The Granite Tower
FOREIGN REPORTFOREIGN REPORT
Disclosing Incomes… Are You Willing To?
Kim Min Young  |  gorapaduckim@korea.ac.kr
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승인 2017.10.05  19:11:53
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▲ PROVIDED BY SHUTTERSTOCK.

The term “glass ceiling” refers to women not being treated the same way as their male counterparts in their workplaces. They are not paid the same, and women tend to have more problems in getting to higher places in the pyramid of bureaucracy. Germany has decided that this glass ceiling now has to go. As the biggest step to prevent this discrimination, Germany has enacted the Entgelttransparenzgesetz (Act to Promote Transparency of Pay Structures). Salaries are no longer a private matter.


Last March, the German Congress passed a law, which took effect in July, requiring companies with more than 200 employees to disclose all of their salaries. This law does not in the strictest sense disclose all of the salaries to the public in a list. What is possible, however, is that any employee now has the legal right to request the average income of at least five other colleagues. The company upon getting the request should respond within three months. Also, companies with more than 500 personnel are required to prove that there is no salary discrimination based on gender or race even if there is no request. 

This is not simply limited to salaries. The law was made so that even the loopholes used to exploit benefits and welfare are scrutinized. To prevent these probable abuse scenarios, the law guarantees the right of the employee to see how the extra benefits are distributed. This includes allowance for food, transportation, and bonuses, among others. 

The purpose of this legislation is to ensure that the underprivileged class in society will not be paid less for the same amount of work as their colleagues. Germany’s decision to address this problem was fueled by research from their Ministry of Statistics in 2016. The male employees earned approximately 20.71 euro per hour, while their female counterparts were handed 16.26 euros per hour. This is approximately a 5,000 won difference each hour, which translates to about a 21 percent gap between male and female workers. Considering that the Organization for The term “glass ceiling” refers to women not being treated the same way as their male counterparts in their workplaces. They are not paid the same, and women tend to have more problems in getting to higher places in the pyramid of bureaucracy. Germany has decided that this glass ceiling now has to go. As the biggest step to prevent this discrimination, Germany has enacted the Entgelttransparenzgesetz (Act to Promote Transparency of Pay Structures). Salaries are no longer a private matter. Economic Cooperation and Development (OECD) average gap was 15.6 percent in 2014, the situation in Germany was worse compared to most other countries. 

According to German News Network Zeit, Manuella Schwezig, the German Federal Minister of Family Affairs, Senior Citizens, Women and Youth (FASCWY) who supported this bill asked, “How can a person negotiate their salaries properly without knowing how much their counterparts are paid?” She elaborated that this law will be a new opportunity for people to talk more freely about the subject of money and income. She went on further to state that this law is the first step in narrowing the income gap between the genders, and eventually wiping this discrimination from society. 

The road to Entgelttransparenzgesetz’s legislation was not simple. It went through numerous discussions and heated exchanges. There was a general consensus among those people who were worried about the negative effects of disclosing incomes to the public. In the case of Germany, people almost never talk about their incomes or personal finances at all, even amongst family members. Disclosing one’s own salary to other colleagues outside of family comes across as more of an invasion of privacy to most people. 

There were other concerns about how the new law would incite chaos and disunity among employees. Many employers use salaries as a motivation for employees so that competition will ensure efficiency in production. Better work performances are rewarded by higher salaries. However, by making incomes public, the employers fear this system is no longer going to work, as such transparency will disincentivize the workers. To justify such a system, it is crucial to explain the reason for the income gap, which cannot be done without degrading employees with inferior performances to at least some degree. 

Entgelttransparenzgesetz was passed despite the concerns it posed to employers and skeptics. Still, support for the law has been much stronger than opposition. While many other countries have had similar discussions, especially Europe and South Korea, with the Moon administration trying many new policies after an 8-year-long reign of the conservative party. Germany is the only nation that has put this idea into action, since the topic of income disclosure first surfaced. 

The new law of disclosing income was legislated as a response to the controversial glass ceiling within German business society. The legislative process was aimed at the prevalent unwillingness of the general public to talk about personal income, making it difficult for distribution of unfair wages to be corrected. Any legal action always needs evidence in order to be enforced, and Entgelttransparenzgesetz was designed so that it could create a climate where unfairness can be made public. 

The genius of Entgelttransparenzgesetz lies in the fact that the law does not directly interfere with the process or the right of the employer to pay wages. There is no sentence within the law that states men and women should be paid equally. Entgelttransparenzgesetz limits its influence to the disclosure of the information the employee can access regarding the average salary of his or her coworkers. It utilizes the power of guilty consciousness and shame rather than resorting to the force of administrative punishment. 
 
   
▲ Professor Kim Se Ik. PHOTOGRAPHED BY CHO EUN BYUL.
 

Whether or not Entgelttransparenzgesetz will be effective in breaking the glass ceiling is a matter that only time can tell. Professor Kim Se Ik (Economics) stated, “The law is not and should not be simply about disclosure. It is about disclosure that will solve the problem of inequality.” Still, the world as well as Germany has its eyes on this legislation; it tackles the problem of gender inequality through a different mechanism than any other policies. This revolutionary bill’s success promises to open a new frontier, but the shockwave of its failure would bring despair to many hoping for gender equality. 

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