Workplace Wellbeing: End of income secrecy in sight 

Thanks to recent EU legislation, workers will soon have the right to request pay transparency. Experts say this change will help to level the playing field for workers

Pic: iStock

SOME people unashamedly divulge how much they earn to all and sundry. You may even be such a person yourself. However, it’s much more likely that you keep this information close to your chest.

According to the Irish Congress of Trade Union’s social policy and employment affairs spokeswoman Laura Bambrick: “Talking about money and asking people how much they earn remains a common taboo, even among many married couples, never mind colleagues and friends”.

Wladislaw Rivkin, associate professor of organisational psychology at Trinity College Dublin, says there are several reasons for this. One is that some employers discourage people from sharing this information. “There are cases where non-disclosure agreements prevent individuals from sharing their salaries and other cases where employers just tell employees not to disclose them,” he says.

Rivkin explains that many people associate salary with ‘distributive justice’ or the concept of equal pay for what is considered equal work. “It’s to do with fairness, and there is often more to lose than there is to gain when it comes to sharing details of one’s salary,” he says. “For example, finding out I earn less than my colleague who does the same job as me may result in envy and frustration on my side and a less friendly relationship with my co-worker in terms of support and help.”

Cloe Stapleton, a recruitment and business director at Osborne Recruitment, suggests that a reluctance to talk about money may be part of Irish culture. “I remember always being told that speaking about money was rude,” she says.

Cultural sensitivities and employer preferences may not matter for much longer as we will soon have to embrace salary transparency. In March this year, the European Parliament adopted the EU Transparency Pay Directive, which requires employers to advertise information on pay as part of their recruitment process. Employers with more than 50 employees will have to provide workers with information on the criteria used to determine pay and pay progression. And workers will have the right to request information on the average pay level of those doing similar work. All EU member states will have to transpose this into national legislation within the next three years.

Dr Laura Bambrick, ICTU

Gender pay equality

Salary transparency is the term used to describe openly communicating information about compensation with employees and job candidates. It’s also a term that saw an uplift of 5,400% in Irish Google searches in the first three months of 2023 compared with the same three months in 2022.

Bambrick thinks the move towards increased transparency should level the playing field for workers. “Pay secrecy plays a huge role in pay inequality,” she says. “Knowledge is power, and if you know how much other staff are paid, you’re in a better position to challenge unfair discrepancies and get the pay you deserve.”

She points to countries such as Sweden and Finland, where salary transparency is already the norm. “In these countries, you can find out what your colleague, neighbour, or spouse earns through publicly available income tax returns,” she says. “I don’t think it’s any coincidence that these are the countries that perform best on income and gender pay equality.”

The gender pay gap is still significant here in Ireland. “The Anti-Discrimination (Pay) Act was introduced in 1974 and put an end to employers having one rate of pay for men and another — lower — rate of pay for women doing the same work,” says Bambrick. “However, almost 50 years later, for every €1 men in Ireland earn for every hour they work, women earn an average of just 89c. This new directive is intended to help close this pay gap and to finally deliver on the commitment of equal pay for women.”

Stapleton has high hopes it will achieve this aim. “We saw the gap in pay between temporary versus permanent staff close when the Agency Worker Directive came into play in 2011, so I’ve no doubt this new directive will have an impact,” she says.

Rivkin is more measured in his expectations, saying it will take time. “The BBC introduced salary transparency as a measure to reduce the gender pay gap, and even though it has reduced the gap between male and female employees, there’s still a gap. Salary transparency is a step in the right direction but it’s just one part of what needs to be a longer-term strategy for more fairness in compensation.”

The directive should also have other positive effects, including making the job application process easier for everyone.

“Employers will have to publish pay details in job ads which will allow would-be applicants to decide if the remuneration matches the job on offer before they put in hours of interview prep and attend what is often multiple rounds of interviews only to find out that [for example] what is being offered is a starting salary for a senior role,” says Bambrick.

It will also make it unlawful for interviewers to ask job candidates about their pay history or current wage. “This will stop workers from being penalised in their new job for their low pay in their last one,” says Bambrick.

Jealousy and resentment

Rivkin predicts that inexperienced employees lacking in confidence will benefit most from such salary transparency. “The challenge for employees joining an organisation is that it’s difficult to know where one stands in the salary structure of a team or department,” he says. “Young professionals and women are known to be less confident on average when negotiating salaries for themselves. This should be alleviated when salaries are made more transparent.”

Employers should also view the new legislation positively, as research shows that salary transparency helps attract talent. A 2022 US survey of 1,200 workers found that 85% were more likely to apply for jobs that listed the salary range.

Studies also suggest that salary transparency and pay equality affect employee engagement and retention. Research carried out in America in 2022 found that employees who perceived their pay as inequitable were 13% less engaged and were 15% less likely to stay with their current employer.

Though there are significant pros, one potential con to this new legislation is the jealousy and resentment it could cause in the workplace. “I’d worry that it could cause problems if fair salary structures aren’t in place within organisations,” says Stapleton. “I would view pay scales being introduced for roles as a positive development, but I wouldn’t like ever to see it going so far as revealing individual salaries. That could lead to others feeling underpaid and demotivated.”

Rachel (not her real name) saw the effect unfair salary structures can have in one of her former workplaces. “In one job in the private sector, everyone was on different rates they had each negotiated for themselves,” she says. “This became known and bred such contempt between people as those with more qualifications and experience were sometimes paid less because they had taken what was offered rather than negotiating upwards.”

She had other negative experiences, too, such as when she negotiated a fee to appear on a TV show, only to find out later that double the money was available.

She has since returned to the public sector. “In the public sector, my salary scale is public and so are any increases to that scale,” she says. “When I apply for a role, I know exactly how much it will pay and the benefits attached. I also know that my salary will increase annually and without having to negotiate that increase or be left at the discretion of my line manager. It’s all above board and open, and that’s how I prefer it.”