A low starting salary can cost you a million

A good start makes a world of difference - also when it comes to your salary development. In fact, the starting salary you start your career with will most likely play a significant role in your lifetime income.

Year after year, IDA can document that newly qualified women on average receive a lower starting salary
than their male colleagues. Last year, the average difference was more than DKK 1,300 per month. And if you start your working life with a lower starting salary than other new graduates, it will most likely have noticeable consequences for your lifetime income.

Take this fictional example of a member's salary developments over 22 years:

Imagine that a member starts their career with a salary gap of DKK 1,000 per month in the first job. Over a working life of 40 years, which offers salary increases at an average level – 3.5 percent per year – but not extraordinarily large salary increases that make up for the difference in starting salary, one is left with an accumulated salary loss of more than DKK 1 million in lifetime income. DKK 1,014,603 to be precise.

'This calculation example shows how important it is to get off to the right start in terms of salary. If you start your working life with a salary gap and do not receive large salary increases during your career, which is by no means a given, it can have a major impact on both your lifetime income and the size of the pension assets you will have to live on in your retirement,' says Malene Matthison-Hansen, chair of the Employee Council at IDA.

'So unless you have developed an infallible system for winning the lottery, it is important that everyone goes into any salary negotiation with the best possible preparation. That is why I would encourage everyone, and especially newly qualified women, to make use of all available salary tools so that you are as well prepared for the salary interview as possible,' she says.

Specifically, it is a good idea to have a look at IDA's salary statistics and IDA's salary calculator. In addition, Malene Matthison-Hansen encourages members to contact elected representatives at the employer they are applying for a job with so that they get a clear picture of the salary level.

Malene Matthison-Hansen also believes that employers have a great responsibility.

'Some will probably point out that women may have lower salary expectations or are worse at negotiating salaries. This may well be part of the explanation, but it would be unfair to place the responsibility solely on women’s shoulders. Employers also play a vital role in eliminating this structural inequality and ensuring that all employees are paid fairly and objectively,' she says.

Malene Matthison-Hansen hopes that more openness about salaries will help improve the situation. By 2026, the EU directive, which, among other things, obliges employers to be much more transparent about salary levels to job applicants, must be implemented in Danish legislation.

'Here we need to be as ambitious as possible, so that as many companies as possible are obliged to create salary transparency. This will force more employers to actively address why they often offer newly qualified men a higher salary than newly qualified women and do something to change that,' she says.