators in determining equal pay for work of equal value