Bye-bye salary secrets

In good news for jobseekers, the European Union has recently adopted the long-anticipated Pay Transparency Directive, designed to establish standards of transparency around remuneration. It essentially ensures that employers will be obliged to provide information about starting salary levels, or a salary range, prior to interview or when advertising job vacancies. EU member states will be required to enshrine the directive in legislation by 2026.
Under the directive, employers will also be forbidden to ask prospective employees about their own pay history and will be required to define their pay and progression criteria for employees. Workers, meanwhile, will have the right to disclose their pay to colleagues, and to request information on both their own pay levels, but also the average pay levels of others in the company doing similar work. Failure by the employer to fulfil these and other obligations will result in penalties, and in cases where discrimination has been alleged, the burden of proof to the contrary will now rest with the employer. Also included are other related initiatives focusing on work-life balance and equal gender representation on boards.
Achieving gender pay equality appears to be the primary motivator for the directive, empowering workers – primarily women - to claim their right to equal pay for equal work. Women in the EU earn on average 13 percent less than their male counterparts. Pay discrimination is one of the key obstacles to achieving parity, which stands to be addressed under this measure, making it easier to claim redress and forcing companies to evaluate and amend their practices if necessary. Ultimately, the directive is set to transform the way companies across the EU approach pay equity and transparency - whether they like it or not.
The new directive is not only welcome in the context of gender pay equality, however. Jobseekers across Europe will rejoice at the demise of meaningless, outdated terms like ‘competitive salary’, ‘commensurate with experience’ or even ‘DOE’ in job advertisements. Most of us who at one time or another might have sought new employment or a career change will have experienced the utter frustration of trawling through job advertisements and trying to figure out not only whether or we might meet the criteria to be considered for a job, but whether or not we can actually afford to take it. And how many employers have held off discussing money until deep into the recruitment process only for candidates to fall off when the gap between salary expectation and reality proves unsurmountable?
The benefits of such openness are so obvious that failure to do so suggests a real lack of vision on the part of companies. Research consistently shows that job advertisements displaying salary information attract a higher number of applicants, and as far back as 2018, a study conducted by LinkedIn showed that compensation was by far the most important element of a job description to candidates. In a more recent study on the same platform 91 percent of respondents said seeing the salary range on a job post affected their decision to apply for the job.
Publicising compensation suggests a culture of openness, transparency and fairness - values that encourage loyalty and productivity - as well as demonstrating that the company does not believe in wasting their own time or that of applicants, and such openness has been shown in an increasing body of research to attract better and more diverse talent. It's not always about the money - flexible working hours, hybrid working arrangements, annual leave entitlements, pension, health insurance, social benefits, company culture and other perks can make a job more attractive, and companies that display innovation in delivering an enjoyable and rewarding working environment can expect to reap benefits. However at the end of the day, hard cash is what pays the mortgage and the bills.
Job-hunting is a time-consuming, stressful and often expensive process for both parties, so it is puzzling that companies continue to cling to the conservative and inefficient notion of salary secrecy. Perhaps it stems from the days when talking about money was seen as distasteful – this is not, however, the case anymore. Sure, they might argue that keeping salaries under wraps maintains competition, avoids resentment within companies and combats poaching, but let’s be honest - any company who in 2023 fails to disclose in a recruitment campaign what they are willing to pay the right candidate - in true capitalist style - probably know in their hearts (if they have any) that they are not offering enough. By 2026, there will be no hiding it.