Pay Transparency, Only 7% of Companies Have a Plan

The countdown on pay transparency marks 365 days to the deadline for the transposition by Member States of the directive published in May 2023 (2023/970) which introduces measures to guarantee equal pay between men and women for the same work or for work of equal value. Then in 2027 the obligation will come into force for companies with more than 150 employees to present the first report on pay transparency. But how are companies moving? According to the latest Global Pay transparency that Mercer has carried out on the subject, in Europe only 7% have a structured plan, yet the new obligations could change many things for human resources departments. In fact, it will be necessary to indicate the pay bands in job advertisements, guarantee employees the right to know the criteria on which their salary is based, publish periodic reports on gender pay gaps and implement processes to mitigate gaps greater than 5%.

According to the report that Mercer conducted among 1,144 companies in 45 countries, including 35% in Europe, 32% in the United States, 22% in Canada, 7% in the United Kingdom and Ireland and 4% in Asia, regulatory obligation is the main driver of commitment on the issue for 77% of organizations, but there are also factors that push companies to promote pay transparency, such as alignment with corporate values, indicated by 53% of companies, increased employee satisfaction with pay equity (51%) and consistency with talent management strategies and compensation policies (49%).

Globally, 69% of companies are moving toward pay transparency. However, expectations on this topic are higher among candidates than among current employees, because there is a strong demand for transparency that comes from the labor market itself. Precisely for this reason, almost seven out of ten organizations are engaged in initiatives to increase pay transparency. Of the companies interviewed, currently, 60% share the salary ranges of hiring in job advertisements, but in the next two years this percentage will rise to 94%, to almost all.

While pay transparency is a topic that is being discussed, it is still complex to implement and there is no standardized sharing. Only a minority of European companies, less than one in ten, share pay bands internally and externally, going beyond regulatory requirements. France is a leader in compliance with local laws, but does not seem to want to go beyond what is required, while the United Kingdom is exploring how to share pay bands more widely. As for Italy, the regulation has not yet been implemented at a local level, but Mercer's survey highlights a growing interest among both multinationals and SMEs, also to implement new projects in human resources management.