We’ve had gender pay gap legislation for several years now. But is there any evidence of it helping to close the gap? What will upcoming pay transparency requirements do, and will it help to eliminate pay inequities?
Ireland has begun the implementation of the European Union Pay Transparency Directive, which member states must have transpose into national law by this year. It represents the most significant legislative shift in equal pay enforcement in decades. Yet the gender pay gap persists and the reasons why reveal something uncomfortable about how work itself is valued.
Gender pay gap reporting has successfully helped reduce disparities in certain European countries, though its effectiveness varies significantly depending on how the policies are designed and implemented, says Marianna Baggio, research officer in the social policies unit at Eurofound. “Research in Denmark, Switzerland and the United Kingdom demonstrate reductions in gender pay disparities at the company level.”
The picture elsewhere is more mixed, Baggio notes. A recent study in Germany found short-term impacts from transparency legislation, but only for medium-sized organisations where works councils or collective bargaining agreements were already in place. In Austria, similar reporting requirements produced no measurable impact at all.
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For Irish employers, the reporting obligation introduced in recent years has at least sharpened awareness. “Organisations have a much clearer understanding now of what the gender pay gap is, its causes, and the extent of actions needed to close it,” says Doone O’Doherty, partner in workforce consulting at PwC Ireland.
“In terms of pay policy and promotions, we are seeing many employers take actions to support more women with career progression. It may take some years before these changes are reflected in a narrowing of the gap.”
Where shift work and overtime form a substantial part of total pay, gaps can widen not because women are excluded from those opportunities, but because other responsibilities make such patterns unattractive
The causes behind the gaps are rarely straightforward, according to O’Doherty. In finance and consulting, for instance, there is often a broadly even split between male and female employees overall, but women remain underrepresented at senior and leadership levels, dragging the average down. In male-dominated industries where female participation is low but growing, a gap can emerge simply because women are earlier in their careers.
“This is an example of where taking positive action to build a more diverse workforce can actually lead to a higher gender pay gap in the short term,” she notes.
Working patterns add another layer of complexity, O’Doherty explains. Where shift work and overtime form a substantial part of total pay, gaps can widen not because women are excluded from those opportunities, but because other responsibilities make such patterns unattractive. Performance awards – bonuses, shares, commissions – compound the effect further, she adds.
A single headline figure, then, can easily mislead. “Being able to explain the causes is fundamental to employees understanding the difference between equal pay and a gender pay gap,” says O’Doherty. “It is helpful to support the narrative with figures showing how much of the gap is due to representation, overtime, and so on.”
The incoming directive attempts to move beyond disclosure toward enforcement. “Without access to clear information, employees were effectively prevented from gathering the evidence needed to bring a successful claim,” says Baggio. “Pay transparency measures are designed precisely to solve this, enabling workers to negotiate on an informed basis and to hold employers accountable.”
Crucially, the directive also requires member states to impose effective, proportionate and dissuasive penalties for breaches of equal pay obligations. Transparency exposes the gap; the threat of enforcement is meant to compel employers to close it.
But legislation alone has never been sufficient, Baggio argues. The gap has been narrowing across the EU precisely because the issue has been tackled on multiple fronts simultaneously, promoting Stem education for women and girls, improving work-life balance policies, expanding affordable childcare, encouraging more equal sharing of parental leave, and strengthening anti-discrimination enforcement. Progress, however, has recently slowed.
The recent slowdown in progress across the EU has prompted further reflection, Baggio says. “Too often, professions that are typically female dominated see entire dimensions of the work neglected, not valued properly and paid accordingly,” she says.
“Soft skills, relational abilities, emotional labour, caregiving and the capacity to manage stressful or sensitive situations are rarely captured in formal, and often outdated, job evaluation systems even though they are essential to how the work is actually done.”
Equal pay for work of equal value has been a founding principle of the EU since the 1957 Treaty of Rome. Nearly seven decades later, the distance between that principle and daily reality remains a central challenge and the question of how we define value in the first place may be the hardest part of all to answer.
