Close the gap: The importance of pay equity in the modern workplace

In today's rapidly evolving workplace, the significance of pay equity cannot be overstated. Not only is it a matter of fairness and justice, but it also plays a pivotal role in employee morale, retention, and the overall brand image of an organization.

The European Union takes a stand

Recent legislations by the European Union underscore the urgency of addressing the gender pay gap. The EU Pay Transparency Directive, adopted in 2023, aims to close the gender pay gap among workers in the European Union. Despite the EU's gender pay gap standing at 13% in 2020, there has been only a minimal decrease over the past decade. This Directive seeks to promote transparency in pay systems, empowering both workers and employers to uphold the right to equal pay.

The right to equal pay between women and men for equal work or work of equal value is a foundational principle of the EU. However, the practical enforcement of this right has been challenging. The recent Directive emphasizes the need for greater transparency in pay systems, which will empower both workers and employers to better protect the right to equal pay.

Furthermore, the Directive mandates that employers provide pay transparency reports, with specific requirements based on the number of employees. This transparency is expected to shed light on any existing pay disparities and prompt organizations to take corrective measures.

“The EU Pay Transparency Directive is a true game-changer for equal pay for equal work. The directive will lead to full transparency in salary structures with a focus on gender inequalities. Since the directive stipulates potential fines and class-action lawsuits for non-compliance, companies need to start addressing the issue of equal pay way ahead of the directives commencement in 2026”.

- Magnus Drogell, CEO & Founder of Pihr

The impact on employee morale and retention

Recognition of value: When employees feel they are paid fairly, they perceive it as a recognition of their value and contribution to the organization. This boosts their morale and motivation.

Trust in leadership: Fair compensation practices foster trust in organizational leadership, as employees believe that their well-being and contributions are genuinely valued.

Reduced turnover: Employees are less likely to seek opportunities elsewhere when they believe they are compensated fairly in their current role.

Attracting top talent: Companies known for their fair pay practices are more attractive to job seekers, ensuring a steady influx of top-tier talent.

Branding and public perception

Positive public perception: In the age of information, companies' pay practices are more transparent than ever. Organizations that champion pay equity are often viewed more favorably by the public, enhancing their brand image.

Stakeholder confidence: Investors, partners, and other stakeholders are more likely to engage with companies that prioritize ethical practices, including pay equity.


The push for pay equity is more than just a trend; it's a movement towards creating a more just and equitable society. With the EU's new legislation serving as a catalyst, it's imperative for organizations to take proactive measures, ensuring that they are not only compliant but also aligned with the values of fairness and equality.

In light of these evolving standards and our commitment to promoting pay equity, we're proud to collaborate with Pihr, a partner that shares our dedication to creating fair and inclusive workplaces.

Webinar: Do you want to learn more about the upcoming EU Pay Transparency Directive?

Join our webinar on Equal Pay Day 15th of November 2023.

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