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Germany Looks to Salary Transparency to Close the Gender Pay Gap

Topics: Current Events

The gender pay gap is a problem worldwide. In Germany, women earn about 21 percent less than men, on average. In response to this, the German government recently passed new legislation aimed at righting this wrong. They’re hoping to make progress by forcing companies to be more transparent about salaries. Let’s take a closer look at the issues, and at this plan.

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  1. The gender pay gap is complicated.

One thing we know for sure about the gender pay gap is that it’s a tough injustice to correct. The issue isn’t just that women make less than men, all over the world, for doing the same job. (Which they do, by the way. According to the latest data from the World Economic Forum, women make about 69 cents for every dollar a man earns, worldwide.) It’s also that there is an opportunity gap. According to data gathered for PayScale’s report, Inside the Gender Pay Gap, men are about 85 percent more likely than women to be VPs or C-suite execs by mid-career.

Another statistic that’s important to understand is what’s known as the controlled gender pay gap. That figure is determined by controlling for job title, job level, and other important factors such as years of experience. This controlled gender pay gap should be a simpler divide to bridge.

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This new legislation from Germany doesn’t tackle some of the more complex and systemic issues that contribute to the wage gap, such as the variance in opportunity. But, as far as the controlled gap goes, these actions might not be a bad place to start.

  1. Now, German companies will have to be transparent about salaries.

In an effort to start to reverse the controlled gender pay gap, the German government is trying something new. Now, companies with more than 200 employees will have to be more transparent about salaries. The new law states that workers in companies of this size have a right to inquire about the pay of men and women in equal positions. Additionally, companies that employ more than 500 workers will have to publish updates regularly about salary structures in order to demonstrate that they are complying with equal pay laws.

  1. It helps to talk about it.

Manuela Schwesig, Germany’s women’s affairs minister, called the law “a real breakthrough” and said she expects it will help millions of women narrow the gap.

“We have to break the taboo that you don’t talk about money,” she told the Rheinische Post, “because we want to make sure that men and women aren’t played off against each other when it comes to wages.”

Salary transparency is one of the keys to closing the gender pay gap. First of all, honesty is a prerequisite of fairness. Employers are held to an open and honest standard by laws like these. Also, these types of legislation empower workers to take information gathering efforts into their own hands. Websites like PayScale exist to meet needs like this — to allow workers to assess their pay and be sure it’s fair.

  1. However, this legislation ignores other important factors.

This legislation won’t solve equal pay issues on its own. Nations that wish to tackle the problem of equal pay will have to consider other factors. Women in Germany tend to work part-time jobs more often than men and to work in lower paying jobs and industries. They also receive less education, on average, than men do. Dissolving these inequities is more complex and will take time. As far as the controlled pay gap goes though, this law is a step in the right direction.

Tell Us What You Think

Do you think Germany’s new law will help to close the gender pay gap? We want to hear from you! Leave a comment or join the discussion on Twitter.


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