Salary transparency when hiring in France and Germany in 2024
Salary transparency is increasingly recognized as a crucial factor in the recruitment process and for promoting equality in the workplace in both France and Germany. Both countries as part of the EU are tackling legal and cultural challenges to create more openness and fairness in compensation practices.
In France, the transparency of salary information in job postings is becoming more significant. According to a report by Indeed, the proportion of job ads with salary information rose to 49.5 % by March 2023, showing a substantial increase compared to previous years.
This trend mirrors developments in other European countries. The practice of including salary information in job postings helps attract qualified candidates and avoids wasting time on applicants with salary expectations that don't match your budget.
Legal requirements in France
France has already implemented measures to promote salary transparency. The 2018 Loi pour la liberté de choisir son avenir professionnel (Freedom to choose your professional future law) requires companies to publish an annual report on the Gender Equality Index (Index Egapro), which measures the gender pay gap. Companies scoring below 75 must take corrective actions and may face fines if they do not comply.
Recent surveys revealed that 89.1 % of respondents are more likely to apply for a job if salary details are provided. Additionally, about 90 % of respondents believe that salary information improves their perception of a potential employer.
Cultural and legal changes are underway
Despite the positive attitude towards salary transparency, only 26 % of employees actually disclose their salary. The 2017 Pay Transparency Act aims to enforce the principle of "equal pay for equal work" and reduce the gender pay gap. The 2023 EU Pay Transparency Directive, which must be implemented by 2026, will introduce further mandatory measures to enhance salary transparency.
From a short term financial perspective, it still seems understandable to want to pay an employee as little as possible. Openly giving away your budget can lead to paying them more than they might have asked for, which is why companies can be reluctant to state a clear salary range for an open position.
However, it's important to remember that better pay can increase productivity and will reduce turnover, which will mitigate long term cost of vacancies and save precious time spent on recruiting processes.
Regardless, many german companies do not plan specific measures to increase salary transparency yet. Only about 23 % of recruiters cite the lack of salary information as a common reason for discontinuing recruitment processes. Instead, dissatisfaction with salary offers is seen as a more significant issue, with about half of all recruitment processes remaining unsuccessful because the salary offer was insufficient.
Both France and Germany are increasingly aware of the importance of salary transparency, but there are differences in implementation and acceptance. France has made progress through legislative measures, while Germany is still grappling with cultural barriers and the need for stronger enforcement of legal regulations.
In both countries, salary transparency is being recognized as a strategic tool in the competition for talent. Companies that disclose salaries can enhance their attractiveness to potential applicants and benefit from a more efficient recruiting process as well as higher employee satisfaction and retention in the long run.
The coming years will reveal how legal mandates and cultural shifts will impact salary transparency practices in both France and Germany.
Nikolai Rabald
