How salary transparency reduces the gender pay gap

Key insights

• Women in Germany and the UK say they are less able to assess their own market value than men and therefore benefit more from salary information in job adverts.
• When it comes to salary negotiations, women are now just as successful as men, although they have fewer opportunities to negotiate their salaries.
• By providing more salary transparency, companies would not only gain advantages in candidate attraction, but would also contribute to closing the gender pay gap.

Salary information creates more gender equality

Globally, women earn on average 23% less than men. In Germany, the difference is 18%, while in the UK it is around 14%. Although the gender pay gap has been shrinking in the past decades, progress has been very slow. According to calculations by the World Economic Forum, it would take almost 260 years at the current rate to close the gap. How can we accelerate this process? Legal measures such as the Pay Transparency Act of 2017 in Germany or the Equality Act of 2010 in the UK are already contributing to it. The promotion of diversity and the proportion of women in higher positions or receiving support, such as childcare, also contribute to greater fairness and options for women. In addition to these aspects, salary transparency is a key factor in closing the gender pay gap, which is the focus of our latest study.

What are the differences between genders when it comes to salary and salary transparency? To begin, we see that in Germany, 10% fewer women are satisfied with their current salary than men, compared to just over 6% in the UK. Why is that? To negotiate a satisfactory salary, employees must be able to realistically assess their own market value in relation to their position and qualifications. Compared to 77% of men, 67% of German women state that they can assess their market value well. A similar picture emerges in the UK: around 65% of women compared to just under 75% of men can assess their market value. The majority of respondents say their own professional experience informs their salary expectations. For German and British women, salary details in job adverts play the second most important role. While the difference to men in the UK is 5%, for Germany it is just under 9%, which emphasizes the importance of this source of information for strengthening one's negotiating position. It is therefore not surprising that 9 out of 10 women (90% in Germany and 87% in the UK) in both countries are in favor of salary transparency in general.

This is particularly worrying when more than a quarter of women in the UK who are dissatisfied with their salary state that their salary doesn’t allow them to live comfortably, especially when they have children. Totaljobs, a subsidiary of The Stepstone Group, analyzed the relationship between the gender pay gap and parenthood in the UK according to salary data, highlighting the ‘motherhood penalty’ as the main culprit behind the gender pay gap.

Women are equally successful in salary negotiations as men

Women are often said to be less successful or proactive in negotiating their salary or a pay rise than men. Our results for Germany show that this is not always true. While around 8% fewer women generally have the opportunity to negotiate a salary increase with their employer, they are just as successful at it as men. Around a quarter of respondents (25% of women and 26% of men) said they had asked for and received a pay rise in 2023. As recently as 2022, we found a greater difference between genders of more than 4%. This reflects a positive effect of salary information in job advertisements in reducing the gender pay gap. Nevertheless, there are other challenges. Between men and women, women are more likely to be significantly less satisfied with their salary increases, which could be attributed to women generally being on lower salary levels. They also feel significantly less comfortable negotiating salaries than men. 20% of women in Germany and 21% of women in the UK feel more uncomfortable than men to negotiate their salaries. This discomfort is due to women being more likely to lack the correct salary information ahead of the negotiations.

Conclusion and recommendations

Our data shows that there is still a long way to go to close the gender pay gap and achieve greater gender equality. And yet: increased salary transparency and more women negotiating successfully in the meantime paint a positive picture of the future, which is particularly important in times of crisis. We also see that complex means do not always have to lead to the goal. Salary information in job adverts provides more orientation, fairness and offers advantages for employers and employees. For example, it increases the attractiveness of employers and the number of candidates. This not only offers more women an opportunity, but also provides a means of counteracting the labor shortage.

About the study

In November 2023, The Stepstone Group surveyed around 5,700 employees in Germany, including around 1,200 managers and around 750 recruiters, on the topics of salary and salary transparency. An additional survey of around 2,000 employees took place in the UK in December 2023. The surveys are representative in terms of age, gender, and education.