Pay Transparency Directive: A €7 billion opportunity for EU women – or a missed one

As the EU’s Pay Transparency Directive edges closer to becoming law, new data shows that women working in small and medium-sized enterprises (SMEs) across Europe could lose between €465 and €700 per year if key provisions are watered down.

The directive, which EU member states – including Malta – must transpose into national legislation by June 2026, aims to tackle the 12 per cent gender pay gap that persists across the bloc. In Malta, the gap stood at 10.2 per cent in 2022 – still below the EU average, but significantly higher in some sectors, such as manufacturing (24.8 per cent), finance and insurance (24.1 per cent), and real estate (23 per cent).

At the heart of the EU’s new rules are reporting obligations that require companies to disclose salary levels and gender pay disparities. But business lobby groups, including BusinessEurope, are pushing back, requesting exemptions for companies with fewer than 250 workers – a change that would effectively exclude millions of women from benefitting.

Transparency could boost women’s pay by billions

According to the European Trade Union Confederation (ETUC), exempting SMEs from the directive would result in substantial financial losses for women employees. The union estimates that 10.4 million women work in EU companies with between 100 and 250 employees. If pay transparency led to just a 10 per cent reduction in the gender pay gap, each woman could earn an additional €465 per year, amounting to €4.8 billion in total. A 15 per cent reduction would boost annual earnings by around €700, resulting in a €7.2 billion gain.

“Equality thrives on transparency. The more we shine a light on discrimination, the more pressure there is to fix it,” said Isabelle Schömann, ETUC’s Deputy General Secretary. She criticised industry arguments that pay reporting is too burdensome. “Businesses say they’re over-regulated, but women have long been overburdened with low pay.”

Business groups call for “simplification”

BusinessEurope, a leading employer organisation, argues that the reporting obligations are “unnecessarily complex” and could weigh down SMEs already facing regulatory pressures. In a recent position paper, the group called on the European Commission to limit the scope of the directive and exclude all SMEs with fewer than 250 employees.

While BusinessEurope maintains that it supports efforts to close the gender pay gap, it warns that current requirements are “unlikely to deliver the intended outcomes.”

Salary transparency remains patchy across Europe

Despite EU efforts, salary visibility in job postings remains low in several leading economies. According to hiring platform Indeed, salary information was included in just 16 per cent of job adverts in Germany and 19 per cent in Italy as of late 2024. In contrast, the UK leads the way with a 70 per cent inclusion rate, followed by France (51 per cent), the Netherlands (45 per cent), and Ireland (42 per cent).

“There’s a stark contrast in salary transparency across Europe,” said Lisa Feist, economist at the Indeed Hiring Lab. “The differences reflect historical, cultural, and institutional factors, as well as sectoral variations in pay-setting mechanisms.”

Indeed’s data also found that high-paying industries are the least transparent. Jobs in software development, law, and industrial engineering rarely include pay information, while roles in cleaning, education, and food services are far more likely to advertise salaries openly.

In France, for instance, 68 per cent of job postings in low-wage sectors displayed pay, compared to just 39 per cent in high-wage roles. The gap was even wider in Ireland, where only 18 per cent of high-paying jobs disclosed pay, versus 57 per cent in lower-wage sectors.

Salary secrecy reinforces inequality

Experts say that withholding salary information worsens gender-based pay disparities. “Women and marginalised groups often lack access to informal pay networks and may be penalised for negotiating assertively,” Ms Feist said. “Publishing salaries upfront empowers candidates and makes negotiations fairer.”

Transparency, according to the ETUC, is a powerful lever for equity, especially when it comes to collective bargaining and securing equal pay.

What’s next for Malta?

With the 2026 deadline approaching, Malta will need to decide whether to fully adopt the EU’s rules –including reporting thresholds – or lobby for broader exemptions. Given the wide disparities in Malta’s gender pay gap by sector, experts argue that pay transparency could be a game-changer for women in the local workforce.

Failure to implement robust reporting mechanisms, however, could see thousands of women across the island missing out on hundreds of euros per year, further entrenching inequality in the labour market.