Across the European Union, women earn on average 11.1% less per hour than men. In India, government figures show male salaried workers earning roughly 24% more than their female counterparts. In the United States, women took home about 85 cents for every dollar men earned in 2024, per the Pew Research Center. The comparative numbers explain why a new EU law is being watched well beyond Europe. For decades, the gap has persisted partly because pay was rarely open to scrutiny; what colleagues earned, and why, stayed behind closed doors. That is about to change in Europe, where a sweeping new regulation is forcing companies to open their books on who earns what, and why.The law behind the numbersAt its core, the directive is designed to make it harder for pay inequity to hide in plain sight. Its stated goal is to strengthen the principle of equal pay for equal work, or work of equal value, by giving employees the information and legal standing to check whether their own pay is fair. Formally Directive requires companies across the European Union's 27 member states to disclose pay ranges to job applicants, ban questions about salary history, and give employees the right to ask what colleagues doing equal work earn. Larger employers must also publish gender pay gap data every one to three years, and build a “job evaluation” system, using objective, gender-neutral criteria such as skill, responsibility, effort and working conditions, that explains why one role pays more than another. Where the unexplained gap within a job category exceeds 5%, employers must address it, with worker representatives, within six months.Member states were required to transpose the directive into national law by June 7, 2026. By that deadline, according to law firm trackers, only a handful of countries, among them Italy and Slovakia, had full implementing legislation in force. Economies including Germany, France, Spain, Austria and the Netherlands had missed it outright, with Brussels signalling that infringement proceedings could follow.Not just a gender storyWhen Tanja Losse and her team at Eurogroup Consulting ran a full job evaluation across a European financial services firm's workforce earlier this year, benchmarking every role against the market and against internal peers doing comparable work, the results surprised her. A significant share of employees, considerably more than her client had anticipated, turned out to be paid less than their role and level warranted, not because anyone had deliberately shortchanged them, but because, in many cases, nobody had ever formally checked.“Pay has historically been treated as something deeply personal, almost taboo to discuss,” explains Losse, a strategy consultant for financial services at Eurogroup Consulting who has spent much of the past year helping European banks prepare for a new EU regulation whose implications reach well beyond compliance and into business strategy. “In practice, what someone ends up earning has often come down to how well they negotiated, rather than the role itself or how they perform in it.”Losse's case findings complicate the assumption that pay inequity is simply a story about women being underpaid relative to men. Among the employees she identified as underpaid, the split between men and women was close to even, roughly half and half. What differed was the size of the gap: among underpaid women, the shortfall relative to what their role warranted was consistently larger than among underpaid men, even though similar numbers of each were affected. “It tells you this isn't purely a gender issue, it's a negotiation and structural issue that happens to hit women harder,” Losse notes.The hardest part isn't the spreadsheetLosse says the technical side of a project like this, pulling the data, running the job evaluation, is the easier half. What decides whether it actually works is who backs it and how carefully the result gets delivered. In her experience, that means keeping the chief executive close with regular updates, and treating the works council and the company's controlling function as partners rather than checkboxes to clear. The group most often overlooked, she says, is the one with the most at stake: the employees themselves, some of whom fear the audit will mean they end up earning less. That is why she treats the communication around a project like this as being just as important as the analysis itself.One discovery from her most recent project reshaped how her team ran it. The leadership team turned out to be far less consistent than expected: some managers held regular, structured conversations with their staff about performance, others held almost none. That gap mattered because those same managers would have to deliver the audit's most sensitive finding directly to each employee, which pay bracket they now sat in, and what their development path looked like from there. Losse's team responded by building a dedicated coaching programme to prepare managers for those conversations, including the pushback some were likely to face. She now treats how well a leadership team handles that individual conversation as one of the clearest predictors of whether a pay equity project succeeds or quietly fails. The measurable result, she says, was a completely rebuilt compensation framework, covering salary and every other monetary benefit, delivered within a year, an ambitious timeline for an organisation of that size and complexity.Your compensation model defines the workforce you attractOn paper, implementing a regulation like this can look like a purely technical exercise: pull the pay data, run the numbers, file the report. Losse pushes back on that framing. In her experience, it is at its core a change and communication programme, one that ends up shaping the workforce a company will have five or ten years from now, including who it keeps, who it promotes and who it can attract in the first place. “People treat this as a data or IT migration project. It isn't. It's setting the path for the workforce you want to keep, promote and attract,” Losse insists.That strategic weight shows up most clearly in how a compensation model actually gets designed, she says. Fairness demands rules that apply uniformly, the same bonus structure for everyone in a given role, for instance, so pay cannot simply come down to who negotiates hardest. But a model built only on uniform rules risks flattening the one thing that keeps ambitious employees engaged: a visible path for growth. The harder design problem, in her view, is building in enough structure to guarantee fairness while leaving room for a development track that rewards learning and growth, and enough flexibility to retain or reward the highest performers. “If you make it completely rigid, you lose the ability to develop and motivate people, and you risk losing your high potentials. If you make it too flexible, you're back to the same inconsistency the law is trying to fix. Getting that balance right is the hardest part of the whole design,” she adds.That, she contends, is why the exercise is worth doing even for companies outside the EU with no legal obligation to run one. The underlying questions, how to define fair pay, how to keep a visible development path open, and how to stay flexible enough to compete for talent, are workforce strategy questions every company eventually has to answer, regulation or not.That question already has an answer, of sorts, in parts of the world with no EU-style mandate. In the United States, roughly 19 states, including California, Colorado, New York and Illinois, require salary ranges in job postings, but there is no federal law and no single national standard. India's Code on Wages, 2019, already requires equal pay for equal work, but it carries no requirement to disclose pay data or ranges, leaving enforcement to inspection and individual complaint rather than routine transparency.Why the law alone won't close the gapEven full compliance, Losse argues, will not by itself close Europe's pay gap. The directive addresses pay gaps within a given role or job level; it does little about the fact that women remain underrepresented in the highest-paid roles in the first place, a pattern researchers call occupational segregation. The 2025 Women in the Workplace report found that for every 100 men promoted to manager, only 89 white women and 54 Black women received the same promotion, a bottleneck at the first rung of management, not the top, that compounds over a career.Losse points to two structural levers she considers more consequential than transparency law alone: childcare and reskilling. Affordable, accessible childcare, she argues, determines whether women can stay on a career track at all, rather than trading progression for flexibility. And as generative AI reshapes which roles survive, employers need to actively invest in moving workers out of the roles most exposed to automation and into higher-value, higher-paid ones. Research led by Stanford economist Erik Brynjolfsson found that employment for early-career workers, ages 22 to 25, in the most AI-exposed occupations has fallen roughly 13% since 2022, even as employment for older workers in the same fields grew, a divergence that has held for nearly four years with no sign of reversing. “If we don't actively help people in at-risk roles move up the skills ladder, transparency on today's pay structure won't matter much, because the structure itself is about to shift,” Losse says.Losse's real fix: Three things, not oneLosse's bottom line is less about any single law than about sequencing. Pay transparency, she says, is a genuinely useful first step: it forces companies to justify pay decisions they may never have examined, and it takes the negotiation advantage away from whoever is simply better at asking. But on its own, it will not close a gap rooted as much in who gets promoted and who can afford to stay in the workforce as in what any individual is paid for a given role. “Transparency, childcare access and a genuine commitment to reskilling, those three things together are what actually move the number,” she concludes.For Losse, the interest is not purely professional. Financial literacy has mattered to her since early in her career, when she volunteered teaching children about money, and giving people a fair, transparent stake in their own finances is a large part of what drives her. It is also why she pays close attention to research like Brynjolfsson's: the question she thinks companies and employees now have to answer together is which skills, among them leadership, empathy, communication and the ability to keep learning, will keep a workforce relevant as AI reshapes which jobs remain.