On average, women earn significantly less than their male colleagues. In the EU, the so-called gender pay gap is 13 percent. Germany is higher at 18 percent. How does this happen? And how could that change? The most important thing about Equal Pay Day.
Sad result from the European Commission: Across the Union, women earn an average of 13 percent less than men. For every euro that a man earns, a woman receives 87 cents. The EU wants to raise public awareness of this grievance, which is why the EU has “Equal Pay Day”. This year it falls on November 15th, the date corresponds to the day from which women mathematically have to work additional hours in order to achieve the same wage level as men. In April, EU member states adopted a directive to close the gender pay gap. However, several states still have to implement the regulation into national law.
In Germany, several women have complained about the income differences. Here, women earn an average of 18 percent less than their male colleagues. The value is calculated annually by the Federal Statistical Office and has fallen in recent years.
In court, most of the complaining women were dealt with with sentences – only one was right, was paid 14,500 euros by the employer and also received compensation for the rights violation. In February, a judge in Erfurt made a landmark ruling. Negotiation skills no longer count as an argument when a man earns more than his colleague.
It is now easier for women to demand what they are entitled to: equal pay. The traffic light government wants to further reduce the gap to 10 percent by 2030. How realistic is that? And why do women actually earn less than men? The most important questions and answers about the gender pay gap:
What is the gender pay gap?
The gender pay gap describes the difference in earnings between women and men per hour worked. In Germany the value has been calculated since 1995. A distinction is made between the adjusted and unadjusted gender pay gap. Depending on which factors are taken into account in the calculation, the wage difference will be higher or lower. The fact that the work of women and men is rewarded differently is not only due to discrimination, but also has structural reasons. The International Labor Organization lists, among other things, training, qualifications and working hours.
Why two values for the wage gap?
At the unadjusted gender pay gap will compare the gross salaries of men and women overall. “This means that the earnings of board members, geriatric nurses and secretaries are equally included here,” explains Leonie Schröder, research assistant in the area of earnings statistics at the Federal Statistical Office. Part-time (retirement) workers, part-time employees and trainees are also taken into account. The unadjusted gender pay gap is currently 18 percent and shows the average difference in earnings between the genders regardless of characteristics such as position or qualifications.
The adjusted gender pay gap is methodologically more demanding because it requires individual data from employees to be queried. It was collected every four years from 2004 to 2021. Since last year it has also been calculated annually and for the individual federal states. The difference in earnings between men and women with comparable characteristics is recorded.“With the adjusted gender pay gap, we look at the causes of the earnings gap. Measurable wage-determining differences between women and men are largely eliminated here. This gives us the earnings gap between women and men with almost comparable characteristics. What is missing in our survey, however, “For example, there is information about breaks in employment,” says Schröder. With this information, the value would probably be even lower. The adjusted gender pay gap cannot be equated with discrimination because it compares the genders with comparable positions and qualifications. The adjusted gender is currently Pay gap at seven percent.
“Both values have different significance, but also their right to exist,” says Schröder. The unadjusted gender pay gap is also about barriers to access to the labor market. “With the adjusted gender pay gap we can highlight the causes of the different earnings.”
The statisticians use the gross hourly wage to calculate both values because monthly or annual earnings would distort the statistics due to different levels of employment.
How does Germany compare internationally?
Globally, the gender pay gap is 20 percent – women earn a fifth less than men. However, this value varies depending on the country and region – even within Europe. The earnings gap in the Federal Republic is very high compared to other European countries. According to the statistics platform Eurostat, Germany ranks fourth from last with 18 percent. The gender pay gap is highest in Latvia (22.3 percent) and lowest in Luxembourg (0.7 percent).
“This is partly because women’s participation in the workforce is lower in some countries compared to Germany,” admits Schröder. The few women employed in Italy, for example, work in better paid areas and positions. Although this reduces the gender pay gap, it fundamentally changes little in terms of the equality and distribution of women and men in the labor market. The gender wage differences are therefore difficult to compare across countries.
How is the gender pay gap calculated?
The Federal Statistical Office calculates the wage gap based on pay slips from around 58,000 companies in the Federal Republic from the month of April. “April is the first month of the year without seasonal effects,” says Schröder. Therefore, data from this month is considered particularly representative. In addition to seasonal effects, the economic sectors public administration, defense, social security, fishing and agriculture are also excluded from the calculation.
In which sectors is the wage difference the largest?
“At 27 percent, the gender pay gap is highest in the banking and insurance sectors,” says Schröder. In the information and communications sector the figure is 23 percent, and in tax and management consultancies it is 20 percent. Schröder suspects: “This may have to do with the fact that banks and insurance companies, for example, are male career domains.” Management positions there are predominantly held by men. The value is also high for freelancers, scientific and technical services.
According to the microcensus, women work primarily in trade, hospitality, education, health and social services, art, entertainment and recreation. Within these economic sectors, the proportion of women is 49 percent.
Why does the gender pay gap increase with age?
“The gender pay gap could increase with increasing age because women repeatedly interrupt their careers throughout their working lives,” says the Eurostat statistics platform. This is also proven by data from the demographic portal. In 2020, every second working woman worked part-time. Among men it was only one in eight. Almost half of all women surveyed said they worked part-time due to personal or family obligations, while only eleven percent of men said the same. Most of them (25 percent) worked part-time because of training or further education; among women the figure is seven percent.
The statisticians at the Federal Statistical Office say that women’s earnings stagnate after the birth of their first child, “while those of men rise quite sharply.” “Men then seem to have more careers and earn higher salaries,” says Schröder. Here too, the figures show: men work an average of over 80 percent full-time, regardless of the age of the (youngest) child.
Over 50 percent of working women with children remain in part-time employment. “But there are also many women working part-time who would like to work more hours. One reason for the high part-time rate could be that there is not enough full-time childcare available,” says the demographic portal.
Are there differences between the federal states?
In 2022, the gender pay gap was surveyed by federal state for the first time. The average wage gap between the genders is highest in Baden-Württemberg at 27 percent and lowest in Saxony-Anhalt (nine percent). If you look at the adjusted value, the picture changes: Brandenburg is in the inglorious first place with nine percent, while in Schleswig-Holstein the wage difference between men and women with comparable qualifications, training and positions is the smallest at four percent.
“In Brandenburg, Mecklenburg-Western Pomerania and Saxony-Anhalt, the adjusted gender pay gap is larger than the unadjusted one,” is the conclusion of the study. This means that women in these federal states have characteristics that justify higher pay.
Will women and men eventually earn the same amount?
The traffic light has set itself the goal of reducing the unadjusted gender pay gap to ten percent by 2030. According to Schröder, there are certain factors that could impact the differences in earnings in the next few years: “The baby boomers, who tend to have more traditional role models, are now retiring. Years in which this distribution of roles is less pronounced are moving up.” But the structures would also have to change. In concrete terms, this means: expanding childcare, filling more leadership positions with women, and higher salaries in typical women’s jobs.
In a study, statisticians were able to show how a higher minimum wage and earnings premiums for women affect the gender pay gap. Women and men benefit equally from the minimum wage increase. If the minimum wage were 15 euros, the unadjusted gender pay gap could fall to 17 percent according to the simulation. The study author suggests increasing the minimum wage specifically in areas of the economy that are particularly dominated by women, but the simulation also shows that increasing the minimum wage in areas occupied by women has only a small impact on the unadjusted gender pay gap.
Earning premiums for women of one euro per hour would reduce the gender pay gap to 15.5 percent. “An across-the-board increase in women’s gross hourly earnings (…) will have a stronger effect on the gender pay gap than increasing the statutory minimum wage (…) for all sectors,” says the simulation report. In order to achieve the federal government’s goal of reducing the gender pay gap to 10 percent by 2030, women’s gross hourly earnings would have to be increased by 2.20 euros. However, this would be the least gender-equitable measure.
In a study, the International Labor Organization advocates pay transparency legislation. It has already been introduced in several countries, such as Canada, Chile, the United States, but also in some EU countries. This is a tool to control the pay of women and men. Employees should have access to pay levels, for example.
In Germany there is something similar in a weaker form: the federal government introduced the so-called Pay Transparency Act in 2017. Employers must inform their employees about their payment criteria upon request. Private employers must also regularly disclose their pay structures and prepare status reports on equal pay.
However, critics fear that transparency could reduce men’s salaries.
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