What in the world: salary transparency and the gender pay gap
The gender pay gap continues to be a problem in the UK. Indeed, it continues to be globally. The Office for National Statistics (ONS) put it at 8.3% for full-time employees in April 2022 (the most recently available figures). Over the years, the ONS has found this to be declining gradually, however, is there more that can be done? And is this something we need more legislation on? In this article in our “What in the world” series, Croner-i Content Consultant and employment law researcher, Stacie Cheadle, examines what the rest of the world is doing to protect against discrimination at work.
The Fawcett Society, a leading charity campaigning for gender equality and women’s rights, published a study that found 90% of candidates felt questions on their pay in previous roles were “unfair”, and should not be used when determining what level of salary to offer when taking on a new role. There are a number of reasons why using this might be unfair.
• A gender pay gap is evident from when women first enter the job market, albeit on a smaller scale which widens with age, possibly due to career interruptions for women as they start families (Eurostat gender pay gap statistics, 2022).
• When employers rely on previous salaries, rather than basing a salary offering on their own organisation or market rates, they risk continuing to maintain or even increase the gender pay gap for that individual.
• Pay received in a previous role may well lack relevance to the new role: a different business, with different financial commitments and pressures, perhaps in a different industry or location, will have different factors to consider when offering pay than other organisations.
Equality and inclusivity within a workplace enables employees to develop their full potential and thrive, bringing with this improved productivity and performance. However, according to the World Economic Forum, it will take around 132 years to reach gender pay parity based on the current global rate of change. In the following section, we will look at what the rest of the world is doing to increase this glacial rate of change.
Around the world
Since 1 November 2022, all adverts for jobs, promotions or transfer opportunities that are to be performed within New York City must include a “good faith” pay range. The goal of this legislation is to force employers to be upfront from the start and commit to at least a salary range prior to making a job offer, thereby limiting (theoretically) the chances of salary negotiations leading to a much higher salary offer than others, less confident at negotiating, might get.
It’s not just New York City doing this, however. In fact, they have been relatively late in coming to this. Colorado paved the way first, back in 2021. Since then, 21 other states have introduced a requirement for employers to list salary ranges on job adverts, with California joining in from 1 January 2023, making it the largest US state where job listings are required by law to include salary information. California is home to roughly 19 million workers, with 200,000 employers within the scope of the legislation, including notable businesses such as Apple, Google, Disney and Meta.
As far back as 2006, Denmark amended its Equal Pay Act to promote visibility and information about pay differentials, which led to a reduction in the gender pay gap by 13%, according to one research study.
Liberty Hive, a tech-led talent platform, has launched a new campaign to drive the Government to introduce laws which make it unlawful for employers to ask job applicants about their salary history and to make it a requirement to list salary details on job adverts. It’s hoped this will improve equality by ensuring pay parity.
The campaign aims to encourage recruiters to open the debate around salary transparency. From January 2023, Liberty Hive will be encouraging their partners to list a salary range during the recruitment process and when posting job adverts, and they won’t ask candidates the salary history question.
Liberty Hive’s data reveals that when salaries are displayed, the response time is over 50% quicker and a post that displays a salary receives around 67% more applications than one that does not, highlighting that being transparent about salary in job adverts can help companies recruit the best talent more quickly and successfully, whilst improving pay equality.
Research has found that 75% of candidates would be more likely to apply for a role that included a salary range, and 62% of candidates believe they should not be asked about their current or past salary in an interview, this figure increases to 73% amongst Asian workers and 75% for black workers. Additionally, 57% of women and 54% of men felt less positive about a potential employer when they were asked the salary history question.
Liberty Hive’s campaign follows the launch of a pay transparency pilot scheme by the Government in March 2022, where participating employers list salary details on job adverts and stop asking about salary history during recruitment. However, it remains to be seen whether there will be any legal changes regarding salary transparency anytime soon.
Is it enough?
Simply having this requirement is just a step on the way to removing the gender pay gap. The experience in New York City on introducing this has been that some businesses are doing their utmost to get around this requirement, with examples such as $50,000 to $145,000 for a reporter opening, $125,800 to $211,300 for a senior technical writer and $106,000 to $241,000 for a general counsel position showing that not all employers are adhering to this in the spirit in which it was intended. In fact, it was reported that Citigroup, an international employer, listed several jobs with a salary range of between $0 and $2 million; presumably this is not what the legislators had in mind.
Salary transparency is clearly a valuable tool when reducing the gender pay gap, the above research shows that. However, it alone will not overturn decades of pay inequality. The answer may not only lie in further legislation, but also in changing the way employers approach pay and building a culture of pay that is blind to anything other than the talent and skills of the individual.
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