New evidence on the pay gap in temporary agency work in Germany.

Using the 2023 Earnings Survey (Verdiensterhebung), which, unlike its predecessor, covers all employees of the sampled establishments, we provide new evidence on the hourly pay gap of temporary agency workers in Germany several years after the 2017 reform of the Temporary Agency Work Act. The raw gap of about 18% is considerably smaller than in earlier data and is more than fully explained by differences in worker and job characteristics, particularly tenure, education, and skill requirements. Conditional on these characteristics, the gap is close to zero or even favours agency workers. We also find that hourly wages in temporary agency work vary less with age, gender, nationality, and part-time status, suggesting that wage-setting structures differ between agency and non-agency employment.

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