The Equality and Human Rights Commission wants staff to have the right to review colleagues' pay, bonuses, and perks to address the current 6.8% gender pay gap in the UK. International evidence shows that while transparency can narrow pay disparities, it often does so by suppressing the growth of men's earnings rather than raising women's wages. Additionally, a study of 100,000 US scientists revealed that publishing individual wages weakened the traditional link between workplace performance and compensation.
Key points
Transparency initiatives frequently compress the gender wage gap by stifling higher earne…: Transparency initiatives frequently compress the gender wage gap by stifling higher earners' wage growth rather than lifting lower-paid workers.
Disclosing salary data fails to solve the broader issue of occupational sorting between l…: Disclosing salary data fails to solve the broader issue of occupational sorting between lower-paying and higher-paying industries.
Individual wage transparency can create unintended workplace consequences, including weak…: Individual wage transparency can create unintended workplace consequences, including weakening the connection between an employee's performance and their compensation.
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Would you like to know what your colleagues are paid? If the Equality and Human Rights Commission gets its way, you will be able to find out. Under its proposals, workers will be able to request detailed information about the pay, bonuses and other perks received by their co-workers. The government agency argues that if we increase pay transparency, we can also reduce the pay gap between men and women. But countries that have tried this model have discovered that there are downsides to it too.
The gap between men’s and women’s pay had started to close when equal pay legislation was introduced in Britain in the 1970s, and then more women moved into previous male-dominated occupations in the 80s and 90s. Today, women in the UK earn on average about 6.8% less than what men earn.
This has left policymakers asking what else can they do. One intervention that dozens of countries have adopted is some form of pay transparency. The idea is that allowing people to understand what others are paid will help to shine a light on…
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