Transparency law unsuccessful?: Employees rarely compare salaries

Transparency law unsuccessful?
Employees rarely compare salaries

Only a few employees use their right to ask about the earnings of their colleagues for more equal pay between women and men. This is shown by the second report with which the Federal Government has examined the effectiveness of the Pay Transparency Act that came into force in 2017. The following overview shows where the reluctance comes from and how to overcome it.

Family Minister Lisa Paus assessed the report previously discussed in the Federal Cabinet in Berlin as very sobering and announced an amendment. According to the report, the majority of employees have neither requested information nor plan to do so in the foreseeable future. “Specifically, 4 percent of the employees state that they have made a request for information,” wrote the authors of the Institute for Applied Economic Research at the University of Tübingen.

The law allows employees to request information about what other employees doing similar work earn. In this way, the payment should be able to be compared with the wages of colleagues of the opposite sex. Equal or equivalent work should be paid equally. According to the Federal Statistical Office, women earned an average of 18 percent less per hour than men in 2022 – because of often lower-paid professions and more part-time work. But even with comparable work, it was 7 percent less per hour.

reasons for reluctance

It is not due to a lack of relevance to the topic of equal pay that so few people are asking. According to the report, 85 percent of employees said that the topic is important to them. But two-thirds know nothing about their right to information – although around 86 percent of those responsible in companies and departments surveyed know the right to information. However, according to the experts, companies and departments would “not actively communicate” the right to information to the employees.

“Among the other third, some see no added value in information, or they fear that a request for information could be viewed negatively by their superiors,” the experts note. In some companies, it was therefore not specified who is responsible for answering the requests for information – which could prevent employees from following up.

Effect of the right to information

In its current form, the right to information has “no statistically significant effect” on the differences in pay, according to the evaluation report. However: If a request for information was made and differences in income are noticed, this “usually” also has an impact: The job description is then often changed or the paid income is increased. “Conspicuous information has an influence on the fee.”

test procedures in operation

The law also provides for companies to voluntarily review their pay structure – but since 2019, just under 30 percent of private employers with more than 500 employees have done so. “Many companies see no need for verification or complain about a lack of incentives, information, help or resources,” say the experts. This instrument adopted by the legislature also has “no effect in terms of the goals of the law”. Many companies have also failed to produce the reports on equal pay required by law.

law should be improved

“The Pay Transparency Act fizzles out largely without effect,” said DGB Vice Elke Hannack. There is no way around further development. Hannack recalled the new EU directive on pay transparency, which offers a lot of potential to clear up the deficits in German law. Employers would have to be obliged to regularly review their company pay structures and eliminate discrimination. IG Metall deputy boss Christiane Benner called for “an obligation to take action if violations of equal pay are found”.

Paus announced an amendment to the law in line with EU requirements. The law should “become better known and, above all, more binding”. Unlike today, the scope of the law should also be extended to companies with fewer than 200 employees.

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