Social equity and labour
Pay Equity
Definition
Pay equity is the principle and practice of ensuring that employees receive equal remuneration for work of equal value, without discrimination on grounds such as gender or ethnicity. It encompasses legal obligations (equal pay law), analytical methods (pay equity analyses measuring unexplained gaps) and disclosure metrics such as gender pay gap reporting and CEO-to-median-worker pay ratios.
References
principle and international standards
regulatory direction and disclosure requirements
Overview
What it means
Pay equity analysis distinguishes explained pay differences (role, experience, performance) from unexplained gaps that may indicate discrimination. The adjusted gap is the discrimination-relevant figure; the unadjusted (median) gap reveals structural under-representation in higher-paid roles.
Both are now commonly disclosed, and pay transparency laws in the EU and elsewhere are pushing employers from reporting toward remediation.
How it is used
Employers conduct pay equity audits; regulators require gap reporting (e. g. , UK gender pay gap rules, EU Pay Transparency Directive); investors use pay ratio and gap data in social assessment and engagement.
Why it matters
Pay gaps compound over careers into pension and wealth gaps; pay equity is both a fundamental fairness issue and a measurable indicator of whether workplaces deliver social sustainability in practice. **Note:** Serves as the merge target for IDs 2002 (Pay equity analysis) and 2003 (CEO-to-median pay ratio).