Salary transparency aims to ensure equity if every job applicant can start negotiating under the same expectations. It involves the disclosure of salary information among employees, allowing them to understand how their salary compares with those of their peers. Proponents of salary transparency argue that it is a way to promote pay equity, reduce wage discrimination, and ensure that employees are fairly compensated for their work. It can also help to reduce the gender pay gap and ensure that employees are paid fairly for the same work. Additionally, it can help to improve employee morale and loyalty, as employees will be more likely to stay with an organization if they feel that they are being fairly compensated.
As a recruitment agency, we are keen to promote salary transparency and would like to see more employers sharing salary ranges on their job adverts. We see this as an essential action in a candidate scarce market where displaying a salary range can better help to attract applications for a job vacancy. We know through our own research that potential candidates will be more likely to apply for a job if they can clearly see an accurate salary range for what they can expect from the job, thus providing them with the information that they need to make an informed decision about whether the role is right for them to apply to.
Salary ranges give potential candidates an understanding of the market rate for the job and can help them to determine whether they are being offered a fair salary. This can be particularly important for those who are negotiating a salary, as it allows them to know what they are worth in the job market.
Won’t the job applicant request the top end of the salary range?
In our view, it doesn’t necessarily mean that the job applicant will demand the top end of the disclosed range, as many employers fear. Following the salary disclosure legislation in the US, job advertisements usually state:
‘Actual offers may vary by market location, job-related knowledge, skills, and experience.’ (using Tesla as an example when advertising a salary range)
Talking with some employers, many believe that salary ranges should not be displayed on job adverts for several reasons. Firstly, displaying salary ranges on job adverts can make it more difficult for employers to negotiate salary with potential candidates. As mentioned above, candidates will be able to see the salary range on the job advert and may insist on the higher end of the range, making it difficult for employers to negotiate the appropriate level of salary. This can be particularly problematic for start-ups and other small businesses that may not have the budget to offer competitive salaries. Secondly, displaying salary ranges on job adverts can open employers up to unwanted criticism or scrutiny. Candidates may be unhappy with the salary range on offer and may publicly criticize the employer, which can have a negative impact on the employer’s reputation. Finally, displaying salary ranges on job adverts can limit an employer’s ability to reward employees for their performance. If salary ranges are set in stone, employers may not be able to reward employees for their hard work or for taking on additional responsibilities. For these reasons, many employers are not keen to broadcast their salary ranges on job adverts.
Some employers, Netflix for one, have been navigating around the recent US pay transparency law with ridiculously wide salary ranges.
A recent job advert quoted the range as $90,000 to $900,000 for a software engineer, creating quite a grey area in legislating to promote pay transparency.
Yet from the perspective of job seekers, here are a couple of examples of the frustration of not seeing salary ranges on display.
“I am frustrated by the lack of salary ranges on job adverts. I understand that employers want to negotiate the best possible salary with potential candidates, but it is difficult to make an informed decision about whether a job is right for me if I don’t know the salary range.”Candidate seeking a Software Developer job opportunity.
“It is frustrating to encounter job adverts that don’t include salary ranges. Without this information, it is difficult for me to determine whether the job is worth the time and effort to apply, as I have no idea if the salary is fair or competitive.” Candidate seeking a Financial Controller job opportunity.
Indeed, we agree that it can be frustrating to encounter job adverts that don’t include salary ranges. Without this information, it can be difficult to know whether the employer is paying their employees a fair wage for the job. In a recent LinkedIn poll by Emerald Zebra Recruitment Agency in Cyprus, we asked
‘Would you attend an interview if you didn’t know the salary range or salary from €+ on offer?’
44% voted ‘NO’ – they wouldn’t attend an interview in comparison to a much lower 26% that stated ‘YES’, they would attend an interview and 29% stating ‘MAYBE’.
Our view is that employers should include salary ranges on job adverts along with the following disclosure that ‘actual offers may vary by market location, job-related knowledge, skills, and experience’ to ensure that job seekers have the information they need to make an informed decision about whether the job is attractive for them to apply to or not.
If you are looking for a recruitment agency that specialises in the attraction and recruitment of candidates to the FinTech, Tech and Financial Services sectors in Cyprus, then look no further than Emerald Zebra. Contact us today to find out how we can help you find the right person for your company.
On 30 March 2023, a large majority in the European Parliament approved the new "EU Pay Transparency Directive." With this directive, Europe aims to implement concrete measures to close the gender pay gap. The European Union (EU) has implemented several transparency rules and directives to promote fairness and transparency in the workplace:
Equal Pay: EU laws emphasize equal pay for equal work, regardless of gender. Employers must ensure that men and women receive equal pay for performing the same job or work of equal value.
Pay Transparency Directive: Under the pay transparency directive, EU companies will be required to share information about how much they pay women and men for work of equal value, and take action if their gender pay gap exceeds 5%. The new rules will make it compulsory for employers to inform job seekers about the starting salary or pay range of advertised positions, whether in the vacancy notice or ahead of the interview. Employers will also be prevented from asking candidates about their pay history.
Reporting obligation: Companies with more than 250 employees will be required to report annually on the gender pay gap in their organization to the relevant national authority. For smaller organizations (initially those with over 150 employees), the reporting obligation will take place every three years.
Who does the EU pay Transparency Directive apply to?
The EU Pay Transparency Directive applies to both private and public employers, and all workers. Member states will have two years after the directive is finalized to implement its provisions at a national level.
Employers must be transparent about the initial wage level or pay scale in the job announcement or before the interview. Employers cannot ask future employees about their pay history.
Employees have the right to request information about their individual salary level and the average salary level, broken down by gender, for categories of employees doing the same work or work of equal value. This right applies to all employees irrespective of company size.
Obligation to report annually on the gender pay gap for companies with more than 250 employees. Companies with more than 100 employees should report every three years.
A joint pay gap assessment must be conducted with employee representatives if the gender pay gap exceeds 5%.
As of May 2023, member states now have three years to transpose this directive into national law.
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Our 1st Emerald Zebra HR Power Breakfast. An event that we created based on identifying the need and wants of the HR community as well as business leaders and owners.
