Transparency in Wage Structures Act: Companies Receive Fewer Requests than Expected

In Germany, everyone is talking about the Transparency in Wage Structures Act. Since January 6, 2018, employees have, under certain conditions, the opportunity to request transparency from their employer on their salary. HR and management consultancy Kienbaum conducted a study of the first six months of the new disclosure obligation, surveying more than 100 companies to scrutinize the situation in their HR departments: How many requests did managers expect to have to deal with, and what are the actual figures? What is the situation when it comes to responding to requests for information? What sort of hurdles are there when it comes to responding.

Employees still reticent about making requests

“Requests in German companies are still contained, and so far only a small number of employees have made use of the right to request information. In those organizations where requests have been made, around two are received every month,” explains Neele Siemer, Compensation Expert at Kienbaum, adding, “In a fifth of companies surveyed, the ratio between female and male inquirers was even. Around 46% of participants in the survey reported fewer requests than expected, and only a very small number of organizations received more requests than expected, with an average of 20 requests per company.

No pay gap identified in 65% of cases

More than 65% of those surveyed indicated that no pay gap had been identified. 14% of those companies who had already responded to requests found that the employees requesting information were generally receiving below-average pay in the comparison group.
Responsibility for responding to requests for information rests with the works council, but employers can take on the responsibility themselves. Neele Siemer says, “In our sample, 18% left responsibility to the works council, but where the works council is responsible for responding, the company receives fewer requests. In these organizations, only four requests on average had been received, compared to twice that number where the employer was responsible, or was planning to be.”

Participants skeptical about effects on pay for female employees

According to the study, the greatest challenges when it came to responding to requests for information, were calculating comparative pay and assessing the comparison group. Although 80% of those surveyed said it posed a challenge to justify the pay gap, 55% provided justification in addition to their response. Only 13% percent said that they had no difficulties in responding.

 

“The results indicate that it will be very interesting to see how companies will handle implementation of the Transparency in Wage Structures Act in the future. We will continue to monitor changes within those companies through the year,” says Neele Siemer. “But it’s also rather doubtful that the Act will actually support its original intention, i.e. reducing the pay gap between men and women. 85% of those we surveyed did not believe that the Act would have implications on pay for female employees.”

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