Germany lags behind as gender pay gap narrows

The UK’s slight gender pay gap narrowing means it is in step with other economically similar nations. But Germany has fallen behind with a gap of 22.3% compared with the UK’s 17.9%.

The 2019 Glassdoor study collects salary reports from thousands of employees in eight countries – Australia, France, Canada, the US, UK, Singapore, Germany and The Netherlands – and digs deep into the specific impact of factors such as job title, differences in education and experience and the degree of work segregation between men and women.

As with the UK part of the study, the size of the gap lessens when factors such as worker experience, job title, age and location are brought into the equation (resulting in an adjusted figure), but does not vanish. This leaves a proportion of the gap that can’t be explained and could be down to bias and differing negotiation perceptions between men and women.

Australia has narrowest gap

The pay gap is smallest in Australia. Unadjusted figures show Australia has achieved a median base pay gap of 15.1% as revealed by employees, although the official government figure is 16.2%. After the full range of adjustment factors were incorporated, the gap shrunk to 3.1%.

As in all the countries, when figures for full compensation including bonuses and share options and the like are introduced, the gap enlarges: to 17.4% (unadjusted) in Australia’s case and 5.4% once the adjustment factors are included.

Similar to the UK, more than a third of Australia’s gender pay differences are unexplained (39%) and down to variations in the way the labour market rewarded men and women with the same characteristics, which could involve bias and the possibility that more men than women negotiate to obtain the best possible wage for their role.

Of the 61% of the gender gap that is explained by worker characteristics over half (36%) are because of the sorting of men and women into different occupations and industries – a particularly striking degree of the genders systematically taking different roles – and 24% due to differences in education and experience between men and women.

Germany has the largest gap

Of the eight countries, Glassdoor’s study shows that Germany has the largest unadjusted gap, of 22.3% (the official government figure was 21%), with women earning only 78 cents in each euro earned by men, which is one cent below the figure earned by US women compared with men. However, once statistical controls are applied this rises to 94 cents of the male euro.

It is also the case that Germany’s figures have not improved over the past three years, unlike the other seven nations.

The adjusted gender pay gap for Germany comes in at 6.4% for base pay (8.2% for all compensation).

Out of all the countries, Germany has the highest proportion of the gender pay gap that is unexplained, at 45%.

Reasons behind the 55% that is explained show a fairly evenly split between the sorting of men and women into different industries and occupations, and differences in education and experience between men and women.

Occupational segregation and the US gap

Interestingly, in France, only 16% of reasons behind the pay gap are to do with sorting of men and women into different industries and occupations while individual worker characteristics explains 30% of the pay gap, a much higher proportion than in the UK or Germany, which has the highest segregation figure.

What Glassdoor calls “occupational segregation”, ie the tendency of men and women to seek work in different kinds of jobs, is considered one of the main drivers of the pay gap. But in the US, as well as France, it is a weakening factor, the research suggests, with increasing numbers of women entering previously male-dominated fields in the US labour market.

The research reveals that, in the US, the sectors with the worst gender pay gap (after adjustment) is, surprisingly, media (6.4%). More predictably, retail and construction followed. The narrowest gap is in education (2.4%) and biotech and pharmaceuticals (2.2%). IT, where there has been so much dispute over the inclusion of women, lies slightly above the middle of the range with a gap of 5.4%.

Not all sectors are moving in the director of narrower pay gaps. In the US, restaurants bars and food service has seen a 1.8% percentage point expansion of the gap and travel and tourism a 0.9% growth.

Glassdoor calculates that the gender pay gap in the US could close in 16 years’ time, in 2035. However, it concedes this is an optimistic estimate based on the recent acceleration of the gap’s narrowing. If the decrease in the pay gap between 2010 and 2018 were maintained it would actually be 2070 before the gap disappeared.

The confidence gap

The research’s authors explore whether applications can reveal much about the different approaches of men and women to pay when looking for work. This reveals that where men and women are equally qualified there is only a tiny gender pay gap (0.7%), so the salary confidence gap effectively disappears. Overall, however, men apply for higher paying jobs than women, based on generally higher levels of education and experience.

When switching between jobs, men and women each seek pay increases of around 33%. Women, though, start from a lower pay base, so are negatively affected by pay gaps from earlier in their work history. This is a key reason behind the gender pay gap growing as people age and also why many campaigners are urging governments to make it unlawful to require people to reveal their salary histories.

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In January a Danish academic study revealed the beneficial effect of gender pay gap reporting on equality between men and women when it came to salary.

The Glassdoor study, Progress on the Gender Pay Gap: 2019, was based on 510,954 salary reports in eight countries between 1 January 2016 and 31 December 2018.