Equal Pay Day: How fair is your company?

Entrepreneur Alexandra Knauer is committed to more wage justice and is convinced that both, companies and the economy in Germany will benefit from that.

Entrepreneur Alexandra Knauer pays attention to equal pay in her company. Image Credit: KNAUER/Florian Bolk.

For some years now, the Equal Pay Day has been established as a day of action to draw attention to the fact that women are paid less than men. This date marks the day of the year until which, in a figurative sense, women work without payment. Or the other way around, it would be the day from which men would have to start working in order to achieve the same average annual salary as women. This year, according to calculations, the Equal Pay Day in Germany falls on March 17, 2020 - this corresponds to a salary gap of 21% on a national average.

Although the principle of "equal salary for equal work" is taken for granted by a majority of the population, the reality is still a different one.

In Germany, the so-called unadjusted wage gap has only decreased by around one percent to its current level since 2013. In an EU comparison for 2018, Germany is at the bottom of the table with these figures - only Estonia is even worse.

Berlin entrepreneur Alexandra Knauer, whose company develops and produces high-tech laboratory measuring instruments, has paid attention to fair conditions in her company for many years.

The success of these efforts is reflected, for example, in the fact that almost as many men use their parental leave entitlement as their female colleagues. The overall women's quota at KNAUER is very high for a technology company, at almost 40%. The proportion of women in management positions is, at 35%, significantly higher than the average for German companies, which is 21%.

Motivated by the Equal Pay Day, Alexandra Knauer has had the gender salary gap and the Equal Pay Day calculated once a year for her own company for two years now.

I am very satisfied that we have been able to reduce our small salary gap from 3.2% last year to 2.6% this year. This means that KNAUER has already reached Equal Pay Day on January 10^th. I consider a fluctuation margin of 3% in both directions to be acceptable and try to stay within this range."

Alexandra Knauer

How is the unadjusted gender pay gap determined?

The value is calculated from the average gross hourly wage for men minus the gross hourly wage for women and is put in proportion to the hourly wage for men. This ratio is expressed as a percentage and is also known as the "gender pay gap".

Gender Pay Gap by states (Graphic: Lohnspiegel.de)

However, this calculation method has been criticized, because it simply lumps everything together. For example, in the case of the wage gap between the federal states of Baden-Württemberg (22.7%) and Brandenburg (14.9%), critics say that it is mainly structural reasons that are to blame and not actual unequal payment. After all, it is precisely the federal states with a high proportion of well-paid technical occupations, in which traditionally significantly more men work, that have a large wage gap.

The simple calculation of the unadjusted wage gap obviously has its weaknesses. It does not take into account the comparability of individual jobs, but as an average value it is still a good indicator. If we avoid that one sex is better paid than the other and jobs are mostly allocated equally between women and men, the unadjusted figure will no longer differ from the adjusted one. It is an important task for me to ensure that these structural conditions are met in our company".

Alexandra Knauer

The CEO of 145 employees could be resting on her laurels, because the figures put her far ahead of the German average. However, it is important for her to motivate other entrepreneurs to review and minimize the gender pay gap in their companies as well. In order to lend more weight to these activities, KNAUER has also applied to "Mein gutes Beispiel" (German for: my good example), a nationwide competition for corporate social responsibility.

The motivated entrepreneur is convinced that diverse teams can achieve better results, even if this means more discussion at times. Germany can only maintain a leading position in international competition with the very best ideas.

KNAUER signed the Charter of Diversity years ago and thus clearly positioned itself.

Both, employees and applicants, welcome transparency regarding the wage gap. The work force feels they are in good hands, while the others prefer such a company when looking for a job.

Therefore, it is reasonable for companies to calculate their own wage gap on an annual basis - as is the case with KNAUER. Depending on the result, a company knows where it stands and can take specific measures to perform better in the future. On the other hand, a good result can and should be announced. Similar to corporate social responsibility activities, this can contribute to a positive image of the company.

Those who wish to reduce the wage gap in their work force will achieve this if women's performance is rewarded in the same way as men's when hiring and when raising wages. It is important that managers at all levels are mindful of this issue and take the first steps.