Greater pay transparency could narrow gender gaps but fuel workplace resentment - Politics and regulation

A UK proposal would let employees request details of colleagues’ pay and benefits. Research cited in the article suggests individual salary disclosure can reduce gender pay gaps, but may also increase dissatisfaction and staff turnover.

The UK Equality and Human Rights Commission is proposing that workers be allowed to request information about colleagues’ pay, bonuses and other benefits. The agency argues that greater transparency could help reduce the gender pay gap, but evidence from places that have adopted similar measures points to possible drawbacks as well as benefits.

Women in the UK currently earn an average of about 6.8% less than men. Existing transparency rules have had some impact: since 2010, UK organisations with more than 250 employees have had to publish their gender pay gap. A study found that this reporting was associated with a 19% reduction in the gap, largely because men’s pay growth slowed rather than because women’s pay rose faster.

Other research has found benefits from making individual pay information available. A study of Canadian universities linked individual-level transparency to a 20% to 40% reduction in the gender pay gap. Research on US scientists also found less gender inequality in pay, while evidence from Norway suggested that women changing jobs were able to use salary information to find and negotiate for better-paid roles.

However, individual salary disclosure has also been associated with problems. The US scientists study found that pay became less closely linked to performance. Research on senior managers in California’s public sector found that transparency was followed by wages falling by about 7% and quit rates rising by 75%. In a study of US universities, employees earning below the average became more dissatisfied and more likely to seek another job after learning colleagues’ salaries; higher earners’ job satisfaction was unchanged.

The evidence also suggests that transparency rules have not shifted the tendency for men and women to enter different occupations, which contributes to pay inequality. The proposal would therefore extend disclosure beyond published gender pay gap figures, giving employees a way to request information about specific colleagues. The research cited in the article suggests that such openness could make pay more equal, while also increasing resentment and turnover and weakening the relationship between pay and performance.

Sources: The Guardian Politics.