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Equal-pay-day 19 March 2016
The picture shows the same kind of work, but less income, and as a result also lower pensions after retirement; the data recently published by the Federal Statistical Office shows that the difference of pay between men and women has gone down, but still women get paid less for the same work than men do. It almost seems like women are unable to escape that inequity even in our modern 21st century. The published data has drawn some criticism, though.
A number of causes for the inequality have long been identified, like the still lacking facilities and support that allow people to juggle career and family life. This continues to be a problem especially in the West-German states, while the Eastern states benefit from the old child-care system of the former GDR. Even that pales, though, if compared to France, which has been praised for their most advanced child-care system in Europe. As a result, even highly qualified mothers often have to accept drawbacks for their careers as they take care of their children either by taking a break from the job or working part-time. In addition to that, typical “female” jobs like in nursing or teaching pay less overall than those in the male-dominated STEM fields, with its engineers, physicists, chemists and the like. Unfortunately, many statistics don’t account for those important differences, making the inequality seem larger than it is. Still, even in those social professions, men are often paid more than women. Lawmakers have taken measures to prevent that, but not everything is having any effect (yet) and others completely miss the mark.
In 2016, „equal pay day“ was the 19th of March. Statistically speaking, the men in Germany would only need to start working on march 20th to earn the same income until the end of the year as women. That is an improvement by almost a full month since the turn of the century, but still spans almost a full quarter of the year. But how is that calculated?
The method of calculation for the mentioned study takes the average hourly wage of men (EUR 20.59) versus women (EUR 16.20). On average, therefore, men earn about 21% more per hour. That difference is showing a slight downward movement of exactly one percent between 2014 and 2015. It is widely assumed that in 2015 the new legal minimum wage helped to improve the pay of the many badly paid jobs that are mostly held by women. In some cases that meant pay increases of up to 40%, although still on a very low base level. Overall the increase in such minimum wage jobs was only 8% in the Eastern States, though, and almost 23% in Western Germany. Statisticans have not been able to provide a good explanation for that, given that women working in service jobs in the Eastern states had been most affected by low wages due to high regional unemployment rates.
The long-term consequences for the statutory pension are well known. Men on average have 40% prospects for their retirement than women, not even counting occupational pensions, which are often paid in addition to statutory pensions for industry workers. That translates into a monthly difference of about 400 euros in pension after retirement. Recent changes now allow women with to accumulate some more pension bonus for their pensions, but those still don’t compensate by far for the losses during times devoted to child-rearing. Those periods usually cannot be compensated for until reaching retirement age. Adding to that, the aging population adds more and more leave periods of caring for care dependent parents or in-laws. That work, too, is mainly done by women. It therefore happens that a woman might earn the same wage as a similarly qualified man, but not over the full 45 years of average employment time. Even just five years of leave time can have great impact on the future pension. Many women underestimate that effect when deciding to care for children or parents, and afterward maybe work only part-time for a while.
The only thing positive to mention here is that the difference is not as bad anymore as it was 25 years ago. The statistically higher life expectancy of women, while pleasant for the individual, also leads to overall lower pensions, as it causes a longer calculated pension period than for men. One also has to consider that for the lower income household, the increase in income hasn’t been able to keep up with rising prices for many years now, something that could also lead to difficulties for accumulating a sufficient pension for retirement.
This about the data published by the Federal Statistical Office; The Institute for German Economic Research (IW) disagrees, listing different reasons for any differences in pay, and claiming the wage gap does, in fact, not exist. Shortly before this year’s “equal pay day”, an IW spokesperson told a major daily newspaper that after controlling for all factors like time spent caring for children or dependent parents, the size of the employers and different professions, the gender pay gap disappears. The 21% stated by the Federal Statistical Office for example does not take into account that women are more likely to work in small companies, which overall pay lower wages than big corporations. At the same time the IV spokesperson expressed their rejection of the wage equality law in planning by Federal Minister Andrea Nahles (SPD), calling it a bureaucratic monster. Independently of both institutions, the Hamburg Institute of International Economics (HWWI) estimates the pay gap to be around 2.3 per cent.
Looking at the various statistics, this begs the question of who is miscalculating. Is this a matter of Churchill’s quote “I only believe in statistics that I doctored myself,” or should the various experts re-adjust their formulas?
Considering the inequality in today’s labor marker and the looming poverty in old age we are not talking about games or math exercises. One does not have to be a feminist to realize that equal pay for the same work is important to keep the social peace in our society.
We are, therefore, anxiously awaiting solutions.
Herr Daniel Stock d.stock(@)top-jobs-europe.de