Gender Pay Gaps in Europe - what countries perform best?

The gender pay gap, the persistent disparity in earnings between men and women, remains a crucial issue in European labour markets. Despite various efforts, including the ratification of Directive (EU) 2023/970, aimed at ensuring equal pay, significant differences persist. This article delves into the current state of gender pay gaps across Europe, highlighting where progress is being made and challenges remain.

Understanding the Gender Pay Gap

The gender pay gap represents the average difference in pay between men and women. Influenced by factors like direct discrimination, sectoral segregation, part-time work, and career interruptions due to caregiving responsibilities, this gap is more than a mere economic indicator — it reflects deep-rooted societal and workplace inequalities. With the introduction of the (EU) 2023/970 directive, the EU is trying to push companies towards setting the pay based on the job to be done, rather than based on the demographics of the person doing the job - this is where the principle “Equal pay for Equal work” stems from. They do so by requiring companies to report on their pay levels, and only allow them to factor in objective pay-setting criteria to explain potential differences in pay. 

EU’s Legal Framework and Initiatives

Directive (EU) 2023/970 is a cornerstone in the EU's approach to addressing the gender pay gap. It mandates increased pay transparency and stronger enforcement mechanisms. Alongside this, the EU has initiated various programs and policies to support member states in tackling this complex issue.

Read more about the new Pay Transparency directive, in our comprehensive guide to (EU) 2023/970.

The state of gender gaps in Europe

The state of gender gaps in Europe is a multifaceted issue that varies significantly across the continent. As of 2021, the average gender pay gap in the European Union (EU) stood at 12.7%, meaning that women's gross hourly earnings were on average 12.7% below those of men​​. However, this gap is not uniform across Europe. The gap varies considerably from country to country, reflecting differing national policies, labour market conditions, and cultural norms. 

In countries like Luxembourg, women earn approximately as much as men, making it an exception among European nations. Other countries with relatively low gender pay gaps include Romania and Slovenia, with gaps of 3.6% and 3.8%, respectively. Conversely, some countries continue to face significant challenges. Estonia, for instance, has one of the highest gender pay gaps in the EU at 20.5%, and the gap in Belarus is even higher at 28.9%​​. Such disparities can often be traced back to factors like traditional gender roles, the undervaluation of work typically done by women, and less rigorous enforcement of equal pay legislation.

European Countries Leading the Way

Certain European countries have made notable progress in closing the gender pay gap. For instance, Luxembourg and Italy have implemented effective policies, including robust anti-discrimination laws and supportive childcare systems, contributing to lowering the pay gap. These countries serve as models, demonstrating how policy, societal attitudes, and corporate responsibility can collectively reduce gender pay gaps. 

Challenges and Areas for Improvement: 

Conversely, countries like Estonia and Latvia face ongoing challenges, with higher gender pay gaps persisting. Factors such as traditional gender roles, less aggressive policy enforcement, and economic sector disparities contribute to these gaps. These examples underscore the need for tailored approaches to address each country's specific challenges. The European Union is hoping that the introduction of (EU) 2023/970 will help the countries shape the national regulatory framework that can enforce the requirement to pay employees equally for equal work.

Factors Influencing the Gender Pay Gap:

1. Sectoral Segregation: Women tend to be overrepresented in relatively low-paying sectors like care, health, and education. Jobs in these sectors are often undervalued, contributing to the pay gap​​.
2. Unequal Share of Paid and Unpaid Work: Women often spend more hours on unpaid work, such as caregiving, which can impact their career choices and earnings.
3. The Glass Ceiling: Women are less represented in top managerial positions, with less than one in ten of the top companies' CEOs being women. This discrepancy contributes to the overall gender pay gap​​.
4. Pay Discrimination: Despite legal provisions, in some cases, women still earn less than men for doing equal work or work of equal value.

Key Takeaways from Top Performers:

Learning from countries with lower gender pay gaps is crucial. Key strategies include enforcing equal pay legislation, promoting women's participation in high-paying sectors, ensuring transparency in pay, and providing support for balancing work and family life. These practices could inspire reforms in countries still struggling with significant pay disparities.

Need help to address or analyze your Pay Gap?

It can be a cumbersome process to appropriately identify and quantify a company’s pay gap. It requires delicate attention to detail and most of all establishing a data pipeline with trustworthy and representative data. Our team is ready to assist you on your journey, whether you are about to make your first reporting, or already have been doing it for a while and need a more streamlined process for doing it recurringly.