The Equal Pay Directive (EU) 2023/970 is a pivotal step in addressing the gender pay gap in the European Union. However, its effective implementation cannot be achieved solely by reporting or publishing data. To this end, every organisation subject to the Directive requires a fundamental evaluation and monitoring tool: the establishment of a system that allows the company to consistently measure the true value of each job.
Without a reliable, transparent and gender-neutral evaluation system for each role, there is a risk that the same work or work of equal value will continue to be paid differently, perpetuating discrimination.
Evaluating the value of a job is the first step in identifying bias in pay structures – whether it concerns gender or some other dimension of employee identity. Without a clear framework, salaries are often determined based on stereotypes, personal biases or entrenched perceptions: jobs associated with “feminine” skills (such as care giving, organization, administrative support) are often undervalued compared to “masculine” jobs, which are given greater weight (e.g. technical jobs, jobs with high visibility or jobs that involve physical strain).
Developing a Job Classification System (JC) or a Job Evaluation System (JES) allows companies to break free from biases and assign each job a real value based on objective criteria.
Differences between JC and JES
As mentioned in the European bibliography, the two tools mentioned above adopt a different approach:
• JC (Job Classification): organizes positions into categories based on their title or type, providing a general picture of the hierarchy.
• JES (Job Evaluation System): delves deeply into the tasks, skills, responsibilities and requirements of each position, allowing for a more detailed and accurate assessment of its value.
The second approach, although more demanding, is the one that leads to the substantial elimination of inequalities.
A typical example is that the new Directive is not limited to basic remuneration, but also extends to additional or variable elements (Article 3, paragraph 1, subparagraph a). This means that bonuses, allowances and other forms of compensation must also be included in a fair evaluation system. Here the existence of a JES is crucial, as it allows all the parameters that affect total income to be controlled.
The Icelandic standard: an international best practice
Iceland offers one of the most interesting examples of how to define value. ÍST 85:2012 is the national Icelandic standard that requires employers to develop a comprehensive, gender-neutral job evaluation system based on four main pillars. The system provides both guidance and flexibility, so that it can be adapted to the needs of each organization. Its most important feature is that it provides employers with incentives to develop truly equal practices, rather than simply complying with the legal framework. The Icelandic standard has been internationally recognized as the most aligned with the recommendations for gender equality in pay.
By this experience, Iceland shows that it is possible to create a system that ensures flexibility for employers while at the same time ensuring real equality in pay. For companies in other European countries, the challenge is to see the Directive not as a burden, but as an opportunity and thus demonstrate that fair valuation of work can be the foundation for a more sustainable, competitive and just future.
From compliance to strategic choice
For a company, developing a gender-neutral job evaluation system is not just a compliance obligation. It can become a strategic advantage as it brings:
• Transparency and trust: When employees know that the value of their work is valued fairly, their trust in the employer is strengthened.
• Attracting and retaining talent: Corporate responsibility and equal pay are now a priority for new generations of employees, and often determine the choice of employer.
• Improving reputation and ESG indicators: Companies that demonstrate a commitment to equality benefit in terms of social responsibility and corporate image.
• Increasing productivity: Fair recognition of the contribution of each employee leads to higher morale and efficiency.
Whether Greek businesses will be able to capitalize on the upcoming change in such a strategic way will depend largely on whether they seriously invest in developing tools that objectively calculate the value of each job.
Tools for Greece
Experts in pay transparency report that the relevant measures are more effective in companies that establish them from their start-up; however, proper strategic planning can (and should) enable their implementation by companies with many years of experience, large numbers of staff and a significant impact on society. To better implement measures on pay transparency, particular attention must be paid to the following:
a) Employers must invest in ensuring sufficient levels of financial literacy among their employees, to enable them to better understand and handle the pay information they receive more effectively.
b) Before making any moves to establish transparency, employers must first clarify the context for defining the value of each role and the appropriate pay for it. This process is neither easy nor fast; however, it helps companies reevaluate the characteristics and achievements they consider important, and the basis of their reasoning.
c) Large companies planning on taking steps towards transparency are advised to follow a gradual approach, perhaps starting in one department only.
d) In any event, pay transparency is not an absolute, yes or no, matter. Each company and each society must decide the form and level of transparency that is right for it, at any particular time.
The first version of this article was published in the WHEN guide “Lessons from Norway and Iceland: Equality and Inclusion in Business”, which was created as part of the project “Gender equality in the corporate world: what can we learn from Norway and Iceland about empowering women in business”.