Equal Pay and Gender Pay Gap Analysis

The significance of equal pay has grown substantially in recent years due to three key factors:

1. Corporate Social Responsibility 
   In the 21st century, it is no longer acceptable for two individuals performing equivalent work to be paid differently simply because of their backgrounds. Companies are held accountable for their social track record. The "Where's my €300,000?" campaign by Women Inc. is a prime example of this. Demonstrating commitment to equal pay has become a business necessity.
2. Legislation 
   As public scrutiny increases, lawmakers have also taken action. In the UK, companies have been required for several years to disclose their gender pay gap data. Similar regulations are expected to be implemented across Europe in the near future. Some industries already face stricter rules, such as those enforced by the European Banking Authority (EBA) since December 31, 2021.
3. A Competitive Job Market 
   A tight labor market is another strong driver for companies to address diversity and inclusion, particularly the gender pay gap. Companies that can demonstrate fair pay practices are more attractive to a broader talent pool, improving their chances of securing top talent.

The good news is that the pay gap is narrowing. The bad news is that, as of 2021, women in Germany still earn 18% less than men on average. This places Germany among the worst performers in Europe in terms of pay equality.

The wage gap varies significantly by sector. In the public sector, for instance, it had been reduced to 6% by 2022. However, even in industries with strict collective bargaining agreements and standardized job classifications—such as healthcare—pay disparities persist. This suggests that rigid pay structures alone are insufficient to close the gap.

One reason for the shrinking pay gap in Germany is the rising educational attainment of women. In some cases, young women now earn more than young men. Does this mean the problem will resolve itself over time?

A key factor in the gender pay gap is the lower career mobility of women within companies. Women are less likely to move into higher-paying positions. One potential cause is that they are more likely to work part-time, often due to family responsibilities.

Additionally, analyses by Highberg show that even when women do reach senior positions, they still earn less than their male counterparts—despite efforts by some companies to balance gender representation in leadership. This suggests that the gender pay gap in Germany is a complex issue that will not disappear on its own. Each company must conduct its own analysis and take targeted action to address pay disparities.

If your company wants to implement the principle of "equal pay for equal work," how does the process work?

Step 1: Define the scope, key terms, and background variables for the analysis. For example, what exactly constitutes "salary" in your organization? How do you define "equal work"?

Step 2: Collect, link, and process all necessary data for analysis. These data often come from HR systems.

Step 3: Once all relevant data have been gathered and converted into an analytical dataset, the analysis can begin. Statistical methods are used to control for factors such as education level, tenure, age, contract type, performance rating, and location.

Step 4: After the analysis, the results are interpreted. Is there a gender pay gap? Does it apply to the entire company or only specific segments? What factors contribute to the gap, and how can they be addressed?

Step 5: Based on the findings, an action plan can be developed to close the gender pay gap. Clear communication is essential: What did we discover? What steps are we taking to ensure equal pay?

Many companies have already assessed whether they provide equal pay for equal work. In 2018, Aegon Nederland was the first company in the Netherlands to conduct a gender pay gap analysis, publishing the results online. Companies like ProRail, APG, Tilburg University, and ABN Amro have since followed suit.

Would you like to learn more about this topic? Watch the "Unlocking Equal Pay" webinar by Highberg.

Companies that have worked with Highberg on equal pay analysis have shared their experiences:

• ProRail: “In 2018, together with our HR analyst, we began systematically reporting on diversity and inclusion data. At the same time, our HR department was looking for an HR analytics partner. We found Highberg, who are now helping us with our Equal Pay case study.”
• Aegon Nederland: “We chose to have an external agency, Highberg, conduct the analysis. They specialize in HR data analytics and know how to approach an analysis like this properly. It’s also crucial to incorporate an objective perspective on this topic.”
• Van Lanschot Kempen: “Equal pay is an important topic for Van Lanschot Kempen. We had our pay policies reviewed externally. Based on the results, we set goals to ensure pay equality within our company.”
• Gemeente Enschede: “Based on the findings and recommendations from the analysis, we reviewed our current policies, identified key areas for improvement, and developed an action plan.”
• KIT – Royal Tropical Institute: “Thanks to the analysis, we now have even more confidence that pay equity is deeply embedded in our organization. We can now say with certainty that fair pay is part of our identity and have the data to prove it.”
• Oxfam Novib: “We were surprised to discover that one specific department had a disproportionately high number of employees in lower-paying roles—most of whom were women. This insight was a real eye-opener.”

Does your company want to conduct a gender pay gap analysis with the help of an independent, expert partner? Highberg is the right choice!

• 20+ corporate references for Equal Pay, nationally and internationally
• Compliant with legal regulations
• Outstanding client reviews
• Standardized processes at competitive prices
• The only provider offering an interactive Power BI dashboard

Highberg offers two options for conducting an Equal Pay analysis:

• SME Pay Equity Check: For companies with 100+ employees, this check provides a quick and simple initial insight into whether a pay gap exists. Results highlight nominal pay inequality across the entire company and within specific groups (e.g., departments, job types, tenure).
• Equal Pay Analysis: This comprehensive analysis is designed for organizations with 500+ employees. It examines both nominal and adjusted pay disparities, allowing companies to identify the root causes of pay gaps and develop targeted strategies for improvement.

What data/variables are minimally required to conduct the analysis?

Based on experience, the following variables (or their derivatives) are minimally required:

• Gender
• Salary (including fixed allowances) based on a full-time contract
• Age
• Employment level or job level (possibly derived from rank)
• Job category or function
• Country/location (in case of multiple locations)

Additionally, any variables that influence salary can be included in the analysis, such as work experience and educational background.

What if we don’t have all the necessary data and/or if our data quality is insufficient?

Depending on the data quality, there are several options:

• Engaging employees to collect missing data, for example, through surveys or by asking them to update their information in the HR system.
• Using a subset of employees for the analysis. If this subset is representative of the entire workforce, the results can be extrapolated to the whole organization. If the data is only of sufficient quality for a specific group, the analysis can be conducted solely for that group.
• Using only the variables that meet the required quality standards.

Is the tool secure?

Yes, data protection and security are top priorities at Highberg.

How is employee privacy ensured?

Names and contact details are not used. Additionally, dates are converted into less traceable variables, such as replacing birth dates with age in years or start dates with the start month.

Our company does not want employee data to be stored outside our infrastructure. Can Highberg still perform the analysis?

Yes, please contact us to discuss the possibilities.

Can this method also be applied internationally?

Yes, we have conducted this analysis multiple times for both national and international companies.

What methods are used?

For the Equal Pay analysis, Highberg uses a combination of the following methods:

• T-test
• ANOVA
• Regression analysis
• Random Forest
• Rake method

The Equal Pay Certification from Highberg demonstrates your company’s commitment to fair pay.

With this certification:

✔ You assure employees that pay disparities have been thoroughly assessed
✔ You show potential hires that equal pay is a priority
✔ You provide proof that an independent, expert analysis was conducted
✔ You demonstrate compliance with relevant guidelines

After completing a detailed analysis, companies receive the Equal Pay Certification, proving they have conducted an independent and rigorous gender pay gap assessment.