The gender pay gap in Germany

A 2020 report claimed Germany had the widest gender pay gap among EU states. While the gender pay gap in the EU was 13% in 2020, it was more than 18% in Germany. This was way higher than other EU member states like Romania, Luxembourg, Poland, and Italy, where the gender pay gap was less than 5%.

This year, Germany marked March 7 as Equal Pay Day. Not sure what Equal Pay Day is? In 2020, German women were paid 18% less than their male counterparts, according to the Federal Statistical Office of Germany.

In other words, this 18% was the “gender pay gap in Germany in 2020” or German women were earning 82% of the amount their male equivalents were getting paid.

It meant 18% was the median difference between the wages that German women and men received for equivalent work. If we assume men and women earned the same hourly wage, and we convert that 18% into days, women would work for free for 66 days (18% of 365 days) annually. Therefore, March 7, 2022, was identified as a symbolic day to raise people’s awareness of the gender pay gap in Germany. 

Gender Pay Gap by the Sectors

Germany’s gender pay gap differed significantly between various sectors in 2020. The pay gap at 31% was the widest in the arts, entertainment and recreation sector. It was followed by scientific and technical activities (27%) and human health and social work activities (24%). The next on the list were two sectors, information and communication and banking and insurance, each with a 23% gender pay gap.

The next positions were acquired by sectors where German men are traditionally found employed in much larger numbers and even earn relatively higher salaries than women. These were manufacturing (22%) and trades, maintenance, and repair of motor vehicles (21%).

The gender pay gap in Germany was relatively low, as per 2020 statistics, in the mining and quarrying (8%), food service and accommodation-related activities (8%), transport and storage (5%), and water supply, sewerage, waste management, and remediation activities (2%). However, these sectors employed just a few women. Sadly, none of these sectors and activities had their women employees earning more than their male counterparts.

An interesting observation about Germany’s gender pay gap is that it’s less pronounced in the public sector compared to the private sector. The country’s public sector has a pay gap of just 7% between the genders, which is almost one-third of the wage gap prevalent in the private sector at 20%.

Reasons Behind Germany’s Gender Pay Gap

Gender pay gap in EU countries (Image courtesy Statista)

To have a better understanding of the gender wage gap in Germany, it’s crucial to be aware of the contributing factors. It’s equally vital to conduct a detailed analysis of the role of companies in the gender wage gap by focusing on the pay gap prevalent between similarly skilled women and men and between and within firms.

To begin with, a weak policy of the government is partly to blame. Women and men also differ in their preferred occupational sectors and working lives, which leads to different careers and wage gaps between the genders in many cases. The blame is partly to be borne by German companies too, which could do a lot more to support and accelerate women’s pay progression to close earnings gaps between the genders.

It may surprise many to know about Germany’s gender pay gap, as the nation has generous maternity leave and welfare benefits. It even had a woman (Angela Merkel) as its longest-standing Chancellor and is known for its relatively good status for gender equality. Thus, having one of the widest gender pay gaps in the Eurozone could be baffling.  

According to some analysts, Germany’s gender pay gap isn’t adjusted for vital factors like age, sector, and skills, and when it’s done, the gap comes down to around 6% or 7%. But German academics dispute this view and emphasise that disregarding the unadjusted gender pay gap will simply encourage people and policymakers to ignore the nation’s deeper gender inequality.

Some other factors also need to be considered when analysing the gender pay gap in Germany. For instance, when making international comparisons, doing it with a country that has a lower proportion of women in employment (like Italy with a gender pay gap of 4.2% as in 2020) would obviously mean Germany’s gender pay gap comes out as much bigger than it really is. This happens because lower levels of female employment can decrease the gender pay gap.

When you compare Germany’s gender pay gap with countries having similar employment rates, like Norway and the Netherlands, you will notice they have gender pay gaps of 13.4% and 14.2% – much lower than German’s wage gap of 18% (2020 statistics). The reason could perhaps be attributed to the better reconciliation of professional and personal life in these countries with more flexible work hours and higher levels of publicly-funded childcare provision.

Motherhood also seems to be a contributor to the wage gap in Germany as mothers tend to stay at home for a relatively long time after childbirth., When they are ready to return, they prefer to take up part-time jobs, which are usually concentrated in some particular low-paying sectors of the German economy, especially in healthcare, retail trade, elderly care, hotels, restaurants, etc. As a result, the economic cost of maternity widens Germany’s gender pay gap.

Solutions to the Gender Pay Gap in Germany

The government’s hesitance to bring forth rules and enforce them to make pay equality a reality has contributed to the gender pay gap significantly. Since the burden rests on employees to evaluate if they are paid fairly or not, the situation has become difficult for professionals and workers, more so due to wage transparency not being up to the desired level.

While the government needs to step up its reforms related to closing the gender pay gap, it should also focus on setting up fair and equitable remuneration systems. It could take a cue from Iceland, where companies are forced to prove that they have an unbiased remuneration system.

In Germany, individual workers have to come forward and bat for themselves. In case discrepancies occur, the companies that err don’t face any direct legal consequences, which makes it pretty difficult for employees to level those differences out. This needs to change.

Improving wage transparency is another thing the government and companies should strive to achieve if they really want to close the wage gap between the genders. For instance, companies can scrutinize their remuneration system to discover gaps in recruitment, pay and bonuses, promotions, or leadership positions, to amend them.

To do this, they don’t need any legal obligation. Instead, what they need is a clear stance in leadership. It’s important to remember that fair pay is a question of corporate culture, and leaders who are at the helm of their business and act fairly are the ones who do better business.

Final Words

Gender pay reporting isn’t obligatory for companies in Germany. The absence of any civil or criminal penalties for breaches could make employers take reporting lightly. And unless an employee goes to the court to bring an equal pay claim, where the court might take the lack of a report as a signal that the employer has not complied with the equal pay principle, many employers may prefer to ignore gender pay reporting altogether.

Unless employers realise the importance of keeping their employees happy with fair and equitable pay, which will also help them retain top talents successfully, and the government chips in, closing the gender pay gap in Germany would remain a distant dream.  

This article was written by