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Personnel Managers Sceptical About Germany’s New Pay Transparency Act

Summary:
German personnel managers are sceptical about the new Pay Transparency Act, according to the results of the quarterly survey by Randstad and the ifo Institute. In response to the question of whether the law is an effective measure for lowering wage differences between men and women, 45 percent of the personnel managers responded: “Don’t know,” while 42 percent responded negatively and just 13 percent gave a positive reply. The rejection rate rises with company size. The law applies as of 6 January for firms with 200+ employees. There is nevertheless a great deal of uncertainty over the scope of its application. A good quarter of personnel managers stated that they did not know whether their company is even affected by the law.

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German personnel managers are sceptical about the new Pay Transparency Act, according to the results of the quarterly survey by Randstad and the ifo Institute. In response to the question of whether the law is an effective measure for lowering wage differences between men and women, 45 percent of the personnel managers responded: “Don’t know,” while 42 percent responded negatively and just 13 percent gave a positive reply. The rejection rate rises with company size.

The law applies as of 6 January for firms with 200+ employees. There is nevertheless a great deal of uncertainty over the scope of its application. A good quarter of personnel managers stated that they did not know whether their company is even affected by the law.

To identify the causes of wage differences, personnel managers were also asked about wage inequality in general in their companies. Half of them stated that pay differences did exist between employees performing similar tasks and holding comparable positions in their companies. Almost half of them did not see any wage differences, while two percent were unsure. The primary employee-related reasons for wage differences were cited by personnel managers as professional experience (43 percent), performance (36 percent), as well as education (18 percent).

Around 1,000 personnel managers participated in the survey.

Clemens Fuest
Clemens Fuest took over from Hans Werner Sinn as chairman of the IFO Institute in April 2016. He is professor at the Faculty of Economics of the University of Munich.

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