New EU rules will require wage disclosure, historically a taboo in the Czech Republic

The European Commission has proposed rules for transparency in wages in an effort to fight gender inequality in the workplace. The idea runs against long-standing Czech taboos over disclosing salaries.

Under the proposal, people would be able to find out how much co-workers doing the same or similar work are making, though actual names would be withheld. The broad measure would allow people to sue for pay discrimination, and would prevent employers from asking job applicants about their pay history. If approved by EU member states, the rules could take effect in two years.

Ursula von der Leyen, president of the European Commission, explained why the rules for disclosure were important. “Equal work deserves equal pay. And for equal pay, you need transparency. Women must know whether their employers treat them fairly. And when this is not the case, they must have the power to fight back and get what they deserve,” she said.

Vera Jourová, the vice president for values and transparency, said it is high-time both women and men to be empowered to claim their right.

There are very few companies in the Czech Republic where employees know each other's salaries, and these are mainly in the technology sector, according to an analysis by the magazine Ekonom.

In the Czech Republic, many companies have non-disclosure clauses in contracts preventing people from discussing their wages with co-workers. Lack of transparency has long been a part of Czech corporate culture, with management taking the position that it better for employees to be in the dark about not only wages but all aspects of the company’s dealings and finances.

Many long-term employees no longer in entry positions do not know how much their peers make, according to human resources experts. And they might be surprised to find out that newly hired people are making more than they are, despite their lack of seniority. New hires often make several thousand crowns more per month than existing employees, since wage adjustments are almost nonexistent in the Czech Republic.

And while more money now has to be offered to attract new talent, companies don’t see the need to spend more to retain their existing talent.

The situation has slowly been changing due to the competition for employees, as many job advertisements now include salary expectation.

“It is a virtue out of necessity, Companies have been pushed to do so in the fight for workers. The response to advertisements with the wage specified is much higher,” Tomáš Ervín Dombrovský, data analyst at LMC, which operates the Jobs.cz and Práce.cz portals, told Ekonom. He said 40 percent of the positions on LMC portals now specify the wages, and their number has increased substantially in the last six years.

Dombrovský added that companies feel they are revealing too much to both employees and the competition if they reveal wages.

Lenka Simerská, head of the Czech Ministry of Labor and Social Affairs’ Project 22% EQUALITY, said the proposed EU rules might not be as sweeping as some people expect.

The company would need to have functional categorizations of its positions, job descriptions, and performance monitoring. Then it is not a problem to quantify the average evaluation in comparable positions. Then if an employee finds out their wages are below average, the employer can show them the basis for that, Simerská said.

The Czech Republic has long been criticized for its lack of gender equality. The country has been failing in the gender equality rankings. In the World Economic Forum's equality index, the Czech Republic comes in comes 78th out of the 153 countries.

On March 8, 2021, the Czech government approved a gender equality strategy until 2030, which includes measures in support of equal representation of men and women in politics, equal salary, more kindergartens, and more part-time employment. Within 10 years, the gender pay gap for men and women in the same posts and with the same tasks should drop from 11 to 6 percent, under the plan.

A new concept for higher wages in occupations where women predominate, such as in the education, healthcare, and social services should be created by the end of next year.