There is a lively public debate in the media about the Pay Transparency Directive, which popular opinion has dubbed the "equal pay directive."

The government has stepped in to defend entrepreneurs who have behaved rather like Toots*— business owners who, over the past three years, have not bothered to prepare for pay analysis — and is now promising to delay the entry into force of the legislation by two years. Women's organizations, in turn, are preparing protests, because women's wages in Estonia are still 12.2 percent lower than men's, and reducing the gender pay gap is one of the directive's explicit aims. As a trade union leader, however, I believe that entrepreneurs are simply afraid of trade unions and well-informed employees.

So what is the issue? How did we reach a point where Estonia is witnessing an outright heated conflict between business owners, women, and employees? And where the minister responsible for the field has publicly discussed how much Estonia might have to pay the European Union in fines for failing to implement the directive — only to then walk those statements back by saying that we will adopt something after all, but businesses certainly will not be required to seek solutions to the pay gap together with employees.

Employers must start cooperating with trade unions

At the core of the Pay Transparency Directive is the principle that equal pay must not remain something employees can only guess at or learn about by chance. Employers must make pay-setting transparent, justifiable, and verifiable, and employees and the trade unions representing them must be able to examine the causes of pay gaps, challenge them, and remove them from the pay system.

The directive starts from a very real problem: employees often lack sufficient information to understand whether their pay is fair. This very lack of transparency makes pay discrimination in Estonia difficult to detect — and even harder to prove.

That is why the legislation grants employees the right to obtain information about the average pay levels, broken down by gender, of colleagues performing the same or equivalent work within the company. This means employees no longer have to rely on rumors, and their access to information does not depend on the employer's goodwill.

It is also clearly stated that employees may obtain information and support from trade unions, and that when a pay gap is identified, the employer must seek solutions together with employee representatives. This is especially important in the case of joint pay assessments, which analyze, among other things, the proportion of female and male employees, average pay, variable compensation, unjustified differences, and measures to eliminate pay disparities. In other words, I am talking about collective bargaining and cooperation between trade unions and employers.

At present, a large part of pay systems operate on the logic that the employer knows everything and the employee knows very little. If a person does not know how their pay is determined or whether it is comparable to that of a colleague in an equivalent position, they have no real opportunity to challenge unfairness. Alternatively, they may "vote with their feet" and leave for an employer who values their contribution on an equal basis with others. The employee's goal in working is to sell their time, knowledge, and skills at the market rate — regardless of gender.

Estonia's position in the Global Gender Gap Index 2025 is contradictory. We have moved rapidly toward gender equality, rising from 29th place to 11th in a single year, yet women remain underrepresented in leadership positions and at decision-making levels, and the gender pay gap is shrinking only slowly. This points to structural barriers that prevent women from fully realizing their high level of education in the labor market and in society more broadly. Targeted policies are therefore needed to support women's advancement into leadership roles and to reduce the pay gap.

For years, Estonia has effectively been among the "bottom tier" in the European Union when it comes to the gender pay gap. The EU Pay Transparency Directive finally forces us to acknowledge this — and to deal with it.

Business convenience versus employees' right to information

Employers warn that the Pay Transparency Directive will impose a significant administrative burden on companies, increase bureaucracy, potentially create tensions within organizations, and harm competitiveness. That may well be the case — but does business convenience outweigh employees' right to receive equal pay for equal work?

The government stresses that implementing the directive requires striking a balance between employees' rights and the competitiveness of the business environment. Balance is important, but it cannot mean that one party remains trapped in an information blackout at work and must continue to accept unfair pay. It is also important to understand that the directive does not view purely technical reporting as the solution — despite employers' emphasis on the resulting administrative burden.

In fact, the Pay Transparency Directive clearly emphasizes the role of social dialogue. It states that discussions between social partners during collective bargaining on issues of equal pay are important and deserve special attention (Recital 45). Moreover, member states are encouraged to strengthen the role of social partners and to use collective bargaining as a means of reducing pay discrimination.

The claim that pay transparency creates tensions within organizations may be true—but those tensions do not arise from transparency itself. They arise from differences that were previously hidden. Transparency makes disparities visible and forces action, because in the end, employees are not asking for anything more than fair pay for their work. As the head of a confederation of trade unions, I believe they have a right to both information and fair compensation.

* A reference to Toots, a well-known fictional character in Estonian literature, symbolizing careless or unserious behavior.

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