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Understanding the gender pay gap: Definition and causes

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Working women in the EU earn on average 14% less per hour than men. Find out how this gender pay gap is calculated and the reasons behind it. Although the equal pay for equal work principle was already introduced in the Treaty of Rome in 1957, the so-called gender pay gap stubbornly persists with only marginal improvements being achieved in recent years. Society 

What is the gender pay gap and how is it calculated?

The gender pay gap is the difference in average gross hourly earnings between women and men. It is based on salaries paid directly to employees before income tax and social security contributions are deducted. Only companies of ten or more employees are taken into account in the calculations. The EU average gender pay gap was 14.1% in 2019.

Some of the reasons for the gender pay gap are structural and are related to differences in employment, level of education and work experience. If we remove this part, what remains is known as the adjusted gender pay gap.

The gender pay gap in the EU

Across the EU, the pay gap differs widely, being the highest in the following countries in 2019: Estonia (21.7%), Latvia (21.2%), Germany (19.2%), the Czech Republic (18.9%), Slovakia (18.4%) and Hungary (18.2%). The lowest numbers in 2019 can be found in Poland (8.5%), Slovenia (7.9%), Belgium (5.8%), Italy (4.7%), Romania (3.3%) and Luxembourg (1.3%).

Interpreting the numbers is not as simple as it seems, as a smaller gender pay gap in a specific country does not necessarily mean more gender equality. In some EU countries lower pay gaps tend to be because of women having fewer paid jobs. High gaps tend to be related to a high proportion of women working part time or being concentrated in a restricted number of professions. Still, some structural causes of the gender pay gap can be identified.

Causes of the gender pay gap

On average, women do more hours of unpaid work,  such as childcare or housework. Such a gender gap in unpaid working hours can be found in all EU countries, although it varies from six to eight hours per week in the Nordic countries to more than 15 hours in Italy, Croatia, Slovenia, Austria, Malta, Greece and Cyprus, according to 2015 figures.

This leaves less time for paid work: according to 2018 figures, almost one-third of women (30%) work part-time, while only 8% of men work part-time. When both unpaid and paid work are considered, women work more hours per week than men.


Women are also much more likely to be the ones who have career breaks and some of their career choices are influenced by care and family responsibilities.


About 30% of the total gender pay gap can be explained by an overrepresentation of women in relatively low-paying sectors such as care, sales or education. There are still sectors such as the science, technology and engineering sectors where the proportion of male employees is very high (with more than 80%).


Women also hold fewer executive positions: less than 10% of top companies’ CEOs are women. If we look at the gap in different occupations, female managers are at the greatest disadvantage: they earn 23% less per hour than male managers.


But women also still face discrimination in the workplace, such as being paid less than male colleagues having the same qualifications and working within the same conditions and occupational categories or being demoted after returning from maternity leave.

So, women do not only earn less per hour, but they also perform more unpaid work as well as fewer paid hours and are more likely to be unemployed than men. All these factors combined bring the difference in overall earnings between men and women to almost 37% in the EU (in 2018).

Closing the gap: Fighting poverty and strengthening the economy

Reducing the gender pay gap creates greater gender equality while reducing poverty and stimulating the economy.

The gender pay gap is widening with age - along the career and alongside increasing family demands, while it is rather low when women enter the labour market. With less money to save and invest, these gaps accumulate and women are consequently at a higher risk of poverty and social exclusion at an older age. The gender pension gap was about 29% in the EU in 2019.

Equal pay is not just a matter of justice, but would also boost the economy as women would get more to spend more. This would increase the tax base and would relieve some of the burden on welfare systems. Assessments show that reducing the gender pay gap by one percentage point would increase the gross domestic product by 0.1%.

Parliament's actions against the gender pay gap

On 21 January 2021, MEPs adopted a resolution on the EU Strategy for Gender Equality, calling on the Commission to draw up an ambitious new gender pay gap action plan, which should set clear targets for EU countries to reduce the gender pay gap over the next five years.

In addition, Parliament wants to make it easier for women and girls to study and work in male-dominated sectors, to have flexible working time arrangements and also to improve wages, salaries and working conditions in strongly female-dominated sectors.

Find out more about what the Parliament does to tackle the gender pay gap and to promote gender equality in general.

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EU

EU countries should ensure universal access to sexual and reproductive health

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MEPs urge member states to protect and further enhance women’s sexual and reproductive health and rights in a report adopted today (11 May).

In the draft report approved by the Committee on Women’s Rights and Gender Equality by 27 votes in favour, six against and one abstention, MEPs point out that the right to health, in particular sexual and reproductive health rights (SRHR), are fundamental women’s rights which should be enhanced and cannot in any way be watered down or withdrawn.

They add that violations of women’s SRHR are a form of violence against women and girls and hinder progress towards gender equality. They thus call on EU countries to ensure access to a full range of high-quality, comprehensive and accessible SRHR, and remove all barriers impeding full access to these services.

Access to abortion, contraception and sexuality education

Women’s Rights and Gender Equality MEPs stress that some member states still have highly restrictive laws prohibiting abortion except in strictly defined circumstances, leading to women having to seek clandestine abortions or carry their pregnancy to term against their will, which is a violation of their human rights. Thus, they urge all member states to ensure universal access to safe and legal abortion, and guarantee that abortion at request is legal in early pregnancy, and beyond if the pregnant person’s health is in danger. They also recall that a total ban on abortion care is a form a gender-based violence.

Furthermore, MEPs demand that EU countries ensure universal access to a range of high-quality contraceptive methods and supplies, family counselling and information on contraception.

They also urge member states to ensure access to comprehensive sexuality education for primary and secondary school children, as SRHR education can significantly contribute to reducing sexual violence and harassment.

The negative impact of the pandemic on women’s health

Regretting that access to abortion continues to be limited during the COVID-19 crisis, as well as the effects the pandemic has had on the supply and access to contraceptives, MEPs urge EU countries to consider the health impact of this crisis through a gender lens and ensure the continuation of a full range of SRHR services through the health systems.

Rapporteur Pedrag Matić (S&D, HR) said: ‘‘In the text adopted today, we clearly call on member states to ensure universal access to SRHR for all, and demonstrate there is strength in the EP to counter those opposing basic human rights. Sexuality education, access to contraception and fertility treatments as well as abortion constitute some of the key components of SRHR services. This is an important step in ensuring that all EU citizens have access to SRHR and that no person is left behind in exercising their right to health.

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Digital economy

Digital transformation: Importance, benefits and EU policy

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Learn how the EU is helping to shape a digital transformation in Europe to benefit people, companies and the environment. The digital transformation is one of the EU's priorities. The European Parliament is helping to shape the policies that will strengthen Europe's capacities in new digital technologies, open new opportunities for businesses and consumers, support the EU's green transition and help it to reach climate neutrality by 2050, support people's digital skills and training for workers, and help digitalize public services, while ensuring the respect of basic rights and values, Society .

MEPs are preparing to vote on a report on shaping the digital future of Europe, calling on the Europea Commission to further tackle challenges posed by the digital transition, especially to take advantage of the opportunities of the digital single market and to improve the use of artificial intelligence. What is digital transformation? 

  • Digital transformation is the integration of digital technologies by companies and the impact of the technologies on society.  
  • Digital platforms, the Internet of Things, cloud computing and artificial intelligence are among the technologies affecting ... 
  • ... sectors from transport to energy, agri-food, telecommunications, financial services, factory production and health care, and transforming people's lives. 
  • Technologies could help to optimise production, reduce emissions and waste, boost companies' competitive advantages and bring new services and products to consumers. 

Funding of the EU's digital priorities

Digital plays an essential role in all EU policies. The Covid crisis accentuated the need for a response that will benefit society and competitiveness in the long run. Digital solutions present important opportunities and are essential to ensuring Europe's recovery and competitive position in the global economy.

The EU's plan for economic recovery demands that member states allocate at least 20% of the €672.5 billion Recovery and Resilience Facility to digital transition. Investment programmes such as the research and innovation-centred Horizon Europe and infrastructure-centred Connecting Europe Facility allocate substantial amounts for digital advancements as well.

While the general EU policy is to endorse digital goals through all programmes, some investment programmes and new rules specifically aim to achieve them.

Digital Europe programme

In April 2021, Parliament adopted the Digital Europe programme, the EU’s first financial instrument focused specifically on bringing technology to businesses and people. It aims to invest in digital infrastructure so that strategic technologies can help boost Europe’s competitiveness and green transition, as well as ensure technological sovereignty. It will invest €7.6bn in five areas: supercomputing (€2.2bn), arfitifical intelligence (€2.1bn), cybersecurity (€1.6bn), advanced digital skills (€0.6bn), and ensuring a wide use of digital technologies across the economy and society (€1.1bn).

Online safety and platform economy

Online platforms are an important part of the economy and people's lives. They present significant opportunities as marketplaces and are important communication channels. However, there also pose significant challenges.

The EU is working on new digital services legislation, aiming to foster competitiveness, innovation and growth, while boosting online security, tackling illegal content, and ensuring the protection of free speech, press freedom and democracy.

Read more on why and how the EU wants to regulate the platform economy.

Among measures to ensure safety online, the Parliament adopted new rules to prevent the dissemination of terrorist content online in April 2021. MEPs are also considering rules on a new European cybersecurity centre.

Artificial intelligence and data strategy

Artificial intelligence (AI) could benefit people by imroving health care, making cars safer and  enabling tailored services. It can improve production processes and bring a competitive advantage to European businesses, including in sectors where EU companies already enjoy strong positions, such as the green and circular economy, machinery, farming and tourism.

To ensure Europe makes the most of AI's potential, MEPs have accentuated the need for human-centric AI legislation, aimed at establishing a framework that will be trustworthy, can implement ethical standards, support jobs, help build competitive “AI made in Europe” and influence global standards. The Commission presented its proposal for AI regulation on 21 April 2021.

Read more on how MEPs want to regulate artificial intelligence.

The success of AI development in Europe ilargely depends on a successful European data strategy. Parliament has stressed the potential of industrial and public data for EU companies and researchers and called for European data spaces, big data infrastructure and legislation that will contribute to trustworthiness.

More on what Parliament wants for the European data strategy.

Digital skills and education

The Covid-19 pandemic has demonstrated how important digital skills are for work and interactions, but has also accentuated the digital skills gap and the need to increase digital education. The Parliament wants the European skills agenda to ensure people and businesses can take full advantage of technological advancements.

42% of EU citizens lack basic digital skil

Fair taxation of the digital economy

Most tax rules were established well before the digital economy existed. To reduce tax avoidance and make taxes fairer, MEPs are calling for a global minimum tax rate and new taxation rights that would allow more taxes to be paid where value is created and not where tax rates are lowest.

Other interesting articles to check out

More on Europe's digital policies 

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Defence

Defence: Is the EU creating a European army?

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While there is no EU army and defence remains exclusively a matter for member states, the EU has recently taken big steps to boost defence co-operation. Security 

Since 2016, there has been significant progress in the area of EU security and defence with several concrete EU initiatives to encourage co-operation and reinforce Europe’s capacity to defend itself. Read the overview of the latest developments.

High expectations for EU defence

Europeans expect the EU to guarantee security and peace. Three quarters (75%) are in favour of a common EU defence and security policy according to a special Eurobarometer on security and defence in 2017 and a majority (55%) were in favour of creating an EU army. More recently 68% of Europeans said they would like the EU to do more on defence (March 2018 Eurobarometer survey).

EU leaders realise that no EU country can tackle the current security threats in isolation. For example French President Macron called for a joint European military project  in 2017, while German Chancellor Merkel said “we ought to work on the vision of one day establishing a proper European army” in her address to the European Parliament in November 2018. Moving towards a security and defence union has been one of the priorities of the von der Leyen Commission.

EN - 2018 Eurobarometer: % of Europeans think that the EU should do more in security and defence policy
Most Europeans want the EU to do more to boost security and defence  

Recent EU measures to boost defence co-operation

A common EU defence policy is provided for by the Treaty of Lisbon (Article 42(2) TEU). However, the treaty also clearly states the importance of national defence policy, including NATO membership or neutrality.

In recent years, the EU has begun to implement ambitious initiatives to provide more resources, stimulate efficiency, facilitate cooperation and support the development of capabilities:

  • Permanent structured cooperation (PESCO) was launched in December 2017, and 25 EU countries are participating as of June 2019. It currently operates on the basis of 47 collaborative projects with binding commitments including a European Medical Command, Maritime Surveillance System, mutual assistance for cyber-security and rapid response teams, and a Joint EU intelligence school.
  • The European Defence Fund (EDF) was launched in June 2017. It is the first time the EU budget is used to co-fund defence cooperation. On 29 April 2021, MEPs agreed to fund the flagship instrument with a budget of €7.9 billion as part of the EU's long-term budget (2021-2027). The fund will complement national investments and provide both practical and financial incentives for collaborative research, joint development and acquisition of defence equipment and technology.
  • The EU strengthened co-operation with NATO on 74 projects across seven areas including cybersecurity, joint exercises and counter-terrorism.
  • A plan to facilitate military mobility within and across the EU to make it possible for military personnel and equipment to act faster in response to crises.
  • Making the financing of civilian and military missions and operations more effective. The EU currently has 17 such missions on three continents, with a wide range of mandates and deploying more than 6,000 civilian and military personnel.
  • Since June 2017 there is a new command and control structure (MPCC) to improve the EU’s crisis management.

Spending more, spending better, spending together

At Nato's Wales summit in 2014, the EU countries that are members of Nato committed to spend 2% of their gross domestic product (GDP) on defence by 2024. The European Parliament has been calling on member states to live up to it.

NATO 2019 estimates show that only five EU countries (Greece, Estonia, Latvia, Poland and Lithuania) spent more than 2% of their GDP on defence.

However, building up EU defence is not only about spending more, but also about spending efficiently. EU countries collectively are the second largest defence spender in the world after the US but an estimated €26.4bn is wasted every year due to duplication, overcapacity and barriers to procurement. As a result, more than six times as many defence systems are used in Europe than in the United States. This is where the EU can provide the conditions for countries to collaborate more.

If Europe is to compete worldwide, it will need to pool and integrate its best capabilities as it is estimated that by 2025 China will become the second largest defence spender in the world after the US.

infographic illustration on benefits of closer cooperation on defence at EU level
The benefits of closer cooperation on defence  

The European Parliament’s position

The European Parliament has repeatedly called for fully using the potential of the Lisbon Treaty provisions to works towards a European defence union. It consistently supports more cooperation, increased investment and pooling resources to create synergies at EU level in order to better protect Europeans.

Challenges involved

Apart from practical challenges, the EU needs to reconcile different traditions and different strategic cultures. Parliament believes that an EU white paper on defence would be a useful way to do it and underpin the development of a future EU defence policy.

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