According to current trends and the World Economic Forum (WEF) report, it will take approximately 123 years to achieve full gender parity. While this number may sound unbelievable, it highlights how long and complex the journey to gender equality is, including equal pay. In the European Union, the average gender pay gap stands at 12%, which, according to the latest data, means that women need to work 15 ½ months to earn the same amount that men earn in a year.
The benefits of closing the gender pay gap can be seen on three levels: at the individual, societal, and business levels.
At the individual level, improving gender equality and ensuring equal pay for work of equal value provides women with greater financial security and independence. This directly affects pensions, increases opportunities for investment, and leads to greater savings for later stages of life.
It also leads to increased investment in skills and education, enabling women to work at higher-paid positions and achieve a greater economic return from their education. In the current state of the world, parents often invest equally in the education of their daughters and sons, however the return on that ‘investment’ is not equal when measured through the childrens lifetime earnings.
Equal pay improves mental health and overall well-being, as family relationships become healthier due to reduced financial stress and a more balanced financial contribution within households. Parents are able to invest in their children’s health and education, resulting in long-term well-being.
At the societal level, higher wages for women lead to increased consumption, creating a domino effect by generating higher tax revenues and lowering financial pressure on social welfare systems. All of this has a significant impact on GDP growth. Analyses show that reducing the gender pay gap by just one percentage point can increase GDP by 0.1%.
In the context of current figures, this suggests that the European Union may be losing an average of 1.2% of potential GDP growth due to the existing pay gap.
Equal pay is also beneficial for employers. By eliminating unconscious bias, companies can make better use of the existing female talent in the labour market and within their organizations. Organizations that foster an inclusive culture attract stronger talent, build a better employer brand, and benefit from a more engaged workforce and higher productivity. All of this leads to measurable outcomes that reduce business risks and increase investor and creditor confidence.
Considering all of these factors, it is clear that closing the gender pay gap is not only a matter of fairness, but also a crucial economic and strategic issue, as well as an essential strategy element for social progress.
Everyone benefits from equality. Yet despite all the evidence, disparities persist due to deeply rooted cultural norms and expectations.
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The gender pay gap is not just a statistic; it has a long-term impact on the professional and life opportunities of working women and their families. Lower earnings mean reduced financial security, limited access to education, poorer health, lower pensions, and economic dependence throughout life.
However, pay differences often do not result from discrimination. They are more frequently the outcome of organizational policies built on older, long-standing systems and unconscious biases that easily influence decisions. These are patterns that are difficult to change independently without deliberate effort and investment in reform. In many organisations, salaries are not the result of a consistent job evaluation system based on the value of each role, but rather inherited from previous structures that were progressively adjusted according to business needs. Employers and managers unintentionally contribute to this inequality in their daily work, especially when they lack knowledge of overall pay within their teams.
This is precisely why pay transparency is a key tool for reducing inequality. It allows organizations to systematically identify where, how, and why differences occur and to take necessary steps to reduce pay differences for specific roles. For all employers who have not previously had a formal pay system, this is an opportunity to improve business practices by implementing job evaluation and role structuring, leading to greater transparency and clearer expectations for employees.
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Before taking the first steps, it is useful to understand how your company measures and explains its pay differences. Here are a few questions to help identify potential inequalities:
If you cannot answer some of these questions easily, it may indicate that your system lacks clarity, but there is room for improvement. External assessments, such as diagnostic reviews and/or certifications, can help your organization transition more smoothly toward pay transparency and equality.
To be ready for upcoming changes in legislation, start by analyzing your existing pay system by using the IQA methodology; get insight into pay structures based on the criteria you have defined as important in evaluating roles within your organization. Even during the initial phase of the analysis, you can clearly see how objective your current pay system is, as well as the pay differences between job groups, between men and women, or across different ethnicities.
The analysis, conducted with the robust IQA methodology, provides insight into both unadjusted and adjusted gender pay gaps, explaining pay differences based on the criteria included in the job evaluation process.
The IQA approach helps companies assess if their existing pay systems are in accordance with the EU Pay Transparency Directive.
In cases where pay differences exist for the same roles regardless of gender, or where gender-based pay differences exceed 5%, we provide clear guidance through necessary changes and, if needed, develop a brand new job evaluation system.
If you want to learn more about the gender pay gap and the practical steps your organization can take, read our guide.
