Harnessing the EU Pay Transparency Directive to Attract Diverse Talent

Salary is a key metric to measure. So much so that in 2023 the EU Parliament and EU Council approved new pay transparency regulations that are designed to close pay gaps across the workforce. The new directive, which organisations have until June 2026 to embed, focuses on the pay differences between men and women and promotes the principle of equal pay for equal work. 

With 2025 quickly approaching, organisations do not have much time left to prepare their workforce benchmarking and adapt their hiring and talent strategies to close their current pay gaps when the new directive comes into play. 

In this article I explore the implications of the new transparency directive, what it means for organisations across the EU and how it can be harnessed to create talent strategies that attract high-performing, diverse talent. 

What is the EU pay transparency directive? 

As of 2021, it was reported that women earn approximately 13% less than men when working in same or similar roles.  

Whilst closing the gender pay gap has been high on the agenda across the EU for several years now, the lack of pay transparency has been a key obstacle to levelling the playing field. 

The new legislation has been created to tackle this issue. It introduces a set of rules and obligations for employers to ensure equal pay for equal work and to increase transparency in pay practices. Once implemented, the directive will: 

• Reduce the gender pay gap, which persists across many sectors in the EU 
• Empower employees with knowledge and tools to challenge pay disparities 
• Promote a fairer, more transparent labour market

What does it mean for organisations operating across the EU? 

The rules of the EU pay transparency directive mean that organisations with at least 100 employees need to disclose salary information for their workforce – and specifically between female and male workers. 

For organisations with 250 or more employees, reporting will occur annually during the initial phase, while those with 150–249 employees will report every three years.  

Employers with a gender pay gap exceeding 5% must analyse the reasons for the disparity and implement an action plan to address it. 

Additional requirements include: 

• Job applicants’ rights: Candidates are entitled to receive information about the pay level and range for any advertised role. 
• Salary history ban: Employers are prohibited from asking candidates about their past or current salary. 
• Pay-setting transparency: Employers must disclose how pay is determined and managed, including promotion and progression criteria. 

Under the microscope: the gender pay gap at executive level 

The gender pay gap in the EU, particularly at senior levels like the C-suite and VP positions, remains significant. Women in executive and supervisory roles typically earn over 20% less than their male counterparts.  

Women also hold disproportionately fewer high-level roles, with only about 16.8% of C-suite positions being occupied by women as of 2024. For VP-level positions, women face similar pay disparities but with slightly smaller gaps compared to the C-suite. 

Factors contributing to these gaps include lower representation of women in these roles and ongoing systemic challenges, such as biases in hiring, promotions, and compensation practices. The imbalance is compounded by fewer women advancing into senior leadership, especially in industries like finance and consulting, where the gender pay gap exceeds 20%. 

How can the EU pay transparency directive improve talent acquisition? 

Whilst the new directive brings with it a period of change, it also offers the opportunity to improve talent acquisition and retention. 

Firstly, by being more transparent about how pay structures are defined enables organisations to identify and rectify gaps more easily. 

Organisations that demonstrate that they are not only complying with the new directive, but also taking action to close the gaps identified will be more attractive as a potential employer to female candidates. 

Finally, organisations that analyse their existing gender pay gap will be able to develop a strategy that will help rectify the imbalance. This will improve the retention of talented female employees – especially in industries where there is a limited pool of female talent. 

How Proco Group can help 

DEI is at the forefront of hiring strategies across Proco Group’s regions and three core markets. We work closely with organisations to understand and navigate the increasingly complex – and competitive – talent landscape, and to hire top, diverse talent. 

Proco TRAC, our talent and market intelligence service delivers comprehensive, bespoke talent and market intelligence, empowering organisations to deliver data-driven hiring strategies. Organisations that use TRAC are able to surface hiring trends and challenges – both within their own business and across their industry – and use these to refine their hiring strategy and attract a more diverse pool or top talent. 

Expanding on the talent intelligence services Proco Group provides, we also regularly share insights on DEI incentives, challenges and progress that we have garnered from our global network, including a comprehensive report for International Women’s Day, joining international panels to discuss diversity in the workplace, and conversations on DEI with pioneering female leaders. 

To learn more about Proco TRAC, or for a conversation about understanding and closing the gender pay gap across your organisation, please don’t hesitate to get in touch. 

Stuart MacSween

Managing Partner | EMEA

T: +44 20 3962 4665     E: stuart.macsween@weareprocogroup.com