Estonia pauses transposition of Pay Transparency Directive

TALLINN – Estonia's Minister of Economic Affairs and Industry, Erkki Keldo, has proposed that the European Commission postpone the entry into force of the Pay Transparency Directive by two years to spare businesses from excessive bureaucracy. In the meantime, Estonia will pause the transposition of the directive.

"We have a problem with the gender pay gap, and a warning sign is the fact that women must work 33 more days a year to earn the same salary as men. We fully support the directive's substantive goal of reducing gender discrimination and the pay gap. However, we wish to find a balance where we achieve equality without suffocating our companies with additional reporting," Keldo said.

In recent years, Estonia has made reducing bureaucracy one of its main goals. The government has approved over 600 proposals that make the state more efficient and support entrepreneurship. "If we try to reduce the gender pay gap by increasing bureaucracy, we might as well be trying to put out an oil fire with water," Keldo added.

According to the minister, pausing the transposition of the directive is a direct move against excessive bureaucracy. "We are not alone in this concern. For example, Sweden has also chosen a similar path to Estonia and has proposed reopening and postponing the directive. They have also put a pause on moving forward with the legislative changes for now."

In his proposals to the European Commission, the minister highlighted key changes such as protecting small businesses, reducing the number of reporting indicators, and simplifying terms that create unreasonable complexity. 

"The new composition of the European Commission, much like Estonia, has made combating excessive bureaucracy and increasing the competitiveness of European companies one of its goals. Amending the directive is the right place to put the brakes on bureaucracy and demonstrate a fundamental change," Keldo stated.          

To reduce the gender pay gap, Estonia will continue using its existing tools and supporting activities that help break gender stereotypes and expand opportunities for women and men in both education and their careers. For example, the free tool Palgapeegel (Salary Mirror) helps employers monitor pay disparities within their organization without additional bureaucracy.

The Council of the European Union adopted the Pay Transparency Directive on April 24, 2023. The directive aims to ensure that women and men receive equal pay for equal work or work of equal value. EU member states are required to transpose the directive's requirements by June 7 of this year.