The XX Factor

Germany Considers Requiring Salary Transparency to Address Gender Wage Gap

If women know what their colleagues are making, they may be more likely to ask for what they’re worth.

Government leaders in Germany have approved a proposed bill that would take steps to close the nation’s gender wage gap, one of the highest in Europe. The bill would require medium- and large-sized companies to increase salary transparency, making it easier for female employees to find out if they’re being paid less than men for equal work, the first step toward bringing a case against their employer.

The German Cabinet passed the draft bill on Wednesday; it will need to pass a parliament vote to become law. If it does, companies with 200 or more employees will be required to make workers aware of salary structures and how the company calculates pay. According to the Agence France-Presse, these employees will be able to check to see what men and women in the same types of positions make, though salaries will be anonymized. The law would also force companies with 500 or more employees to establish an internal process of reviewing and publicly reporting on equal pay efforts within the company.

Manuela Schwesig, Germany’s minister for women and families, told the Rheinische Post newspaper that transparency will give women information they need to advocate for fair pay. “We have to break the taboo that you don’t talk about money, because we want to make sure that men and women aren’t played off against each other when it comes to wages,” she said.

This bill has been in the works for years. In 2013, Chancellor Angela Merkel’s Christian Democratic Union (CDU) signed a coalition agreement with the Social Democratic Party that promised to take action on equal pay. Merkel backed an earlier draft of the just-approved bill in 2015.

If women know how much employees in comparable roles are making, they will be more likely to ask for the money they deserve in salary negotiations—an important step toward mitigating the part of the gender wage gap attributable to men hardballing their employers for more money. Reuters reporter Olaf Storbeck writes that German employee contracts often include clauses that forbid workers from revealing their salaries to coworkers. This gives the proposed equal-pay bill the potential to disrupt an entrenched culture of secrecy and don’t-ask-don’t-tell salary discrimination.

Some German legislators say the bill would saddle businesses with undue bureaucratic obligations and make employees unhappy. “The right to demand salary information will foster workplace envy and discontent,” Christian von Stetten, a CDU member of parliament, told the Die Welt paper.

Women make an average of 21 percent less than men in Germany, compared to the European Union average of 16 percent. (When accounting for the fact that women occupy a smaller proportion of management positions and often work in lower-paying fields, the German gap narrows to about 7 percent.) They may be glad to muddle through the initial discontent of learning what their colleagues make if it means a better shot at fair wages.