The gender pay gap: developments in equal pay in the EU and in Ukraine

Author: Liliia Antoniuk, Young European Ambassadors in Ukraine National Coordinator

Equal access to financial resources and their distribution is fundamental to women’s empowerment and independence, as well as preventing the spread of gender-based violence and abuse, including domestic violence. The gender pay gap has a long-term impact on the quality of women’s life, on their risk of exposure to poverty and on the persisting pension pay gap. Thus, one of the key indicators of gender (in)equality in the country is the level of the gender pay gap (the difference between the average gross hourly/monthly earnings of working women and men) and the policies that exist (or not) to address this issue.

According to the latest data, the gender pay gap in the European Union was around 13 % in 2021, and has only changed minimally over the last decade. This means that women would need to work an extra 1.5 months a year to make up the difference. At the same time, there was a huge difference between the EU Member States. For instance, in Estonia and Latvia, the gap was more than 20%, while in Luxembourg, Romania, Slovenia, Italy, and Poland it was less than 5%. There is progress on the EU level, but it is slow and represents only about 3 percentage points in 10 years. Concurrently, as of the end of 2021, the gender pay gap in Ukraine was around 18%, higher than in the EU, though better than in previous years. The country has narrowed the gap by around 7 percentage points from 2015 until 2021. Unfortunately, due to the Russian full-scale invasion of Ukraine, new data is not available.

At the EU level, the right to equal pay between women and men for equal work or work of equal value is enshrined in the Treaty on the Functioning of the European Union and in the Directive 2006/54/EC on equal pay. Moreover, gender pay transparency was included as a key priority in the EU Gender Equality Strategy 2020-2025, and in 2021 the European Commission published its proposal for a pay transparency directive. In Ukraine, it is guaranteed by the Constitution of Ukraine, which foresees that the equality of rights of women and men is ensured by providing women and men with equal opportunities in work and remuneration for it. Moreover, the Labour Code of Ukraine and the Law of Ukraine ‘On Payment for Labour’ prohibit any reduction in wages based on gender. Yet, implementation of this right in practice is hindered by many issues, including the complex nature of the question itself and the so-called confidentiality clause in many companies that prevents people from knowing the salaries of their colleagues. Among the reasons that explain why women earn less the following can be identified: sectoral segregation, glass ceiling, unequal share of paid and unpaid work, and pay discrimination.

With the development of the women’s rights and gender equality agenda and the strong position of the current EU institutions on protecting and promoting women’s rights and gender equality all over the world, including within the borders of the EU itself, after a long-lasting process, earlier in 2023, the European Parliament adopted the EU Pay Transparency Directive. From the moment of its publication in the EU’s Official Journal, EU member states have three years to adapt national legislation to the new rules.

According to the EU Pay Transparency Directive, EU companies will be required to share information on salaries and take action if their gender pay gap exceeds 5%. The directive also includes provisions on compensation for victims of pay discrimination and penalties, including fines, for employers who break the rules. In particular, the new rules foresee that:

• it will be compulsory for employers to inform job seekers about the starting salary or pay range of advertised positions;
• employers will have no right to ask job seekers about their pay history;
• workers will have the right to receive information about the average pay levels and criteria used to determine pay and career progression;
• companies with more than 250 employees will be required to report annually on the gender pay gap in their organisation to the relevant national authority, and smaller organisations will have to report every three years (organisations with less than 100 employees won’t have any reporting obligation);
• if the report reveals a pay gap of more than 5% that cannot be justified by objective, gender-neutral criteria, companies will be required to take action in the form of a joint pay assessment carried out in cooperation with workers’ representatives;
• workers who have suffered gender pay discrimination can receive compensation;
• the burden of proof in pay discrimination cases will be on employers, not on employees.

Simultaneously, even before getting EU candidate status in 2022, Ukraine in 2020 joined the Biarritz Partnership for Gender Equality (the ‘Biarritz Partnership’ initiative), which was launched by the Heads of the G7 Member States at the G7 Biarritz Summit in 2019. The letter expressed their wish to create a global coalition determined to achieve full empowerment of girls and women around the world. They recognised that effective implementation and enforcement of laws promoting gender equality could be a powerful force for the empowerment of women and girls, and expressed their concern that too many women and girls around the world were affected by discriminatory laws and the lack of legal protection. A few months later, Ukraine got membership in the Equal Pay International Coalition (EPIC) led by the International Labour Organisation, UN Women, and the Organisation for Economic Co-operation and Development. Its goal is to achieve equal pay for women and men everywhere. The EPIC supports governments, employers, workers, and their organisations to make concrete and coordinated progress toward this goal and is currently the only multi-stakeholder partnership working to reduce the gender pay gap at the global, regional, and national levels.

As a follow-up, the Cabinet of Ministers of Ukraine issued a plan of measures to implement the commitments of the Government of Ukraine, taken within the framework of the ‘Biarritz Partnership’ for the establishment of gender equality, which includes five obligations that Ukraine undertook. One of the latter deals with reducing the wage gap between women and men and includes the following measures:

• ensuring that Ukraine meets the EPIC membership criteria;
• adoption and implementation of the National Strategy on Reducing the Gender Pay Gap for the Period Until 2023.

The COVID-19 pandemic and the Russian full-scale invasion of Ukraine made it more difficult for the country to fulfil the obligations assumed, but despite all the challenges, in 2023, a few weeks after the EU Pay Transparency Directive, the National strategy for overcoming the gender pay gap for the period up to 2030  was presented. The plan of its implementation foresees:

• overcoming stereotypes and discrimination based on gender through nationwide information and educational campaigns, gender audits, and exchange of best practices for ensuring gender equality in the workplace;
• improvement of legislation on equal pay, including the Law of Ukraine ‘On Payment for Labour’, inspections of the State Labour Service will be introduced based on complaints about discrimination in pay based on gender and national methodology for gender-neutral job evaluation and training for labour inspectors and employers will be developed;
• creating conditions for a convenient combination of family and professional duties: among others, it is proposed to promote the creation and operation of state and private kindergartens, to support organisations dealing with older children at the state level, to improve labour legislation regarding equal treatment of male and female workers with family responsibilities, and to introduce training programmes for employers on providing employees with assistance in combining professional and family responsibilities.

Accordingly, despite the turbulent times, both the EU and Ukraine continue to work on ensuring gender equality and the protection of women’s rights in all spheres of life. In 2023, they issued new regulations on overcoming the gender pay gap and ensuring its transparency. Nevertheless, the regulation at the EU level seems to be a bit stricter and impose more direct and effective obligations on employers, while the Ukrainian approach is still a bit vague, and focuses more on education and training, strengthened by changes in the national legislation. In any case, both initiatives should be welcomed and supported, as the EU already has a long history of protecting and promoting gender equality and women’s rights, while Ukraine is moving in this direction at a tremendous pace, which definitely deserves respect and esteem.