According to Minister of Economic Affairs and Industry Erki Keldo, Estonia's preference is to negotiate, but the state is prepared to pay fines rather than burden the economy with new bureaucracy.

Estonia is required to transpose the European Union's Pay Transparency Directive — also known as the Equal Pay Directive — by June 7. At the same time, many companies have said it would increase bureaucracy. What is the government's position — do we have to adopt it, or how will this move forward?

We have discussed this in the government cabinet. Our fundamental problem is that the way the directive envisages pay transparency unfortunately increases the administrative burden on businesses.

We have made proposals both domestically and at the European Union level, because we want to increase the competitiveness of businesses and reduce bureaucracy and reporting requirements. In our view, this initiative does not align with the current direction of the European Commission.

It is important to emphasize that we do not deny the existence of the problem. The gender pay gap in Estonia is large and is a cause for concern, but it must be addressed in ways that do not increase administrative burden or bureaucracy for businesses.

So what are we telling the European Commission?

I have already personally met with the relevant commissioner for jobs and will also send her a letter. Our first request is that the deadline for the directive's entry into force be postponed by at least a few years.

After that, the directive should be substantively reviewed with the aim of ensuring that people receive equal pay for equal work and that there is no gender discrimination.

That goal is humanly understandable, but we cannot agree with the way it is proposed to be achieved. The current plan creates too much administrative burden and bureaucracy for businesses.

It is certainly possible to do this in a less bureaucratic way. That is why we want time to look at how to address the problem without reducing the competitiveness of our businesses.

What have other EU member states said about this? Are we alone?

Fortunately, we are not alone with this concern. For example, Sweden is taking a similar approach to Estonia. Although the situation in Sweden is different because they already have strict national rules, the Swedish government also announced at the end of March that it wants to begin negotiations to reopen and postpone the directive.

Several countries are struggling with this. On the one hand, the directive must be transposed, but on the other hand, they see additional administrative burden and concerns about how reporting and pay structures would work in real systems. We are looking for allies.

As mentioned, I have communicated with both the commissioner and the Commission. Since the European Commission itself has said that its priority is business competitiveness, it would be right and fair to reopen this directive. This initiative came from the previous Commission, and now that priorities have been reviewed, we should find a solution that does not place excessive burdens on businesses.

Can you give a clear example of how the directive would place an excessive burden on businesses?

It depends on the size of the company, but larger companies would have to create a specific, structured pay scale that allows comparison of pay ranges for people performing work of equal value.

The directive provides that if the pay of people doing work of equal value differs by more than five percent, an additional inquiry can be made as to why this is the case and whether people have been treated unequally.

This means that real systems and, if necessary, additional HR tools would have to be created. Some large companies already have this data and technical structures in place due to their HR policies, but not all do.

That is why it is important that mandatory requirements involve minimal administrative burden. I do not believe the state should prescribe every detail.

Critics say employers simply want to preserve the status quo. Because employees do not know each other's salaries, some can be paid significantly less, which is economically beneficial for companies...

I would not put it that way. That would assume that all employers are exploitative and dishonest, which is not true. Salaries are agreed through negotiations — what compensation a person is willing to accept, and what an employer is willing to offer.

The state must create an environment in which the issue can be discussed. The gender pay gap in Estonia is one of the largest in Europe and is a cause for concern, but that does not require creating additional administrative burdens for everyone.

We already have tools such as the salary mirror, which allows employers to monitor gender pay differences within their organizations without bureaucracy. We prefer to provide tools and create an environment where it is understood that unequal treatment is not acceptable.

Even today, people can turn to the Labor Inspectorate in cases of discrimination. I do not believe that additional bureaucracy will solve the problem; rather, better prevention and informing employers will.

Has Estonian Gender Equality and Equal Treatment Commissioner Christian Veske been informed that you will not adopt the directive by June 7 and instead want it to be revised?

Adopting legislation is the responsibility of the government and later the parliament. We have written to the Commission stating that we support the substance and the goal, but not the method set out in the directive, which entails additional bureaucracy.

We want the directive to be reviewed and its entry into force postponed by a few years. I have not discussed this further with the equal treatment commissioner.

If the EU Commission nevertheless demands that the directive be transposed, will we face fines? Will we pay them while negotiations continue?

Our primary wish is that there will be no fines and that the directive will be reviewed at the European level. The current Commission has clearly stated that unnecessary bureaucracy is not needed, and we proceed from that understanding.

If the situation were indeed to lead to fines, the amount is difficult to predict, but it would certainly be smaller than the cost of transposing the directive in its current form.

That would mean enormous costs for the business sector in terms of working hours and administrative burden. Our preference is to negotiate, and I hope the Commission is willing to review this substantively.

So it is cheaper to pay fines than to overhaul the system?

The preference is not to pay fines, but any additional administrative burden is a cost to our economy. We have already reduced reporting requirements, and it is estimated that companies will save €115 million over two years, for example, in relation to sustainability reporting. Reducing or automating reporting has a clear positive impact on the economy.

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