Overview

The EU Pay Transparency Directive, adopted in 2023, contains far reaching new measures that propose to reduce the gender pay gap and enforce equal pay for equal work by increasing pay transparency in the workplace and improving access to information. The Directive establishes binding rules to ensure greater openness around pay structures and salary information within organisations. By mandating transparency in recruitment, pay reporting and employee rights to information, the Directive seeks to empower workers, enhance accountability among employers and ultimately foster fairer and more inclusive workplaces throughout the EU.

However, while the Directive aims to directly address discrimination, gender equality, gender pay inequality and lack of transparency to expose where unjustified pay differences might exist, it is only treating the symptoms. To tackle gender equality and gender balance requires a focus on the root causes, which include occupational segregation, care responsibilities and the unequal representation of men and women in leadership.

One fundamental limitation of the EU Pay Transparency Directive is that it focuses primarily on equal pay for equal work or work of equal value, yet much of the gender pay gap stems from occupational segregation. Women are disproportionately represented in lower-paying sectors such as care, education, and hospitality, while men dominate higher-paying industries like finance, engineering, and tech. The Directive does little to address the societal and economic factors that push women into undervalued roles or keep them out of male-dominated fields.

The Directive does not change the gendered pipeline leading to different jobs or the social norms or bias in education and career choices which nudges girls and boys into different career paths early on. Schools, and in particular single sex schools, often fail to offer “gendered” subjects such as physics or mechanical drawing in all-girls schools, or home economics in all-boys schools, or timetables are drawn up which pitch gendered subjects against each other. This can narrow career decisions at an early stage.

The Directive does not address the fact that women still carry out the majority of child and elder care responsibilities which limits their working hours, can affect their ability to participate in the labour market and impacts their careers.

These structural imbalances lead to more women working part-time or taking career breaks, which cumulatively affect lifetime earnings and pension contributions as while educational

attainment is often higher among females, it does not offset the loss of work experience. Pay transparency measures, while important, will not solve the broader societal expectation that caregiving is primarily a woman’s responsibility.

Leadership gaps between men and women persist due to both systemic cultural biases and discriminatory norms which also remain largely unchallenged by the Directive. Gender stereotypes about leadership, competence, and commitment continue to affect hiring and promotion decisions. Women may be passed over for leadership roles or high-paying positions not because of pay secrecy, but because of implicit bias and unequal access to professional development opportunities or stretch projects. The Directive cannot, on its own, transform workplace cultures or eliminate deep-rooted gender norms.

The Directive is a progressive and necessary step toward fairer labour markets, promoting wage equity through greater openness and accountability. However, to achieve true gender equality, it must be complemented by broader efforts that address occupational segregation, support for caregiving, cultural change, and investment in women’s career advancement. These complex issues rooted in a mix of structural, societal, and economic factors will require structural interventions and a whole of society approach to change. Otherwise, the Directive may reduce disparities in some areas but leave the underlying causes of inequality largely intact.