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ARTICLE16 October 2020

The EU initiative on wage transparency is the wrong path to follow for equal pay

Equality in working life is an important issue and is one where Sweden has come a long way. However, the European Commission”s forthcoming proposal for a Directive designed to address wage discrimination on the grounds of gender poses a risk that could reverse this trend.

Edel Karlsson Håål
Edel Karlsson HåålPhoto: SÖREN ANDERSSON

For the Confederation of Swedish Enterprise and its members, gender equality in working life is a vitally important issue. It impacts an employer”s attractiveness and therefore its ability to attract skills.

For those unfamiliar with it, the European Commission”s initiative is a proposal for a Directive designed to deal with the issues of wage transparency and equal pay; it plans to submit this initiative later this year. Yet from what we can see so far, the Directive contains much more than that. We met Edel Karlsson Håål, an expert on wage formation issues at the Confederation of Swedish Enterprise, to learn a little more about the proposed Directive. She said:

– There are two things overall to be critical of in this. One is the process of how it has been worked out and the other on the substance. Interestingly, this proposed Directive, which is about wage transparency, has followed a very non-transparent process, one from which the unions and the employers have been completely excluded.

It was at a meeting on 25 June that the unions and the employers first received some information about the Directive. It is being developed by the Directorate-General for Justice and Consumers – which is the Directorate responsible for gender equality issues - not by the Directorate-General for Employment. At the meeting, it emerged that the Commission”s focus was on increasing the number of wage discrimination cases brought to court; essential parts of the proposal will - if implemented - limit the autonomy of the Swedish labour market model.

Since then, further information from the Commission has been non-existent, which is why Edel Karlsson Håål and her colleagues have analysed the proposal”s consequences based on the jigsaw pieces of information they have.

– In Sweden, it is already the case that employers must work in two parallel processes with wages; one part in wage formation according to the collective agreements; the other is according to the requirements of the Discrimination Act. This work is done within each company or organisation. Under the new proposal, the Commission wants to be able to compare wages between different employers. Therefore, uniform job descriptions and definitions of salary, equal and equivalent work, uniform and gender-neutral job titles and job descriptions, etc. will be required. We face the creation of a huge bureaucracy.

In Sweden, the social partners are responsible for wage formation and how wage setting is to be determined in collective agreements. One goal of the EU proposal, however, is to have more individual employees pursue issues of wage discrimination in court. In practice, this can mean that the employer will first negotiate wages in a collective agreement and then be brought before a court. This is an unsustainable model, one where it is also proposed that the burden of proof be reversed and the sanctions tougher.

– Wage formation as we know it will then disappear, and risk being replaced by a bureaucratic planning model where the court becomes the ultimate instance.

So what happens next? The proposal is planned for later this year. At the same time, work is underway to increase understanding of it among social partners and in the government and parliament. BusinessEurope, the umbrella organisation for private employers” organisations in Europe, has produced information on what is genuinely effective in improving gender equality in the labour market, with a focus on societal development and values. It is working to try to improve the forthcoming proposal for a Directive.

– We hope that we can influence both the process and the content of the proposal, so that the Swedish party model and collective agreements are protected and that the functioning of the labour market is not adversely affected. We need development, skills adjustment and increased productivity in Sweden and Europe if we are to be strong for the future - not more bureaucracy.

In Sweden, the pay gap between men and women has been declining every year for many years and is now around 4 percent, according to official statistics. The strongest explanation is that the existing gender division in the labour market is decreasing. On the other hand, it has not been proven that mandatory salary surveys have had any effect. Research has shown that individual wage setting through dialogue on performance and pay between manager and employee benefits women”s wage development. In those Member States with large pay gaps, other measures are needed. These include higher labour force participation for women, which requires the expansion of childcare and care for the elderly. Reducing gender segregation in education and career choices is also crucial for development.

Please read more about what the Confederation of Swedish Enterprise considers needs to be done to improve gender equality in the labour market in this report. You can read our detailed thoughts in the attached report.

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Contact our EU-Office

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Subscribe to our Swedish newsletter
Contact our EU-Office

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BE-1000 Bruxelles Open map
Subscribe to our Swedish newsletter
Publisher and editor-in-chief Anna Dalqvist