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Why is the gender pay gap so big in German-speaking countries?

Avalon Pernell
Avalon Pernell - [email protected]
Why is the gender pay gap so big in German-speaking countries?
Employees gather at a work meeting. Photo by Christina @ wocintechchat.com on Unsplash

In Germany, Switzerland and Austria, women are losing ground in the fight for pay equity, according to a recent analysis from the Munich-based Ifo Institute for Economic Research.

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As DACH countries celebrate International Women's Day, inequalities in the workplace still remain - especially when it comes to remuneration. 

Despite efforts to close the gender pay gap, new research reveals that men still receive much higher bonuses than women in German-speaking countries.

“The gender pay gap in bonus payments is significantly bigger than in basic salary,” said Ifo researcher Michaela Paffenholz in a report published on Tuesday. “These major differences make the gap in total salary even larger.”

Ifo’s data reveals the pay gap in performance related bonuses extends across the DACH region. In Germany, women receive an average of 6.1 percent less in bonus payments, while in Austria, the gap between men and women is 7.2 percent and in Switzerland, women receive an average of 5.2 percent less in bonuses.

The prevalence of performance-based pay continues to grow across Europe. The number of workers receiving performance bonuses nearly doubled from 2000 to 2015 to include nearly a third of European workers, according to a European Trade Union Institute working paper. 

Reducing the gender pay gap is one of the top priorities of the EU Gender Equality Strategy 2020–2025. But the issue of unequal bonus pay has received little focus from policymakers. 

Ifo Institute’s analysis found that bonus payments can increase the gender wage gap. 

In Germany, the pay gap between men and women in basic salary is 2.7 percent, but bonuses increase this gap to 3 percent in total salary. In Austria, the gender gap in basic salary is 2.3 percent, with bonus pay bumping that up to 2.9 percent.

In Switzerland, the gap is 1.2 percent for basic salary; bonus payments increase this to 1.6 percent for total salary.

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Still, the gender pay gap is not limited to hourly earnings and bonus payments: working in lower-paid sectors and fewer working hours also contribute to the gap between men and women’s pay.

According to statistics from the Germany's Statistical Office, working women in Germany earned 18 percent less than men in 2023. 

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This story translates across the DACH region. In Austria women earned 18.4 percent less gross wages per hour than men in 2022. Swiss women face a similar reality. Working women earned 18 percent less than men in 2022, despite “equal pay for work of equal value” being enshrined in the federal constitution since 1981. 

Larger companies are overrepresented in the market data collected by Mercer, so the studies are not representative of all companies in the DACH region. 

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