More Clarity, more Fairness: Pay Transparency is Key

With the adoption of the EU Pay Transparency Directive 2023, the European Union has set an important milestone in the fight against pay inequality. The directive's measures against gender-discriminatory pay structures go far beyond those of the German Pay Transparency Act (Entgelttransaprenzgesetz).

The gender pay gap in Germany remains at around 16% - a figure that has barely changed despite many efforts. Even if the scope of employment, occupations and thus the gender-specific segmentation of the labour market are excluded, the adjusted pay gap in 2023 is 6% on average - and varies greatly by sector. The new EU directive offers the opportunity to finally reduce this persistent gap consistently.

Implementing pay transparency is far more than just a compliance task. It is an opportunity for sustainable organisational development and the establishment of a diversity-oriented corporate culture. In our collaboration with EAF Berlin, we combine our data science expertise with expertise in corporate organisation. We are convinced that this holistic approach not only ensures the fulfilment of legal requirements, but can also initiate a profound change in work and management culture.

Organisational development is key

EAF Berlin supports companies and organisations in understanding the EU directive as a strategic development process. Starting with sensitising management to the importance of pay equity, this includes the development of a transparent remuneration strategy. Existing evaluation systems are checked for hidden discrimination factors and all stakeholders are involved in the transformation process.

Particular attention is paid to the required change management. The disclosure of salary structures is often a sensitive issue and can provoke resistance. However, with professional support, companies can initiate a cultural change that goes beyond mere compliance with legal requirements and leads to a fairer corporate culture.

Thinking intersectionally

Companies with a balanced ratio of women and men in management positions have demonstrably lower pay gaps. It is important not only to pay attention to gender, but also to consider other dimensions of diversity. People with multiple discrimination characteristics in particular - such as women with a history of migration or queer people with disabilities - face hurdles on the path to management positions.

In the past, gender issues were often viewed one-dimensionally, focussing mainly on privileged groups: white, young, highly educated cis-women with no migration history and no disabilities. However, the reality for many women in Germany is different. Studies show that several forms of discrimination have a negative impact on the salaries of migrant and migrantised women. The migrant gender pay gap was 30% in 2022. This shows very clearly how strongly migrant women are affected by at least double discrimination.

The multi-layered patterns of discrimination make it clear that we need a holistic approach that addresses pay equity at an individual, organisational and societal level. The EU Pay Transparency Directive provides an important legal framework for this - but its effective implementation requires technological support in data analysis and expertise in change processes in companies.

The synergy of consulting expertise and technological innovation

The INES Analytics x EAF Berlin collaboration makes it possible to precisely identify career barriers for underrepresented groups and to develop targeted counselling services and strategies for action. Employers are thus supported in implementing bias-sensitive promotion processes and continuously measuring and improving progress in relation to diversity goals.

A concrete example: At a medium-sized company with 500 employees, the analysis by PAY_transparency shows that women on average earn 7% less than their male colleagues in equivalent positions. In a second step, the detailed AI-based analysis by FAIR_solution shows that this difference is at 12% significantly higher for women with a migration background. The tool calculates that closing this intersectional gap would result in additional annual costs of around 340,000 euros. FAIR_solution's AI also identifies all structural causes that are relevant for longer-term options for action. Based on these results, EAF Berlin is developing, among other things, a phased implementation plan that spreads these costs over three years and integrates them into strategic personnel planning.

Holistic approach

In order to fulfil the complex requirements of the EU Pay Transparency Directive, holistic approaches are needed to reduce discriminatory pay structures in the long term. This includes the efficient use of employee data that provides information on possible pay inequalities. It also includes the development of action structures that ensure the long-term implementation of fair and transparent pay structures.

An integrative approach like this goes beyond the mere fulfilment of legal requirements - it has the potential to initiate far-reaching changes in the work environment and in the leadership mindset!

In our cooperation with EAF Berlin, we, INES Analytics, combine our science-based AI FAIR_Solution and PAY_transparency with expert advice on organisational development from EAF Berlin. We are convinced that this holistic approach not only ensures the fulfilment of legal requirements, but can also initiate a profound change in work and management culture.

Resources

• Antidiskriminierungsstelle - Homepage - 19. Migration Pay Gap

• DIW Berlin: Gender Pay Gap in einem Betrieb sinkt mit mehr Frauen in Führungspositionen

• FEI_Equal_Pay_Day__M_G_PD_2025-03-06.pdf

• Gender Pay Gap sinkt 2024 im Vergleich zum Vorjahr von 18 % auf 16 % - Statistisches Bundesamt