Pay Equity & Transparency

What it means,and what the law asks.

A plain-language explainer of pay equity and pay transparency — what the terms mean, how they differ, what the EU Pay Transparency Directive requires, and what the research shows. All claims on this page are backed by primary sources listed in APA 7 format below.

Explainer

Two ideas,one obligation.

This page is maintained by Poem Work as an educational summary. It is not legal advice. Consult your own counsel for how the EU Pay Transparency Directive applies to your organisation.

What pay equity means

Pay equity is the principle that people receive equal pay for the same work and for work of equal value, regardless of gender or other protected characteristics. It is not the same as identical salaries for every employee. It requires an organisation to be able to explain why two people who do work of comparable value are paid differently — and to remove differences that cannot be justified by objective, gender- neutral factors such as skill, effort, responsibility, or working conditions (International Labour Organisation, 1951; European Parliament and Council, 2023).

What pay transparency means

Pay transparency is the set of practices that let candidates, employees, and regulators see how pay is set and how it is distributed. In practice this covers pay ranges in job adverts, the criteria used for pay and progression, individual rights to information about pay levels, and organisation-level reporting on the gender pay gap (Organisation for Economic Co-operation and Development, 2023; Eurofound, 2025).

Why the two go together

Equal pay obligations have existed in international law since 1951, yet the gender pay gap across the EU still sits at roughly twelve percent on an hourly basis, and larger once hours worked are included (Organisation for Economic Co-operation and Development, n.d.; European Institute for Gender Equality, 2025). Transparency is the mechanism that turns the equal-pay principle into something an organisation can actually monitor, defend, and correct. Without visibility into ranges, criteria, and outcomes, unequal pay tends to persist unnoticed (Blau & Kahn, 2017).

What the research shows

Peer-reviewed studies converge on a few findings. A large share of the remaining gender pay gap is driven by the differential impact of parenthood, hours flexibility, and firm-level bargaining rather than by pure discrimination in a single role (Goldin, 2014; Card, Cardoso, & Kline, 2016; Goldin, 2021). Where mandatory transparency has been introduced, gender pay gaps have narrowed — in Denmark by about two percentage points after firm-level reporting became mandatory (Bennedsen, Simintzi, Tsoutsoura, & Wolfenzon, 2022), and in Canadian universities by a similar magnitude after individual salary disclosure (Baker, Halberstam, Kroft, Mas, & Messacar, 2023). Transparency also changes bargaining dynamics and can compress wages overall, which is one of the trade-offs organisations should plan for (Cullen & Pakzad-Hurson, 2023; Cullen, 2024).

What the EU Pay Transparency Directive requires

Directive (EU) 2023/970 must be transposed into national law by 7 June 2026. It gives job candidates the right to know the pay range for the role before the interview, forbids employers from asking about pay history, and gives employees the right to information about their own pay level and the average pay levels for workers doing the same or equivalent work, broken down by sex. Employers above defined size thresholds must report the gender pay gap regularly, and where an unexplained gap of five percent or more exists in any category of workers, they must carry out a joint pay assessment with worker representatives (European Parliament and Council, 2023).

How organisations put it into practice

National experience — from the UK’s gender pay gap reporting regime to Iceland’s Equal Pay Standard — shows that credible pay equity work rests on four building blocks: a documented job architecture, defensible pay ranges, a repeatable gap analysis, and a governance rhythm for remediation and disclosure (UK Government Equalities Office and Women and Equalities Unit, 2023; Government of Iceland, 2017; Wagner, 2020). Public bodies emphasise that data quality — especially the ability to group roles of equal value, not only identical titles — is usually the binding constraint (U.S. Government Accountability Office, 2020, 2023; Eurofound, 2021).

The wider legal and economic context

Pay equity sits inside a broader legal framework that treats non-discrimination in employment as a foundation of economic development (World Bank Group, 2026). It is one of the most consistently tracked dimensions of gender equality in the EU’s official monitoring (European Institute for Gender Equality, 2025) and one where transparent, well-designed reporting has been shown to move outcomes without imposing large administrative costs (Cullen & Perez-Truglia, 2022).

References — APA 7

Sources citedon this page.

  1. 01European Parliament and Council. (2023). Directive (EU) 2023/970 of 10 May 2023 to strengthen the application of the principle of equal pay for equal work or work of equal value between men and women through pay transparency and enforcement mechanisms. Official Journal of the European Union, L 132/21. https://eur-lex.europa.eu/eli/dir/2023/970/oj/eng
  2. 02International Labour Organisation. (1951). Equal Remuneration Convention, 1951 (No. 100). https://www.ilo.org/publications/equal-remuneration-convention-1951-no-100
  3. 03Organisation for Economic Co-operation and Development. (2023). Reporting gender pay gaps in OECD countries: Guidance for pay transparency implementation, monitoring and reform. OECD Publishing. https://doi.org/10.1787/ea13aa68-en
  4. 04Organisation for Economic Co-operation and Development. (n.d.). Gender wage gap [Data indicator]. OECD Data Explorer. https://www.oecd.org/en/data/indicators/gender-wage-gap.html
  5. 05European Institute for Gender Equality. (2025). Gender Equality Index 2025: Sharper data for a changing world. Publications Office of the European Union. https://eige.europa.eu/sites/default/files/documents/gender-equality-index-2025-sharper-data-for-a-changing-world.pdf
  6. 06Eurofound. (2021). Understanding the gender pay gap: What role do sector and occupation play? (European Jobs Monitor series). Publications Office of the European Union. https://www.eurofound.europa.eu/en/publications/all/understanding-gender-pay-gap-what-role-do-sector-and-occupation-play
  7. 07Eurofound. (2025). Gender pay transparency in the EU: Steps taken and lessons learned. https://www.eurofound.europa.eu/en/publications/all/gender-pay-transparency-in-the-eu-steps-taken-and-lessons-learned
  8. 08Blau, F. D., & Kahn, L. M. (2017). The gender wage gap: Extent, trends, and explanations. Journal of Economic Literature, 55(3), 789–865. https://doi.org/10.1257/jel.20160995
  9. 09Goldin, C. (2014). A grand gender convergence: Its last chapter. American Economic Review, 104(4), 1091–1119. https://doi.org/10.1257/aer.104.4.1091
  10. 10Bennedsen, M., Simintzi, E., Tsoutsoura, M., & Wolfenzon, D. (2022). Do firms respond to gender pay gap transparency? The Journal of Finance, 77(4), 2051–2091. https://doi.org/10.1111/jofi.13136
  11. 11Cullen, Z. B., & Perez-Truglia, R. (2022). How much does your boss make? The effects of salary comparisons. Journal of Political Economy, 130(3), 766–822. (NBER Working Paper No. 24841). https://www.nber.org/papers/w24841
  12. 12Cullen, Z. B. (2024). Is pay transparency good? Journal of Economic Perspectives, 38(1), 153–180. https://doi.org/10.1257/jep.38.1.153
  13. 13Cullen, Z. B., & Pakzad-Hurson, B. (2023). Equilibrium effects of pay transparency. Econometrica, 91(3), 765–802. https://www.hbs.edu/ris/Publication%20Files/Cullen_Equilibrium_Effects_Econometrica_2c580d57-9746-4946-bcd4-3d194d6b74ad.pdf
  14. 14Card, D., Cardoso, A. R., & Kline, P. (2016). Bargaining, sorting, and the gender wage gap: Quantifying the impact of firms on the relative pay of women. The Quarterly Journal of Economics, 131(2), 633–686. https://doi.org/10.1093/qje/qjv038
  15. 15Baker, M., Halberstam, Y., Kroft, K., Mas, A., & Messacar, D. (2023). Pay transparency and the gender gap. American Economic Journal: Applied Economics, 15(2), 157–183. https://doi.org/10.1257/app.20210141
  16. 16Goldin, C. (2021). Career and family: Women's century-long journey toward equity. Princeton University Press. https://press.princeton.edu/books/hardcover/9780691201788/career-and-family
  17. 17U.S. Government Accountability Office. (2023). Women in the workforce: Underrepresentation in management positions persists, and the gender pay gap varies by industry and demographics(GAO-23-106320). https://www.gao.gov/products/gao-23-106320
  18. 18U.S. Government Accountability Office. (2020). Gender pay differences: The pay gap for federal workers has continued to narrow, but better quality data on promotions are needed (GAO-21-67). https://www.gao.gov/assets/gao-21-67.pdf
  19. 19UK Government Equalities Office and Women and Equalities Unit. (2023). Gender pay gap reporting: Guidance for employers. GOV.UK. https://www.gov.uk/government/publications/gender-pay-gap-reporting-guidance-for-employers
  20. 20Government of Iceland. (2017). Regulation on the certification of equal pay systems of companies and institutions according to the ÍST 85 Standard (No. 1030 of 13 November 2017). https://eng.forsaetisraduneyti.is/library/04-Legislation/Regulation_CertificatinOfEqualPaySytems_25012018.pdf
  21. 21Wagner, I. (2020). Equal pay for work of equal value? Iceland and the equal pay standard. Social Politics: International Studies in Gender, State & Society, 27(4), 797–818. https://doi.org/10.1093/sp/jxaa032
  22. 22World Bank Group. (2026). Women, Business and the Law 2026: Benchmarking laws for jobs and inclusive growth. World Bank Publishing. https://openknowledge.worldbank.org/entities/publication/78a9d749-20a5-44e3-afd1-1d9d6dcbd581
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