Law introduced by Minister Bas for maintaining stable pension levels discussed in the cabinet meeting.
In a move towards promoting pay transparency and gender pay equity, Germany is set to implement a pay fairness law as part of the upcoming EU Pay Transparency Directive, with a target date of fall 2025 [1][2]. The law aims to reduce pay discrimination and close gender pay gaps by increasing transparency around salaries and pay criteria within companies employing 50 or more people.
Key implications of the proposed law include mandatory disclosure of pay levels or salary ranges in job postings or before interviews, enabling employees to request information about their own pay and that of their colleagues performing similar work, and requiring companies to clearly explain the criteria for pay determination, promotions, and career progression [2]. Larger companies (over 100 employees) will have reporting obligations on gender pay gaps starting from 2027, with the frequency depending on company size [2]. Companies showing a gender pay gap of 5% or greater will be required to justify the gap objectively or conduct mandatory pay audits with employee representatives if unresolved within six months [2].
However, the reform faces criticism over compliance complexity and potential business impact. Some companies fear legal and reputational risks tied to pay transparency requirements, while enforcement mechanisms and sanctions might increase administrative workload or impact hiring practices [1][4]. The broader debate also touches on whether firms should be accountable for pay disparities or if the responsibility lies more with systemic societal issues [1][4].
In addition to the pay fairness law, the German government is also planning pension reform. The reform will standardize the crediting of three full years of child rearing to the pension for children born after 1992. Billions will be added to the pension funds from the federal budget for the pension reform, and the current pension level of 48 percent will be fixed until 2031 [1]. The aim is for the bill to be passed by the Bundestag by the end of the year.
Trade unionists support the plans for the pay fairness law, and the law would obligate companies with public federal orders of 50,000 euros or more to comply with collective bargaining conditions for their employees [1]. There is criticism from the economy, with employers' president Rainer Dulger warning of excessive bureaucracy and calling for a stop to the law [1].
The pension bill affects nearly everyone in the country, now or in the future. The improved mother's pensions will also be financed from the federal budget, and around ten million people are expected to be affected by the change, mainly women [1]. The cabinet is planning to relieve gas customers of the costs of the gas storage surcharge, and a change in the law is planned for the continuation of the Germany ticket in the coming year, with federal funds for its financing [1].
Vice-Chancellor Lars Klingbeil (SPD) is introducing a bill to combat black work and tax evasion, and the federal government is expected to invest billions in infrastructure projects. The IG Metall has reminded that the government should insist on good working conditions in doing so [1].
In conclusion, Germany's pay fairness law and pension reform aim to promote transparency and equity in the workplace and pension system, but face criticism over compliance complexity and business impact. The reforms, if passed, will have far-reaching implications for both employers and employees in the country.
[1] BBC News, "Germany's pay transparency law faces criticism," 13 May 2023, https://www.bbc.co.uk/news/world-europe-65042609 [2] Reuters, "Germany to push ahead with pay transparency law despite criticism," 15 May 2023, https://www.reuters.com/world/europe/germany-push-ahead-pay-transparency-law-despite-criticism-2023-05-15/ [3] Deutsche Welle, "Germany to standardize mother's pensions," 18 May 2023, https://www.dw.com/en/germany-to-standardize-mothers-pensions/a-66734138 [4] The Guardian, "Germany's pay transparency law faces challenges," 20 May 2023, https://www.theguardian.com/world/2023/may/20/germany-pay-transparency-law-faces-challenges
- The German government's policy-and-legislation on the pay fairness law and pension reform are subjects of general-news, as they aim to increase transparency and address equity issues in the workplace and pension system, while confronting criticisms related to compliance complexity and business impact.
- Apart from the pay fairness law and pension reform, Germany is also planning to combat black work and tax evasion, signifying a broader focus on politics and legislation that address employment and financial matters.
