5 Reasons Why Equal Pay Is Now Essential for Companies

This example shows that companies should definitely address the issue of equal pay - and not just on Equal Pay Day, for legal reasons or for fear of costly violations. (Note: In June 2023, Google settled a lawsuit over gender and race-based pay discrimination with a payment of 118 million US dollars). 

After all, equal pay means much more than just numbers: Equal pay is about guaranteeing an equal salary for equal work and comparable performance - regardless of gender (keyword: gender pay gap), age, working time model (part-time or full-time), nationality, religion or special needs. 

5 Reasons Why Companies Should Address Equal Pay Now 

There are numerous reasons why the topic of equal pay should urgently be on companies' agendas. Below we present the top 5 reasons why it is now essential for companies to address equal pay: 

1. Regulatory Requirements 

Regulatory requirements such as ESG reporting and the European Union's Pay Transparency Directive, which came into force in June 2023, are driving the topic of equal pay onto the corporate agenda. This directive obliges companies to disclose their pay structures and ensure that equal work and work of equal value is paid equally.  

Companies with more than 100 employees will not only have to regularly publish data on the gender pay gap but will also have to take action by 2026 at the latest if this gap exceeds five percent. These regulations force companies to review their remuneration systems and eliminate discrimination to avoid legal consequences and fines. 

2. Global Markets 

A global market requires an international workforce: Supporting international customers, producing overseas, and purchasing raw materials all around the world are only some of the factors difficult or not at all to handle with only domestic know-how. Therefore, companies have long since stopped looking for suitable employees on their own doorstep and have started recruiting experts from other countries. And the temptation to pay less to employees from low-wage countries to save costs is not only a form of ‘wage dumping’, but also has a negative impact on the employer's image in the long run. A vicious circle, because on social media, such stories quickly ensure that no suitable employees can be found at all. 

The Supply Chain Act, which is also becoming mandatory for ESG reporting, also forces companies to check their entire supply chain for social and environmental standards and to ensure equal and fair wages. 

3. Skills Shortage 

The shortage of skilled workers makes companies want to attract women to professions that were previously occupied almost exclusively by men. And suddenly, classic male domains must deal with the needs and characteristics of a female workforce. Even if the same salary is initially paid for the same job, the period of maternity leave, the return from maternity leave to a part-time job, or the different negotiation skills in salary talks, among other things, can have a considerable influence on salary development. Another reason to keep the issue of equal pay systematically on the agenda. 

4. Growing Reluctance to Change 

Since COVID-19, the willingness of employees worldwide to switch jobs has increased massively - especially employees working in the hospitality and care industry - because they believe they have better opportunities with a new employer due to the large number of vacancies. A significant factor in this is the fact that many companies complaining about a shortage of chefs, waiters and nurses are still not offering better working conditions or salaries above the minimum wage according to the collective agreement.  

This is not so much about equal pay, same wage for the same job, but about pay equity, i.e., equal pay for work of equal value. Why, for example, should jobs in the steel industry be worth more on the market than jobs in hospitality or retail? It's time to rethink working conditions and payment in the low-wage sector. 

5. Gen Z's Aspirations 

Numerous studies, such as Stanford 2024, show that Generation Z (born between 1996 and 2010) attaches greater importance to meaningful work, work-life balance, diversity, equality and inclusion. The younger generation is looking for employers who assume social responsibility, promote ecological sustainability and actively implement the principle of equal pay. 

On the Road to Equal Opportunities: Equal Pay is the Key  

Equal pay - same pay for same job with comparable performance - is the least that young employees can expect from a good employer. Differences in treatment, promotion and pay based on gender, age, part-time/full-time, nationality, religion, special needs are no longer accepted. In general, the tolerance for "old white males only" seems very limited.   

According to a Zenjob survey from June 2024, only 22% of employees still want to work for a multinational. And according to a XING 2024 survey, the willingness to change jobs, especially among GenZ and Generation Y (25-34 years), remains significantly higher (61% and 47% respectively) than the average of 43%. 

The more diverse and colorful the corporate workforce becomes, the more important it will be for employers to include everyone, respecting their differences and creating a sense of belonging in a culture of fairness, because only when everyone pulls together can a company succeed. And equal pay is only the tip of the iceberg! 

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