Despite high female employment rates, Austria grapples with one of the European Union’s largest gender pay gaps. Women’s economic independence is hindered by a prevalence of part-time work and unpaid care responsibilities within families, leading to career breaks and financial repercussions. This is compounded by gender segregation in lower-paying service industry jobs, with women significantly underrepresented in leadership positions across sectors such as economy, science, politics and public service. However, two of the most important ways that the gender wage gap in Austria has been addressed are through the National Action Plan (NAP) on Gender Equality in the Labor Market and the Pay Transparency Law.

Action Plan on Gender Equality in the Labor Market

Published in 2010, the NAP outlined strategies for the period spanning from 2010 to 2013 with the goal of eliminating existing gender disparities in the workforce and promoting the strategic and coordinated implementation of diverse initiatives and policies. Notably, the NAP highlighted the fact that women who are not fully integrated into the labor market or are marginally employed face a heightened risk of poverty in their later years. Especially because, in 2007, more than 70% of women who received a net income from the widow’s pension received pensions that fell below the poverty risk threshold, set at 60% of the median income.

During the period spanning 2019 to 2020, the EU-co-funded initiative known as “TRAPEZ – transparent pension future – securing women’s economic independence in old age” conducted an in-depth investigation into Austria’s Gender Gap in Pensions (GGP). The project’s objective was to thoroughly analyze the GGP and recommend practical strategies to mitigate its effects, ultimately bolstering the financial independence of older women.

The strategies outlined in the NAP likely provided important insights and data that informed the direction and focus of the TRAPEZ project. Additionally, the NAP’s emphasis on coordinated implementation of initiatives and policies to address gender disparities in the workforce would have fostered a collaborative approach among stakeholders, including governmental bodies, research institutions and advocacy groups. Overall, by recognizing the heightened risk of poverty faced by women with limited labor market integration or marginal employment, it seems that the NAP laid the groundwork for subsequent initiatives aimed at enhancing women’s financial security and narrowing the gender wage gap in Austria.

The Austrian Pay Transparency Law

Introduced in 2011, the transparency law ensures that if a company has more than 1000 employees, they are required to publish an annual income report detailing information about men’s wages and women’s wages as well as a clear statement of the minimum wage in job vacancy advertisements. Fortunately, there was a more significant wage increase among newly hired women in large firms following the reform compared to newly hired men, indicating a narrowing of the gender wage gap among recent hires.

However, according to results from a regression discontinuity design, the transparency law did not alter wages or the gender wage gap because the law’s impact on employment growth or turnover was small and lacked statistical significance. Notably, for larger firms, the transparency law correlated with a decreased percentage of women employed in treated firms. It seems that the implications for the gender wage gap in Austria, based on the transparency law, are mixed. On the one hand, the transparency law’s requirement for larger companies to disclose wage disparities and minimum wage information in job advertisements has potentially contributed to a reduction in the gender wage gap among recent hires. However, the overall impact of the law on income inequality is limited, as it did not significantly alter wages or the gender wage gap across the board.

Concerns

Transparency law advocates assert that disclosing pay information is crucial in closing the gender pay gap in Austria, as it enables women to confront discriminatory wage practices. However, skeptics express concerns regarding potential administrative burdens and fear that men might capitalize on the disclosed information more effectively than women. Some suggest that the policy’s ineffectiveness could be attributed to the fact that it does not require firms to act upon revealed wage differences. Additionally, the policy’s limited scope, which does not address factors such as firm sorting, may have contributed to its lack of effectiveness.

However, the transparency policy did result in a reduction in the rate at which individuals leave their employment at a treated firm within a given period. This suggests that the policy may have alleviated concerns about unfair pay schedules among workers, leading to higher job satisfaction and reduced turnover.

Final Remark

Currently, the gender wage gap in Austria has reduced from 23.5% to 18.8% from 2011 to 2021. Although this gap remains above the EU average, it is clear that progress has been made in reducing the wage gap over the past decade. Further initiatives focusing on transparency, equitable pay practices and broader gender equality measures will be crucial in achieving lasting change.

– Avery Fuller
Photo: Pexels