Salary transparency has been a problem since there have been salaries. Employers can negotiate terms with each employee individually if they do not make salary information public. For this reason, many people are willing to settle for lower wages, due to a number of factors. Reasons may be underestimation, poor negotiating skills or lack of knowledge of the average wage in a particular field. However, these factors should not be taken into account. That is why the European Union is trying to solve this problem.
How specifically is the EU addressing this problem?
The new rules of the EU Transparency Directive were first proposed in March 2021. Following their recent approval, they address two main issues – the gender pay gap and overall transparency. Women are paid around 13% less on average in the EU. The difference ranges from 0.7% in Luxembourg to 22.3% in Latvia. The solution was a mandatory salary report from every employer with more than 100 employees. If women are paid at least 5% less for the same work and there is no objective reason for this, the employer is obliged to make amends and compensate for the underpayment.
Salary transparency for jobseekers
The proposed regulation on pay transparency for job applicants requires employers to provide clear information on the starting salary level or range in the job advertisement or before the job interview. By introducing these guidelines, EU jobseekers will have access to the information they need to make decisions about their career options and employers will be able to create a more transparent and fairer recruitment process. This is something that in Atena company we have been doing for years because we recognise the importance of transparency and value our employees.
Employees’ right to information
All employees in the EU, regardless of the size of the company, will have the right to ask about their personal pay and the average wage. This applies to groups of workers divided by sex who do the same or similar work. This new policy allows employees to obtain important information about pay. It also ensures that all employees are treated equally.
Shouldn’t pay transparency be the norm?
Although it is common practice in some EU countries for employers to include salary in job advertisements, this is not the case everywhere. If we look at North America, for example, Canada has pay transparency laws in only 6 out of 13 jurisdictions. And it’s even worse in the US. Only 17 out of the 50 states have transparency laws. However, not all of them require employers to provide applicants with salary range information. Although the situation is much more transparent in the EU, there were still countries that did not oblige employers to disclose salary conditions before job interviews. Therefore, the changes to the Directive will certainly have a positive impact on employees across the EU.
How do we see the changes to the EU Transparency Directive?
Transparency, fairness and equality of opportunity are the cornerstones on which is Atena built. Neither the government nor the EU had to force us to disclose salary information at every job opportunity. We’ve always done that. Nor has there ever been, nor will there ever be, a pay gap in our society based on gender, nationality or any other subjective factor. However, even if we are not directly affected by this directive, we believe that it will only bring positive changes to the EU, because from now on, every employee will be rewarded on the basis of his or her skills and education, and not on the basis of bargaining power and willingness to settle for less pay than they deserve.