Slowly but steadily: pay differences between men and women are decreasing

It just doesn’t want to be addressed: the salary gap between men and women in Austria. A recently published Wifo study with the participation of Rene Böheim, an employee of the Institute of Economics at the Johannes Kepler University, shows that at least the direction is correct.

While in 2011 the average wages for women were 19.6 percent below the wage level for men, in 2022 it was “only” 13.5 percent. For the first time, the authors used Statistics Austria’s microcensus (sample survey during the population census) as a data source, as this has also included gross monthly wages since 2011. According to Böheim, the microcensus data would offer a “far more accurate picture of reality than other forms of survey.”

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According to Böheim, the fact that men and women earn differently is already apparent when they start their careers. Women tend to choose career fields in which the average wage is lower. Even if they had a higher educational qualification, the technical studies associated with high salaries would remain the domain of men.

Young people and part-time

However, according to Böheim, the salary gap would only widen if women took a “maternity break” to have children and then worked part-time. “The lack of professional experience and the interruption of one’s working career make a visible difference,” says the economist. Both would ultimately affect the chances of advancement in a company or field of activity. According to Böheim, a possible lever would be comprehensive and, above all, longer childcare and mandatory father’s leave.

However, according to the study, “unobserved characteristics” are likely to contribute to a large part of the wage differences, such as the behavior of women in wage negotiations with employers. “Empirical studies suggest that men are more willing to take risks, and that alone creates a gap,” says Böheim.

So what needs to be done to further, if not completely, close the pay gap? “Higher wage transparency would be a start.” In any case, the “Pay Transparency Act” passed in Austria in 2011 has so far not had any effects that can be seen in the report. Companies currently have to submit an income report every two years, and the works council can see it and inform employees. However, employees are not allowed to talk about it among themselves. “The wage differences presented in the report also have no consequences,” says the economist, who praises the regulation in Switzerland: “If a company there has inexplicable wage differences between men and women, it can result in it not being accepted for tenders for public contracts is taken into account more.”

Loss of public image

If companies also had to make their employees’ salaries public, they would also be exposed to social pressure. “Evidence of discrimination leads to a loss of social image and, as a result, to fewer applicants.”

In Denmark, for example, such a transparency regulation would have demonstrably reduced income differences.