Estonia to increase wage transparency in an attempt to fight gender pay gap

Although Estonia's gender pay gap has narrowed from 25 percent to 13 percent over the years, it remains significantly higher than in many other countries, to the disadvantage of women. Greater transparency in wages is expected to help reduce this issue, at least in part.
Next year, Estonia will begin implementing the EU Pay Transparency Directive, aimed at ensuring that men and women receive equal pay for equal work.
How exactly wage transparency will be achieved is up to each member state to decide. Estonia's Ministry of Economic Affairs and Communications is expected to draft the relevant legislation by the summer.
"Job applicants must be informed of the salary or salary range no later than by the job interview. The state could also introduce the requirement that salaries be disclosed directly in job postings. In general, these transparency measures are aimed at improving the position of employees or job applicants during salary negotiations. Currently, employers and employees are not on equal footing in such discussions," explained Eva Liina Kliiman, an adviser on gender equality at the ministry's equality policies department.
According to Selver's communications manager, Mariann Järvela, the supermarket chain has no gender pay gap issue. "At Selver, equal pay is given for equal work, regardless of gender," she said.
Selver has previously experimented with including salary ceilings in job postings but has since abandoned the practice.
"During the interview process, we gain a better understanding of a candidate's skills. In some cases, we've discovered that a candidate's abilities exceed expectations and we've been able to offer a higher salary," Järvela noted.
Figure Baltic Advisory, a firm that has conducted labor market research in the Baltics for over 25 years, confirms that wage transparency in Estonia has improved compared to 15 years ago.
"At that time, it was common to offer higher salaries to male employees with the justification that they had mortgage payments or didn't need to leave early to pick up their children from kindergarten. You no longer see that kind of mentality," said Irja Rae, a leading partner at the firm. However, she added that this does not mean Estonia has achieved full wage transparency.
"We haven't clearly defined how we recruit, develop, promote or pay employees within organizations. Too often, decisions are based on gut feelings or personal discretion," Rae explained.
Under the new rules, if there is more than a 5 percent pay gap between men and women doing equal work, employers will need to provide a justification.
"All employees will have the right to request information on the average salaries of male and female employees performing the same or equivalent jobs within the organization. But this directive does not require disclosing individual salaries. The main focus is on improving wage transparency within organizations," Kliiman clarified.
The first pay data reports under the new rules will need to be submitted to the state in 2027. Organizations with more than 100 employees will be required to explain any existing pay gaps.
Employers, in turn, hope that the new requirements won't be introduced at the last minute and that compliance won't significantly increase their administrative burden.
"We certainly hope that companies will be informed as early as possible so that we have time to adjust our systems," Järvela said.
"The overall goal is to minimize the administrative burden. Wherever reporting can be done using existing state registers, the state intends to take that approach," Kliiman added.
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Editor: Merili Nael, Marcus Turovski