(Bloomberg) -- European companies will have to come clean on gender pay gaps under new rules that would also ban them from asking prospective employees about salaries earned in previous jobs.
The European Parliament on Thursday voted to support a new directive that would oblige firms with at least 100 staff to disclose information that will make it easier to compare employee salaries.
“Not only do we finally have binding measures to tackle the gender pay gap, but also all citizens of the EU are empowered, recognised and protected against pay discrimination,” Samira Rafaela, of the parliament’s women’s rights and gender equality committee, said in a statement.
As a next step, the EU’s members states must formally approve the new rules before they can come into force 20 days after their publication in the EU Official Journal, which is expected in May.
Thursday’s votes follows an EU political agreement reached in June on a law that would require listed companies to move toward 40% female representation in non-executive director positions by 2026. Meanwhile, progress toward gender pay parity has slowed across the EU, which means women in some countries could be waiting until at least the turn of the century for equal pay. Currently, women in the EU earn on average 13% less than their male colleagues on average, according to Eurostat.
Women in the EU Aren’t Set for Equal Pay Until 2086
While female employees are paid less in every EU member state, there are large variations between individual countries. Luxembourg has the smallest gap with 0.7%, while Latvian women receive on average 22.3% less than their male colleagues, the largest gap in the bloc.
Under the new rules, vacancy notices and job titles will have to be gender neutral and recruitment processes led in a non-discriminatory manner throughout the bloc. Employers will also have to provide information about the initial pay level or its range in the job vacancy notice or before the job interview.
The rights of non-binary people, and protection against discrimination, have also been included in the new rules, a first for European legislation.
Companies will have to send information on the gender pay gap to the national authority and can also publish it on their website. If pay reporting shows a gender pay gap of at least 5%, employers will have to conduct a joint pay assessment in cooperation with their workers’ representatives. Member states will have to put in place penalties, such as fines, for firms that infringe the rules.
(Adds information on non-binary people inclusion in 7th paragraph.)
©2023 Bloomberg L.P.
BNN Bloomberg Picks
Declining prices shift Canadian views of homes as investments
How will the Canada 'mortgage charter' impact homeowners, bank earnings?
Here are the key takeaways from Canada's budget update
'A long time coming': Ottawa looks at requiring corporate climate disclosures
Rona Ambrose: Fiscal update 'very concerning' for Canadians
Business leaders 'disappointed' with fiscal update details