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Germany’s Remuneration Transparency Act Proves Paper Tiger

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Germany's Remuneration Transparency Act has hardly had any impact to date, according to a survey of German personnel managers conducted by the ifo Institute on behalf of Randstad Germany. This is due to the fact that only a few employees have made use of their new right to information. As of the beginning of 2018, employees have been entitled to know the salary of a colleague performing similar activities and in a comparable position if s/he is of the opposite sex. To date, however, employees only obtained such information in just under 10 percent of all of the companies surveyed; and only sporadically even in such cases. Even if employees did request such information, this rarely had an effect, with only around one in seven

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Germany's Remuneration Transparency Act has hardly had any impact to date, according to a survey of German personnel managers conducted by the ifo Institute on behalf of Randstad Germany. This is due to the fact that only a few employees have made use of their new right to information.

As of the beginning of 2018, employees have been entitled to know the salary of a colleague performing similar activities and in a comparable position if s/he is of the opposite sex. To date, however, employees only obtained such information in just under 10 percent of all of the companies surveyed; and only sporadically even in such cases. Even if employees did request such information, this rarely had an effect, with only around one in seven information requests resulting in a salary adjustment.

Fears that the law would create discord among employees or cause excessive bureaucracy for companies have also proven unfounded. Only 4% of HR managers reported the law creating unrest in the workforce. For just under 90 percent of the companies surveyed, the bureaucratic workload also remained limited, with only one percent reporting a high burden. The law took effect in January 2018 for firms with 200+ employees.

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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