Under EU legislation, Member States are required to abolish any legal provisions contrary to the principle of equal treatment and have to introduce measures that would facilitate getting legal remedies in cases of alleged violations of equal treatment (including alleviating the burden of proof from the claimant to the defendant).
Therefore, certain measures regarding pay transparency are to be introduced. The Lithuanian Free Market Institute (LFMI) argues that introducing more obligations and inducing the administrative burden to the employers will not benefit the implementation of the principle of equal pay.
In the majority of EU states, the legal regulations are in line with the aforementioned goals and measures provided by EU law, including transparency measures, the definition of similar and equal work, etc.1
Moreover, if taken as examples, the new version of Lithuania’s Labor Code introduced in 2017 has brought significant improvements in favor of employment flexibility. Regardless the proper legal background on equal treatment, Lithuania’s statistical tendencies show that the gender pay gap is slightly increasing and in 2017 it was approximately 14% (two points below the EU average).
The gender pay gap concerns salaried labor. Therefore, it is not an indicator of overall inequality. As noted by Statistics Lithuania, the gender pay gap is influenced by socio-economic rather than legal factors, including different working patterns of men and women, the number of men and women working in a specific economic area, their profession, education, age, working time, etc.
For example, last year, the highest gender pay gap of 38% was recorded in finance and insurance sector followed by information and communication technology sector (28%) and healthcare and social work sector (28%)2. Given that the gender pay gap is determined by socio-economic factors, it may have asserted that the gender pay gap is the result of different choices made by individual workers rather than the result of prejudices of employers or faulty regulations3, as confirmed by Statistics Lithuania.
Having established the latter, it would seem most beneficial to introduce a more flexible legal framework to better accommodate the developing needs of both the employees and employers in order to ensure more equal opportunities.
Participation and entrance to the labor market would be best facilitated by introducing more measures aimed at ensuring employment flexibility. The lack of employment flexibility remains one of the key issues that needs to be tackled. Eurofund research suggests that one fifth of women and one fifth of men deem the inability to reconcile family and work commitments to be the cause of the problems and a factor that preconditions their decisions on taking on work.
The flexibility or rigidity of labor markets (hiring and firing conditions) have a significant impact on women’s desire or ability to enter the workforce.4 Therefore, introducing more flexible working time regulations and flexible alternative employment contracts would increase labor market participation and show positive results in pay distribution among genders.
Given the latter, increasing obligatory measures would not help in ensuring equal pay as the underlying issues are related to socio-economic factors. On the contrary, obligatory measures would significantly increase the administrative burden and costs for both employers and public authorities.
In addition, they would result in higher wage demand and labor costs while disclosure of pay information could lead to hostility in the work environment and limit the freedom to negotiate wages of both the employees and employers.
It should also be noted that employees are entitled not only to base salaries but also to premiums and other financial benefits that would fall under the definition of a salary.
Such additional financial benefits may be awarded to a group of employees for their particular accomplishments, yet premiums may also be awarded legitimately based on individual characteristics of an employee (e.g. concrete tasks, additional efforts, among others).
1 Joint Report on the application of Council Directive 2000/43/EC of 29 June 2000 implementing the principle of equal treatment between persons irrespective of racial or ethnic origin (‘Racial Equality Directive’) and of Council Directive 2000/78/EC of 27 November 2000 establishing a general framework for equal treatment in employment and occupation (‘Employment Equality Directive’), COM/2014/02 final.
2 Source (in Lithuanian): https://osp.stat.gov.lt/statistiniu-rodikliu-analize?indicator=S3R316#/.
4 Eurofound (2016), The gender employment gap: Challenges and solutions, Publications Office of the European Union, Luxembourg.