TAMSIN SRIDHARA: Welcome to the next in our video series in preparation for the EU pay transparency directive. In this video, we are going to be focused on Germany, and it's going to be informed by the results of our latest pulse survey in Germany. I'm delighted to be joined by Florian Frank, who's our pay equity lead for Germany. So, Florian, just to help set the scene can you just give us the current context on pay equity and pay transparency in Germany?
FLORIAN FRANK: Yes, actually in Germany, we already have some provisions, which we will also come with the EU directive. So, for example, the information right for existing employees on same or equal value of work. It has been introduced in Germany already 2016, I believe, so we are six years in, and there are actually some interesting lessons to learn.
Interestingly, I think there are two facts in Germany, which made the regulation quite prohibitive. So on the one side, it's limited to work locations with more than 200 employees, rather than on the entity level, and on the other side, you need to have at least six employees for the opposite gender in order to run the analysis due to data privacy rules.
TAMSIN SRIDHARA: And then in Germany at the moment, it's the employee right for information, but you're not having then to advertise or disclose anything more that might prompt employee questions.
FLORIAN FRANK: No, that's really all right, but in the end, interestingly, is that actually employees don't take up their rights. So what we really can see is that even after six years, just a handful of companies really are receiving requests and not really many. Only companies that really have troubles over employees really feel they have problems, they have seen a lot of requests coming up.
And even though those regulations, as I said, with those two rules, just assume you have a company with 1,500 employees, seven work locations, only two locations over 200 employees, then information right is limited to those employees on the two work locations with 200 employees. And then often if you define work of equal value very narrowly, you hardly find any jobs where you have then six employees there. So often they don't get actually the information.
TAMSIN SRIDHARA: And this is why I think for both of us we were really keen to see the results of the survey you've just run because we've been hearing for German employers to date, pay transparency has led to much change, but we were wanting to see whether they were anticipating change coming up with the directive. So can you just give us then some headlines from the survey about what it was telling us in terms of how German employers are now seeing the new EU pay transparency directive?
FLORIAN FRANK: I think everyone, of course, has the awareness that they have to do something, but interestingly, it's really that they are still in a wait and see mode. And looking at the past, I think it has worked out right because as I just told you with the existing provisions, hardly any employees are taking up their rights, but I think this time it won't work out.
I mean, I think they have to take actions looking at the decree of the provisions and the consequences. The 5% hurdle which you're having and if you're not meeting it, that you really have to take action together with the workers representative to change your systems and processes.
TAMSIN SRIDHARA: Yeah, and I totally agree that this time it's going to be different. And we're hearing in other markets this nervousness from clients when it seems quite big, and two, is it enough of a priority? But on the other side, is it going to be acceptable for the business in three years time when you're suddenly saying that we've got to do all of this, we've got to find the extra investment, the extra money.
So I think the way that the clients are doing is trying to create that sense of urgency with the business now, which then leads on to the next question is, how ready although German we're hearing that there's a bit of a wait and see, how ready do you think that German clients are in respect of their underlying structures, data analytics, comms that are all part of being able to do this successfully?
FLORIAN FRANK: That's very interesting. Also the outcomes of our survey are very interesting at this point because I think it undermines that the sense of urgency is still not there. So we ask actually companies to rate themselves and the overall market in regards to six WTW fair pay principles. So for example, are they paying equal for equal work? Are they promoting fair pay? Are they taking measures, et cetera.
And when companies rated the overall market, the tendency to agree that the market fulfills those principles, it was like between 10 and 35%. If the companies but then rated themselves, the tendency to agree was much, much higher. So it was between 50 and 95%.
So and what is the conclusion for me? I think the conclusion for me is, yeah, the relation of the market, that's the correct one, and companies are really overstating themselves. And I think it's clearly because they actually don't know where they stand because they haven't run any analysis, and I think it's really now the time to run those analysis to understand where do we stand and really to create this momentum of urgency also internally to say, yes, we have the next two, three years to make changes so that we are ready.
TAMSIN SRIDHARA: So you've got two very practical actions for Germany, then is one creating a sense of urgency in the business case, and then secondly within the rewards team is starting to run the analytics so you really understand where you are.
FLORIAN FRANK: That's right.
TAMSIN SRIDHARA: Florian, thank you very much for sharing the insights from Germany, and we wish the German market every success in the end of preparing for the EU pay transparency directive. Thank you.
FLORIAN FRANK: Thank you, Tamsin.
