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Germany to close pay gap with transparent wage structures

Ben KnightDecember 10, 2015

German Family Minister Manuela Schwesig wants to help close the gender pay gap with a law forcing companies to reveal details of their salary structure. Predictably enough, business federations aren't happy.

Symbolbild Gender Geschlechter Gehalt
Image: picture-alliance/Empics/P. Toscano

The family minister's plan would give employees the right to find out exactly why they are in the pay grade they are, and also to know the salary of colleagues of another gender doing the same job or at the same level - though for data protection reasons, employees making inquires about colleagues would only be allowed to know the average pay of five or more coworkers.

If they find that they earn less, they would immediately have the right to sue.

Family Minister Manuela Schwesig's proposals would also oblige companies of more than 500 employees to review their pay structure for gender equality and to publish internal reports of their results. The proposals also call for job advertisements to include information on the minimum salary and would void clauses in employees' contracts preventing them from revealing salary information.

"At the moment, the question of salary in Germany is more than a taboo topic, it is a black box," Schwesig said as she presented the plan in Berlin this week. "A lot of people don't even know if they're being paid fairly and justly.

"With the new law for more salary fairness, female employees, as well as male employees, will have the opportunity to find out from their company how they're graded, why they're graded, and how, for example, the five men who do an equivalent job are graded - and if they get more money, why that is," she added.

Sexist Germany

Europe's biggest economy has an embarrassing gender pay gap record. On average, German women earn 22.4 percent less than German men - a significantly wider gap than the EU average of 16 percent. In fact, of all 28 EU countries, only two - Austria and Estonia - have a wider average pay gap between men and women.

Deutschland Bundestag Debatte um minderjährige Flüchtlinge Manuela Schwesig
Schwesig says she has the German population on her sideImage: picture-alliance/dpa/W. Kumm

To show her plan enjoyed the public's support, Schwesig referred to a survey showing a large majority of Germans are in favor of more salary transparency.

According to the study, commissioned by the Family Ministry from the Delta Institute for Social and Ecology Research, 71 percent of the population wants the average salaries of all positions in companies to be known by everyone.

But there has been predictable criticism from the German business community. The Confederation of German Employers' Associations (BDA) issued a blunt statement within hours of Schwesig's presentation.

"The planned law needs to be stopped," the statement read. "It will create all kinds of new bureaucracy."

Unions: Transparency works

Moreover, the BDA argued, Schwesig's idea would not close the gender pay gap.

"[The pay gap] is founded mainly on the differing job activities of men and women, and not on a lack of pay structure transparency," the BDA statement said.

German trade unions, meanwhile, argued that transparency is crucial for closing the gender pay gap.

"It's been proven that transparency and justifiable pay structures contribute to overcoming the pay gap," Elke Hannack, deputy chairwoman of theConfederation of German Trade Unions (DGB), told DW in an email. "Wherever wage agreements are enforced and works councils participate, the pay gap between men and women is smaller."

The DGB, however, declined to comment specifically on Schwesig's proposal.

Schwesig, whose remit also includes senior citizens, women, and young people, wants to see the law come into force before the end of next year. But if other government gender equality drives are anything to go by, that's fairly optimistic - it was early 2011 when then-Labor Minister Ursula von der Leyen first floated the idea of an obligatory female quota of 30 percent on the boards of major German companies. The quota was finally passed into law in March this year.