The year 2027 will equalise wages between men and women. Some industries and companies already meet the requirements of the new European regulation.

Published On: 22. 4. 2024

Same work, but with different pay. According to data from the Statistical Office of the European Union, the current gender pay gap across segments, professions and job roles in the Czech Republic is on average 17.9%. The amended EU directive is set to change this. As of June 2027, companies with more than 250 employees will have to report annually that they do not differentiate in wages. The novelty foresees transparency already during the recruitment and interview process. The IT and business services sector is the most ready for the change. According to a survey by ABSL, 93% of companies already use a system that allows pay analysis in line with future EU requirements.

Maximum difference of 5%, objective evaluation criteria

Although Eurostat states that the Gender Pay Gap in the Czech Republic in 2022 is less than 18%, the results of the latest analysis by show a much larger gap – an alarming 28%. Women in the Czech Republic with up to one year of experience earn on average 20% smaller monthly salary than men. For women with between 6 and 10 years of work experience, the difference is as high as 30%, which in practice means more than CZK 20,000 per month. The forthcoming regulation anticipates a maximum limit below 5%.

“If the pay gap for any category of employees doing the same job exceeds 5% and is not explained by objective factors, employers will need 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,”

explains Petr Boldiš of Mercer, and continues,

“The systems we offer allow companies to efficiently meet the new reporting requirements while gaining valuable information for internal pay reviews.”

He says companies shouldn’t delay preparations, as the adjustments will be time-consuming for many of them in terms of aligning internal systems and ensuring they have sufficient budget to correct the differences.

The Directive further specifies that when assessing 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.

Equal pay? A legitimate requirement.

Mandatory reporting awaits companies with more than 250 employees from June 2027, which will have to report annually. In the same year, companies with 150-249 employees must also report every three years. Companies with 100 to 149 employees have time until 2031.

“In general, corporate companies that have already experienced this process in their countries of origin, or those companies for which equal pay is an internal value, are the ones that approach pay equity. Among the sectors where the principle of equal pay is implemented we can mention e.g. business services, retail, telecommunications, banking, but also manufacturing or logistics, especially for lower or medium skilled positions,”

claims Martin Malo, Director of Grafton Recruitment, and he also adds:

“Equal pay and transparency are an important aspect of employer branding, encouraging the recruitment of new candidates and helping retaining current employees.”

Superior transparency and equality in IT and business services

Even without regulation, the IT and business services sector has resisted change by honouring equal pay and transparency. According to an ABSL survey, as many as 93% of companies already use a system that analyses pay according to the directive’s criteria. In terms of transparency, 15% of companies in this sector are even considering publishing all relevant information, 85% only those required by regulation.

“When it comes to the employment of women in senior positions, this sector is one of the most progressive industries. According to our latest report, business services has 42% women in senior leadership roles. Globally, the figure is less than half (19%) and in the Czech Republic even less (17%),”

says Jaromír Staroba, President of ABSL Czech Republic.

According to Iveta Chválová, Director of SAP Services, having a properly set system and maintaining transparency is key to ensuring fair remuneration.

“At SAP, we use our own solution, thanks to which 99.8% of employees have instant access to information about what the salary range is for their position, taking into account their specific level of seniority and the region in which they work. Our leaders have a detailed infrastructure that eliminates room for subjective interpretation of data or remuneration based on impressions and feelings,”

Iveta Chválová explains.

US-based companies also have a head start, as many of the equal pay rules coming into force in the EU are already in place in these organisations.

“At Pure Storage, pay transparency already exists because we publish the salary ranges of our employees in their roles, which is not the local standard. The main way we are preparing for this new legislation is to ensure our existing policies cover all the new EU regulations and we are confident that this will be a smooth transition for us,”

explains Monika Krkošková, Senior HR Business Partner at Pure Storage.

The approaches and tools used by the IT and business services sector offer inspiration for other sectors and confirm that transparency and equality are key values for the future of the labour market.