More Clarity, More Fairness: Pay Transparency as a Key

We see this time and again in our consulting practice at EAF Berlin. With the adoption of the EU Pay Transparency Directive in 2023, the European Union has set an important milestone in the fight against wage inequality. The directive’s measures against gender-discriminatory pay structures go far beyond those of the German Pay Transparency Act. Germany has until June 7, 2026, to transpose these requirements into national law.

The new EU Pay Transparency Directive: A step toward comprehensive pay equity

Unlike previous German legislation, the EU directive applies to companies with at least 100 employees and mandates comprehensive disclosure. Employers are required to make salary structures transparent and systematically analyze wage gaps. The directive includes mandatory reporting on pay gaps, expands employees' right to information, and prohibits pay secrecy clauses. Particularly noteworthy is the reversal of the burden of proof: in cases of suspected discrimination, employers will now have to prove that no disadvantage exists—not the other way around.

The gender pay gap in Germany remains at approximately 16%—a figure that has barely changed despite many efforts (Federal Statistical Office 2025). Even when accounting for employment volume, occupations, and the resulting gender-specific segmentation of the labor market, the so-called adjusted pay gap in 2023 still averaged 6% (Federal Anti-Discrimination Agency, n.d. a)—and varies significantly by industry. The new directive offers the chance to finally and consistently reduce this persistent gap.

Organizational development as the key to sustainable change

EAF Berlin supports companies and organizations in viewing the directive not just as a legal requirement, but as a strategic development process. This begins with sensitizing leadership to the importance of pay equity and includes developing a transparent compensation strategy. In doing so, we review existing evaluation systems for hidden discriminatory factors and involve all stakeholders in the transformation process.

Special attention is paid to the necessary change management. Disclosing salary structures is often a sensitive topic and can trigger resistance. However, with professional guidance, companies can initiate a cultural shift that goes beyond mere legal compliance and leads to a fairer corporate culture.

Diversity in leadership: Inseparable from pay equity

Promoting diversity in leadership positions is another central aspect of our work at EAF Berlin. We know that companies with a balanced ratio of women and men in leadership positions demonstrably have smaller pay gaps (Sondergeld/Wrohlich 2024). It is important not only to focus on gender but also to consider other dimensions of diversity. Our experience shows that people with multiple characteristics of discrimination—such as women with a migration background or queer people with disabilities—face hurdles on their path to leadership positions.

So, when we talk about pay equity, we must absolutely think intersectionally. In the past, gender issues were often viewed one-dimensionally, focusing primarily on privileged groups: white, young, highly educated cis-women without a migration background or disabilities. However, the reality for many women in Germany looks different. Studies show that for women with a migration background, several forms of discrimination have a negative impact on their salary.

The migrant pay gap, or immigrant wage gap, describes the wage difference between immigrants and non-immigrants. In 2022, it was 24% in Germany (Netzwerk-IQ, n.d.). The migrant gender pay gap also looks at gender, meaning it shows the income difference between women without German citizenship and men with German citizenship. This gap was 30% in 2022 (ibid.). This clearly shows how strongly migrant women are affected by at least double discrimination.

These multi-layered patterns of discrimination make it clear: we need a holistic approach that addresses pay equity at the individual, organizational, and societal levels. The EU Pay Transparency Directive provides an important legal framework for this—but its effective implementation requires both professional expertise and technological support.

The synergy of consulting expertise and technological innovation

To meet the complex requirements of the EU Pay Transparency Directive, we at EAF Berlin are collaborating with INES Analytics and their software solutions for pay analysis. This collaboration combines our many years of consulting experience in the field of gender equality with innovative technology. This combination allows us to precisely identify career barriers for underrepresented groups. This enables us to develop targeted consulting services and provide support in implementing bias-sensitive promotion processes, as well as continuously measuring progress toward diversity goals.

PAY_transparency was developed by INES Analytics to make it easier for employers to fully and compliantly meet the reporting obligations and information rights of the EU Pay Transparency Directive. To do this, employee data is uploaded into the tool, which then automatically performs all necessary calculations. The identified gender pay gap and all other relevant key figures can be exported as files and reports.

The FAIR_solution The tool from INES Analytics enables a detailed analysis of salary data that goes far beyond simple comparisons. It takes various factors into account, such as position, qualifications, professional experience, and length of service, to create a nuanced picture of a company's wage structure. The ability to incorporate intersectional aspects into the analysis is particularly valuable: for example, the tool can reveal how gender, age, origin, and disability impact compensation and career opportunities.

However, technology is only as good as the people using it. This is where the consulting expertise of EAF Berlin comes in. We help companies and organizations ask the right questions, interpret the analysis results within their specific organizational context, and develop strategies for action.

A concrete example: For a medium-sized company with 500 employees, a FAIR_solution analysis shows that women earn an average of 7% less than their male colleagues in equivalent positions. The detailed evaluation reveals that this gap is significantly higher—at 12%—for women with a migration background. The tool calculates that closing this intersectional gap would incur annual additional costs of approximately 340,000 euros. Based on this data, EAF develops a phased implementation plan that spreads these costs over three years and integrates them into strategic workforce planning.

Four recommendations for successfully implementing the Pay Transparency Directive

Drawing on EAF Berlin’s experience in organizational development and our collaboration with INES Analytics, we would like to offer four concrete recommendations on how companies can successfully implement the EU Pay Transparency Directive:

1. Start proactive, gender-equitable data analysis—now!

Do not wait for the final transposition of the directive into national law. Start systematically analyzing your salary structures today, taking various dimensions of diversity into account. PAY_transparency and FAIR_solution from INES Analytics can help you not only identify gender-specific pay gaps but also uncover other patterns of discrimination. This comprehensive assessment gives you a head start and allows you to close any pay gaps gradually and within your budget.

2. Develop transparent and inclusive compensation systems

Review your existing compensation systems not only for transparency but also for inclusivity. Use the insights from your systematic salary structure analysis to question whether your criteria for determining pay are truly neutral. Are certain groups systematically disadvantaged? Seemingly objective criteria like "uninterrupted professional experience," for example, can disadvantage people who have had to take career breaks due to caregiving responsibilities. Train your managers in conducting salary discussions and sensitize them to potential patterns of discrimination. A transparent and inclusive system not only protects against legal risks but also increases employee satisfaction and retention.

3. Design change management as a participatory process

Support the transformation process through participatory change management that includes all voices in your organization. Create safe spaces where experiences of discrimination in the workplace can be discussed. Develop a positive narrative for change together that highlights the benefits of pay transparency and equity for everyone involved. Our experience shows that such a bottom-up approach reduces resistance and can increase acceptance of change.

4. Establish long-term governance structures

Pay equity is not a one-time project, but a continuous process. Therefore, establish permanent responsibilities for this topic. Form an interdisciplinary team that regularly monitors progress and makes necessary adjustments. Integrate pay equity into your key performance indicators and make it a fixed component of your corporate reporting. Use PAY_transparency and FAIR_solution for regular analyses and rely on external consulting to avoid blind spots. Make progress visible and celebrate successes—this motivates everyone involved to continue on the path you have chosen.

Conclusion: Pay equity as part of a comprehensive equality strategy

The EU Pay Transparency Directive offers an opportunity to systematically overcome gender-specific and other pay gaps. However, to achieve truly sustainable change, we must understand pay equity as part of a comprehensive equality strategy that addresses the individual, organizational, and societal levels.

In our collaboration with INES Analytics, we at EAF Berlin combine professional consulting and support with innovative technology to guide companies and organizations on this journey. We are convinced that this holistic approach not only ensures compliance with legal requirements but can also trigger a profound shift in work and leadership culture.

Companies and organizations that proactively address the aforementioned challenge benefit from increased employer attractiveness, improved employee retention, and a competitive advantage in the war for talent. Ultimately, greater pay equity leads to stronger employee identification with the company, resulting in higher productivity, innovation, and creativity.

The time to act is now—use the transition phase before the full implementation of the directive to position your company optimally and turn a legal requirement into a strategic advantage. Let us work together to create a world of work where pay equity becomes a reality for everyone, regardless of gender, origin, sexual orientation, or disability.

References

Federal Anti-Discrimination Agency, n.d. a: Migration Pay Gap. Available online: https://www.antidiskriminierungsstelle.de/SharedDocs/Glossar_Entgeltgleichheit/DE/19_Migration_Pay_Gap.html (accessed March 25, 2025).

Federal Anti-Discrimination Agency, n.d. b: Migration Pay Gap. Available online: https://www.antidiskriminierungsstelle.de/SharedDocs/Glossar_Entgeltgleichheit/DE/19_Migration_Pay_Gap.html (accessed March 25, 2025).

Sondergeld, Virginia/Wrohlich, Katharina (2024): Gender pay gap in a company decreases with more women in leadership positions. DIW Weekly Report 3/2024, pp. 38–43. DOI: https://doi.org/10.18723/diw_wb:2024-3-3.

Federal Statistical Office (2025): Press release no. 056. Available online: https://www.destatis.de/DE/Presse/Pressemitteilungen/2025/02/PD25_056_621.html (accessed March 25, 2025).

Netzwerk-IQ (n.d.): The migrant gender pay gap: Until when do migrants work "for free"?. Available online: https://www.netzwerk-iq.de/fileadmin/Redaktion/Downloads/Fachstelle_Einwanderung/Publikationen_2025/FEI_Equal_Pay_Day__M_G_PD_2025-03-06.pdf (accessed March 25, 2025).

The Authors

Hanna Völkle is a Senior Expert specializing in diversity, equal opportunity, and digitalization. Her work focuses primarily on developing pilot projects and building networks—both at the societal and organizational levels. She holds degrees in social sciences and political economy and is a certified diversity trainer.

Natascha Wunder is Head of Commercial Operations at INES Analytics , where she helps shape software solutions for fair and sustainable working conditions.

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