Ewelina Jaworska-Bien, Group Practice Leader for Health & Benefit at GrECo Specialty, shares her insights on the hot topic of the gender pay gap. She discussed strategies to help organisations meet EU directives and ensure equal and fair pay for both men and women with Gabriele Andratschke, Head of Group Human Resources at GrECo Group, along with experts Martina Ernst and Johannes Schestauber.
As with every parent I want my children to be safe and healthy, I want to provide them with the same opportunities in life and to support their education. I strongly believe that all parents share the same dream and want their children to have a good start in life, equal rights and be treated fairly. However, with statistics showing women are still paid considerably less than men for similar roles, it is clear that we as a society have a huge amount of work to do to futureproof remuneration so our children can be paid equally for the same job done.
As of 2023, women globally earned about 83 cents for every dollar earned by men. This means, on average, women are paid about 17% less than men for similar roles. The gap varies by region and industry, but overall, it highlights the ongoing issue of gender inequality in the workplace. When I look at the statics I can hardly believe that in the 21st century just because someone was born a woman she is paid less. What is 20%? 20% is 1 out of 5 working days. 20% is a man only working Monday to Thursday whilst a woman has to work Monday to Friday to receive the same salary!
Factors Contributing to the Gender Pay Gap
The gender pay gap is not a simple phenomenon, but the result of multiple interrelated factors that affect women’s earnings and opportunities in the labour market. One significant factor is occupational segregation, where women and men tend to work in different sectors and occupations. Women are more concentrated in lower-paying fields such as education, healthcare, and social services. This segregation limits their earning potential compared to men who are often found in higher-paying industries.
Another contributing factor is the motherhood penalty. Women are often hampered in terms of wages and career prospects when they become mothers. This is due to reduced working hours, career interruptions, and employer discrimination. These challenges make it difficult for women to advance in their careers and earn salaries comparable to their male counterparts.
Part-time work is also more common among women than men, either voluntarily or involuntarily. Part-time positions typically offer lower hourly pay, fewer benefits, and less job security than full-time roles. This further exacerbates the gender pay gap, as women are more likely to be in these less favourable employment situations.
Discrimination in the workplace is another critical issue. Women may encounter gender bias and stereotypes that limit their access to hiring, promotions, training, and pay rises. This discrimination hinders their career growth and contributes to the persistent pay gap.
Additionally, women are underrepresented in senior and leadership positions, which tend to have higher salaries and more influence over organisational policies and practices. The lack of female managers means fewer women have the opportunity to earn higher wages and shape workplace culture.
Educational attainment has seen significant progress for women, but barriers and gaps remain in certain fields, such as science, technology, engineering, and mathematics (STEM). Women often need higher levels of education than men to earn comparable wages, highlighting the ongoing challenges they face in achieving pay equity.
And lastly, women bear a disproportionate share of unpaid work, such as domestic tasks and caring for children, elderly, and sick relatives. This unpaid labour reduces their time and energy for paid work and career development, further contributing to the gender pay gap.
These factors combined create a complex and persistent gender pay gap that requires multifaceted solutions to solve it.
Legislative Action and Strides Toward Gender Pay Equity in the EU
In order to address the gender pay gap, the EU has enacted a raft of legislation to address the core issues.
The Pay Transparency Directive was introduced by the EU in April 2023 in a bid to combat pay discrimination and reduce the gender pay gap in EU countries. By making pay practices more transparent, banning pay history questions and allowing employees to request pay information, the directive requires firms to disclose information on how they pay men and women. Companies with at least 100 employees must report on their pay gaps, and those with a pay gap of 5% or more must take corrective actions. What’s more, the directive supports the Corporate Sustainability Reporting Directive (CSRD), which also asks companies to report on their pay gaps and ratios. EU member states have until June 2026 to implement the directive into national law. The clock is ticking!
In addition, the EU’s introduction of the Directive for Gender Balance on Corporate Boards requires large, listed companies to attain at least 40% of the underrepresented gender on their supervisory boards, or to ensure 33% among all directors. It also provides legal requirement safeguards for clear objective and transparent board appointment procedures, with objective assessment based on qualification and merit, irrespective of gender.
And thirdly, the EU is focusing on shared responsibility. Care responsibilities for young families and elderly parents should fall on both male and female shoulders. In April 2017, the core of the EU’s directive on work life balance for working parents and carers centred around providing equal possibilities for men and women to combine private and working responsibilities to care for dependents.
Essential Steps to Navigate Gender Pay Transparency
Understanding gender pay transparency is crucial in addressing pay equity within an organisation. From a human resource perspective, it’s about ensuring fairness and equality in compensation, irrespective of gender.
To grasp gender pay transparency, companies need to start by conducting a thorough assessment of the current pay structure. This involves analysing job roles, responsibilities, and compensation across all levels to identify any disparities that may exist. It’s essential to approach this analysis with an objective lens, ensuring that any pay differences are justified by factors such as experience, education, and performance, rather than gender.
Once any pay gaps are identified, HR can take a proactive role in developing and implementing transparent policies that address these issues. This includes creating clear guidelines for compensation that are based on measurable criteria, such as job performance, qualifications, and market benchmarks. By making these policies known to all employees, HR can foster a culture of trust and openness, which is fundamental to achieving pay equity.
Furthermore, to maintain gender pay transparency, HR should establish regular monitoring and reporting mechanisms. This ensures that the organisation remains accountable for its commitment to pay equity. Regular pay audits, coupled with transparent reporting to stakeholders, can help to track progress and demonstrate the organisation’s dedication to this important issue.
Educating employees and management about the importance of gender pay equity is another critical role for HR. This can be achieved through learning sessions, workshops, and seminars that highlight the benefits of a fair pay system, not just for individuals, but for the organisation as a whole. By raising awareness and promoting dialogue, HR can help to shift mindsets and encourage practices that support gender pay transparency.
Finally, HR should encourage open dialogue about compensation within the organisation. This means creating safe spaces where employees can discuss their pay and any concerns they may have without fear of retaliation. Open communication can lead to better understanding and cooperation between employees and management, paving the way for more equitable compensation practices.
“These steps, grounded in the principles of fairness, transparency, and accountability, can help HR departments lead the way in achieving gender pay transparency and ultimately, pay equity within their organisations”, Gabriele Andratschke, Head of Human Resources, GrECo Group.
Overcoming Challenges Within the Organisation
However, where there is change there are challenges and achieving gender pay transparency within organisations is no different. Among the hurdles that HR departments may face are cultural resistance and data complexity. A longstanding culture of secrecy around compensation can make the shift towards transparency daunting. Overcoming such resistance requires a change in mindset and a strong commitment from leadership.
Additionally, the task of gathering and analysing compensation data is not without its intricacies, particularly in large organisations with diverse job roles and structures. Ensuring that the data is accurate and consistent is crucial for drawing meaningful insights.
Legal and privacy concerns also pose significant challenges. Organisations must carefully navigate legal regulations and privacy laws while striving for transparency, balancing the need to disclose pay information with the obligation to protect employee privacy.
What’s more, unconscious biases can further complicate efforts towards equitable compensation. These biases may subtly influence compensation decisions, creating disparities that are not immediately visible. Regular training and awareness programmes are essential to address and mitigate these biases, as is effective communication. Articulating the objectives and actions of gender pay transparency initiatives in a clear and consistent manner is vital to ensure all stakeholders are on the same page.
Maintaining pay equity is an ongoing endeavour. It requires continual audits, policy updates, and training to sustain the progress made. By recognising and proactively addressing these challenges, organisations can make substantial strides towards gender pay transparency, fostering a more equitable and inclusive workplace environment. In the end, the journey towards pay equity is not just a regulatory obligation but a moral imperative that benefits the entire organisation.
Conclusion: Expert Insights on Promoting Gender Pay Equality
“The more diverse and colorful the corporate workforce becomes, the more important it will be for employers to include everyone respecting their differences and creating a sense of belonging in a culture of fairness, because only when everyone pulls together will the company succeed. And equal pay is only the tip of the iceberg,” Johannes Schestauber, E&S FairEqualSolutions FlexCo.
Gallup research shows that the higher employee engagement, the higher corporate productivity and profitability: clear, transparent remuneration processes and structures increase the feeling of fair and equal treatment and drive engagement.
“Organisations must work towards achieving a higher representation of women in managerial positions. Implementing internal quotas or key performance indicators (KPIs) to promote women to management roles, and considering part-time or shared management positions, can improve gender balance”, Martina Ernst, E&S FairEqualSolutions FlexCo.
Flexible working time models are equally important. Introducing flexible working hours, home office options, and part-time opportunities can help employees balance work and family life. Encouraging paternity leave is also crucial for fostering an inclusive environment. And none of these things should impact fair renumeration, whether you’re a man or a woman.
My hope for the not-too-distant future is that these principles become ingrained in the very fabric of our corporate cultures, futureproofing salaries for our children when they enter the workplace. I envision a world where pay equality is no longer an aspiration but a reality, where every employee feels valued and fairly compensated for their contributions regardless of gender, race, or any other distinguishing factors. Achieving true equality in pay would not only reflect justice and fairness but would also harness the full potential of a diverse and inclusive workforce, driving innovation and success for companies worldwide.
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Ewelina Jaworska-Bien
Group Practice Leader
Health & Benefits
T +48 504 178 064
