Progress on Pay Transparency!

A HUGE step forward for fairer, more open employment opportunities is on the way!

The EU have recently agreed on new Pay Transparency Measures

These include:

Pay transparency for job-seekers?– Advertising salary ranges on job adverts / descriptions before interviews. Employers will not be allowed to ask prospective employees about their pay history.

Right to information for employees?– Employees will have the right to request information on their employer's individual pay level and on the average pay levels, broken down by sex, for categories of workers doing the same work or work of equal value.

Reporting on gender pay gap?– Employers with >100 employees will have to publish pay gap data between female and male workers every 3 years (those with >250 employees will report every year).

Joint pay assessments – Where pay reporting reveals a gender pay gap of at least 5% and the employer cannot justify the gap on basis of objective gender neutral factors, they will need to conduct an assessment, in cooperation with workers' representatives.

Positive Steps...

These new measures are certainly a positive step in the right direction and well overdue if you ask me. They will force companies to address the archaic gender pay gaps and wider disparity between functions in organisations. The gender pay gap has been well publicised in recent years and thankfully things are beginning to change, and measures like these will help expedite this.

However, it's not only the gender gap disparity that will benefit. I heard of a recent example I saw where one employee was paid 15% more than another in the exact same job function / level purely because they'd been at the company for 5 more 10 years).

Furthermore, it will eradicate employers offering lower salaries for employees who were previously underpaid in previous role (I've seen it where candidates have relocated from other countries where the average salaries are typically lower, and the employer has therefore offered a lower than norm salary).

Ultimately, a fair and transparent salary structure should be the norm and employees know where they stand when it comes to progressing up the pay scale.

Big changes ahead...

However, there is no doubt this will also cause a big shakeup to some companies who will no longer be able to be 'wishy-washy' with salary information or who prefer to talk package items later in the interview process / negotiation phase.

For our client base, within the scale-up community (or at least those with over 100 employees) it could cause challenges as often the salary is only one small piece of the package puzzle and the Equity component is often the real long-term driver. In any case, it will be important for both companies to tell the right story, to avoid candidates discounting opportunities on fixed salary alone

Finally, headhunters will need to be smarter. It can be challenging enough to entice "passive" candidates to pursue an opportunity at the best of times and with upfront salary ranges listed, they could be dissuaded from even taking a first conversation in the worry they'll be 'wasting their time'.

Any recruiter worth their salt focuses on the value-add of an opportunity to try and capture the imagination of a candidate but these changes will mean they'll need to emphasise non-monetary USPs of a company even more than they do now, particularly stressing the importance of the long-term opportunities for career development, amazing culture, flexibility, purpose etc.

I am really hopeful that these measures could be the game changer we needed but I'm also curious, if not cautious, to see the impacts this will have on recruitment of the future.