New EU Directive Aiming To Reduce Persistent Gender Pay Gap Will Apply From 2027

Published On: 12. 5. 2024

According to data from Eurostat, the statistical office of the European Union, the difference in wages between women and men across sectors, professions and job positions in the Czech Republic is an average of 17.9%.

The results of the latest analysis by the Platy.cz portal reveal an even larger gap of 28%. This investigation also found that differences in salary increase with the length of work experience. For example, in the Czech Republic, female staff within one year of experience earn, on average, a 20% lower monthly salary than men. For women with work experience between 6 and 10 years, this difference increases to 30%.

A new EU directive is supposed to address the situation. From June 2027, companies with more than 250 employees will have to submit reports every year to prove they do not discriminate in wages, with a maximum permitted difference of 5%. Companies with 150-249 employees will also have to report once every three years. The effect of the directive will be extended for companies with 100 to 149 employees, which will have until 2031 to start submitting these mandatory reports.

The Directive provides for transparency as early as the recruitment interview, specifying that when evaluating and comparing equivalent work, employers should take into account objective criteria such as education, professional and training requirements, skills, effort and responsibility, the work performed and the nature of the task.

According to Petr Boldiš from financial services consultant Mercer, the Directive envisages that if the difference in wages for any category of employees performing the same job exceeds 5% and is not explained by objective factors, employers will have to conduct a joint review of the causes of the pay gap with employee representatives and share the results with employees and the relevant authorities.

Adjustments will be time-consuming for many companies in terms of harmonising internal systems and ensuring sufficient budget resources to correct the gap, but will be felt differently between sectors.

IT and business services firms are the most ready for a change. According to a survey by the Association of Business Service Leaders in the Czech Republic (ABSL), 93% of companies in these fields already use a system that enables salary analysis in accordance with future EU requirements.

The employment of women in senior positions in these sectors is also among the highest. According to the latest report by ABSL, corporate services have 42% women in senior leadership positions, compared to a global average of less than half that (19%), and even lower in the Czech Republic (17%).

US-based companies also have a head start in this regard, as many of the equal pay rules coming into force in the EU are already in place in these organisations, for example publishing the salary range of employees in their positions, which is not the standard in the Czech business environment. The transition to follow the new EU regulations is therefore expected to be smoother for these companies.