What is an Adjusted Pay Gap?

The adjusted pay gap is the difference in gross pay between two different groups with comparable characteristics. In order for the groups to have comparable characteristics for the calculation, the part of the earnings difference that is based on structural differences is eliminated. Structural differences include, for example, the level of education, qualifications, work experience and scope of employment.

The two groups compared with each other can be, for example, women vs. men or diverse persons vs. male persons or female persons vs. diverse persons. If two groups with different genders but otherwise comparable characteristics are compared, the adjusted gender pay gap is determined. If employees of different age groups are compared with each other, for example, all employees under the age of 35 with all employees over the age of 35 who otherwise have comparable characteristics, the adjusted age pay gap is determined. Other pay gaps can be the origin gap and disability gap.

What the Adjusted Pay Gap Says

The term "adjusted pay gap" is misleading, because "adjusted" in this case means "broken down". The adjusted pay gap shows in detail which factors contribute to the pay gap and to what extent.

Various structural factors that have an impact on wage inequality are included in the adjusted pay gap. That is why it is usually significantly lower than the unadjusted pay gap. The "unexplained remainder" that remains as an adjusted pay gap suggests that there is discrimination in pay due to other, as yet unknown, factors.

In this example, women earn 16% less gross per hour than their male colleagues. 10% of the gap can be explained by structural factors such as working hours, further training or department. This leaves 6% of the pay gap that cannot be explained by the available factors. In other words, taking into account the known information, this inexplicable remainder remains. This may be due to discrimination against the gender “female”.

Application of the Adjusted Gender Pay Gap

The adjusted gender pay gap can also show wage differentials for equivalent jobs and thus show whether there is unequal pay for equal and equivalent work. In politics, it serves as a means of evaluating and developing gender equality policies and measures to promote equal pay.

In an international comparison, the Gender Pay Gap enables a standardized comparison between countries, provided that the same characteristics have been used for adjustment. With the EU Pay Transparency Directive, all companies with at least 100 employees will soon be required to report the unadjusted gender pay gap.

Quellen

• Verdienstunterschied ­zwischen Männern und Frauen | Sozialbericht 2024 | bpb.de

• Geschlechterungleichheiten: Gender Pay Gap | Arbeitsmarktpolitik | bpb.de

• EU Richtlinie - 2023/970 - EN - EUR-Lex

• Gender Pay Gap - Statistisches Bundesamt