Even With New Transparency Law, Germany Struggles to Overcome Gender Pay Gap

Even With New Transparency Law, Germany Struggles to Overcome Gender Pay Gap

German Chancellor Angela Merkel is arguably the world’s foremost example of women’s empowerment: an accomplished scientist turned national leader and one of the most powerful people (not just women) in the world. Notwithstanding Merkel’s achievements and those of other women leaders in German politics, the country lags behind its European peers in closing the gender pay gap. Germany’s pay gap stands at 21.5 percent, according to EU data: the third largest in Europe and well above the EU average of 16.2 percent.

A new law that went into effect in January is meant to help close that gap by allowing employees to request information about wage disparities from their employers, but as Carolynn Look and Elisabeth Behrmann pointed out in a recent Bloomberg feature, the law puts the onus on employees to ask, whereas other legislative efforts, like the UK’s mandatory pay gap reporting and similar laws being considered in France, compel employers to provide this information up front.

A major component of the challenge for Germany is cultural: The term Frauenberuf (women’s job) is still used to describe occupations like nursing, housekeeping, child care, and social work—jobs that are often low-paying, part-time, and lack clear pathways to career advancement, Look and Behrmann note:

Even in fields dominated by women, such as medical assistants, men can get paid 40 percent more. The lower pay, along with more part-time work for women, mean they earn about 50 percent less over their working lives than male peers, according to a 2017 study by the German Institute for Economic Research in Berlin.

Such discrepancies, along with shortfalls in childcare and social pressures, contribute to fewer women in the workforce — 78 percent of working-age German men were employed in 2016, compared with 70 percent of women, according to the country’s statistics office. That’s a missed opportunity for an economy battling a growth-sapping labor shortage. The Labor Ministry said in a report last year that it sees “significant potential”’ in raising the volume of hours worked by women, but that for that to happen general conditions would have to improve.

The German government has made some efforts to improve women’s representation in the workplace; since 2016, it has been one of several European countries to mandate a certain degree of gender balance on the boards of large companies. Experts are pessimistic about the impact of the new transparency law, however, because most employees won’t come forward and ask: A survey from EY found that only one in eight respondents planned to ask their employer to explain their pay gap, while a third of those who said they would not ask said they feared negative repercussions from doing so.

So far, very few employees at Germany’s largest companies have made inquiries, but the government insists that the number of requests alone is not the indicator of the law’s effectiveness: “It is about those people asking questions who have reason to believe that they are disadvantaged or need better evidence for salary negotiations,” Germany’s Family Ministry said in a statement cited by Bloomberg. While conventional wisdom holds that pay transparency is key to closing wage gaps, some experts have debated whether this is true.

Germany’s pay gap challenge is reminiscent of the difficulty Denmark and other Scandinavian countries have had at achieving gender equality in the workplace despite robust public policy programs designed to help working women, like subsidized child care and generous parental leave for both mothers and fathers. The fact that women are still expected to play the primary role in household management and child care contributes to the pay gap by pushing women to scale back their careers, shift to part-time work, or drop out of the workforce entirely after having children. These gendered expectations still hold true in Germany as well. European welfare states may make it easier to be a working parent, but as long as women are doing the bulk of the parenting, the professional sacrifices working mothers make (and fathers don’t have to) will prevent the gender gap from closing.

Also serving as a potential barrier to gender equality in the German workplace are the country’s century-old labor laws, designed for a time when women were a much smaller segment of the workforce and rarely remained there after getting married and having children. These laws, which cap the number of hours an employee can be asked to work in a day, mandate regular break times, and establish a minimum amount of time between shifts, limit employers’ and employees’ options for flexible scheduling and remote work. Lack of flexibility in these areas is another contributing factor in the gender pay gap, as working parents (again, usually mothers) find it difficult to juggle professional and home responsibilities while adhering to a rigid work schedule.