Just in time for today's International Women's Day and yesterday's Equal Pay Day, one hears and reads everywhere that there are many gaps for women:
- Pay Gap
- Pension Gap
- Investment Gap
Indeed, women tend to work part-time more often—usually because they take on unpaid care work. Moreover, they earn less in their jobs, hence receive less pension, and participate less in the capital market. Making these disparities visible is one thing; another is that (almost) every woman can personally do something about experiencing this gap themselves. Let's tackle it!
Part-time work as an earnings killer
The study "Gender Diversity in the Asset Management Industry" shows: In 2022, only 9% of men in our industry worked part-time, while 33% of women were employed part-time. This study was conducted in 2023 by KPMG in cooperation with Fondsfrauen and the University of Mannheim.
A third of women work part-time—that's a lot! Given the ongoing skilled labor shortage, few companies would suggest their female employees work part-time; they would prefer that they work mostly full-time. Because part-time work is known to limit earning potential, women might consider how they can escape the part-time trap.
Often, the reason for wanting a part-time job is not work-life balance issues but family obligations: children or parents/grandparents need to be cared for, household chores need to be done. These are issues that we women definitely should address! A conversation with the partner, backed up with facts and figures, would be a step in the right direction. Which of the care and household tasks can he take over? Where can one get help? How can it all be organized? Maybe a solution is that he pays her for the tasks to build her own financial cushion? The possibilities will vary from family to family, but the topic needs to be addressed and resolved.
It is much more difficult for single mothers.
The Pay Gap is still 16% in Germany In 2024
The Pay Gap is still 16% in Germany In 2024, women in Germany earned on average 16% less per hour than men. According to the Federal Statistical Office (Destatis), women received an average gross hourly wage of 22.24 euros, which is 4.10 euros less than men (26.34 euros).
The reasons for the pay gap are varied, but the biggest factors are the extent of employment (19% of the wage difference; the part-time issue sends its regards!) as well as profession and industry (21% of the pay gap). Sure, it's difficult to switch industries just like that. But we can point out to our daughters, nieces, and friends that they will earn less if they want to work "with animals" or "with children." Technical professions pay more, and there's no reason why girls can't become IT specialists or similar. There is also a STEM subject gap, but nothing serious is found about an intelligence gap in this regard.
According to Destatis, the adjusted gender pay gap is still 6% per hour. This wage gap remains when comparing women with men who have similar qualifications, activities, and employment histories. It is, so to speak, the unexplained gap, and it needs to be addressed socially.
The individual woman is advised to negotiate her salary immediately. To nail the confident appearance, a salary negotiation coaching beforehand probably wouldn't hurt, and then: Go to the boss and close the gap!
Pension Gap: On average 7,304 euros per year
The next gap opens up in retirement funds. It is essentially a consequence of the pay gap from payment for "official work." Here, the online broker Trade Republic has gathered data: "Official statistics from the Federal Statistical Office (2023) show Statistischen Bundesamtes that the average pension gap for women in Germany is around 6,900 euros per year. In France, the situation is even more drastic: CPS According to data from the social insurance CPS (2022), the annual pension gap there is about 9,200 euros. An analysis of the largest Trade Republic markets—Germany, Austria, France, Spain, Italy, and the Netherlands—resulted in an average pension gap of 7,304 euros per year," the online broker announces.
As a marketing giveaway, Trade Republic is raffling off exactly this sum this year among women who encourage their friend to invest so that they do something for their private provision. "On International Women's Day, Trade Republic raffles off ten times 7,304 euros among all successful referrals—both for the inviters and the invitees," Trade Republic announces.
"We see that women are significantly underrepresented in the capital markets across Europe—and this, although they are the better investors at Trade Republic and have a significantly higher risk of old-age poverty," says Julian Collin (photo), General Manager International Markets at Trade Republic. "We will continue to raise awareness of the importance of retirement provision and encourage women to invest." The online broker has come up with something else to bring the pension gap issue into public consciousness and to draw attention to the fact that financial education and early investment are crucial for long-term wealth building: This year, Trade Republic is working with selected female artists who interpret the pension gap issue from a creative perspective and present it in their own way. The resulting artworks will be showcased on the social media channels of the online broker.
Investment Gap – Women even invest more successfully than men!
While the term "investment gap" actually stands for the fact that female startup founders receive less money than their male counterparts, women also invest their money differently than men, namely on average less profitably. This too is an investment gap.
According to the Deutschen Aktieninstitut (DAI) women invest 45% less frequently in the capital market than men. "In 2024 there were 4.4 million female shareholders, compared to 7.7 million men with a stock investment. The number of female shareholders has even decreased by about 300,000 compared to the previous year," says Henriette Peucker (photo), Managing Director of the German Stock Institute. In our industry, one probably doesn't need to point out that 2 or 3 percent returns are quite nice (after all, it almost beats inflation after taxes, so there are no significant real losses); but with the average return of the stock market of six to nine percent per year, a significantly higher wealth can be built up over the long term.
If women invest in stocks, stock funds, or ETFs, they often even achieve higher returns than men. Online brokers have data here that can be particularly well analyzed. For example, Trade Republic has found that in the analysis period from November 2023 to October 2024, women on average achieved 2 percent higher returns (basis: The customers had to have opened an account with Trade Republic before September 2024 and had at least 100 euros in their accounts at the beginning and end of the period). Last year, the online broker conducted such an analysis and came to the same result. Women achieve on average 2 percent higher returns with their portfolios. Ladies, we are on a good path, but more women should do this!
When investing in capital, not only the return chance should be considered, but also that the costs are low. It's not shameful to want to keep costs low, and numerous discount brokers offer inexpensive account and depot solutions. Trade Republic has also provided us with information here, pointing out that they offer both women and men a particularly cost-effective package: "With free ETF savings plans, 1 percent saveback on card payments, and currently 2.75 percent interest per year on the entire balance, we offer simple and cost-effective ways to invest—regardless of income, life situation, or experience," says the discount broker.
Let´s tackle it!
Let's tackle it! In conclusion: Yes, there are the various gaps. We can make them visible, denounce them, and advocate for their elimination. But just complaining alone doesn't help, and certainly not quickly! Every single woman can and should ensure that she personally doesn't even start to experience gaps. Together, we can then address the societal aspects.
Anke Dembowski is a financial journalist and author of various investment fund-related and other financial books. She is also a co-founder of the "Fondsfrauen" network.