Pay transparency, only 7% of companies have a plan

The countdown on pay transparency marks minus 365 days to the deadline for Member States to transpose the directive published in May 2023 (2023/970) introducing measures to ensure equal pay for men and women for equal work or work of equal value. Then in 2027 the obligation for companies with more than 150 employees to submit the first pay transparency report will be triggered. But how are companies doing? According to the latest Global Pay transparency report by Mercer on the subject, only 7% in Europe have a structured plan, yet the new obligations could change many things for HR departments. It will be necessary to indicate pay bands in job advertisements, guarantee employees the right to know the criteria behind their salary, publish regular reports on gender pay gaps and implement processes to mitigate gaps greater than 5%.

According to a report 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, the regulatory requirement is the main driver of engagement on the issue for 77% of organisations, but there are also factors that drive companies to promote pay transparency, such as alignment with corporate values, indicated by 53% of companies, increasing employee satisfaction with pay equity (51%) and consistency with talent management strategies and remuneration policies (49%).

Globally, 69% of companies are moving towards pay transparency. However, expectations on this issue are higher among candidates than among current employees, because there is a strong demand for transparency coming from the labour market itself. This is precisely why almost seven out of ten organisations are engaged in initiatives to increase pay transparency. Of the companies surveyed, 60 per cent currently share the salary ranges of hires in job advertisements, but in the next two years this percentage will rise to 94 per cent, almost all of them.

While pay transparency is an issue that is being discussed, it appears that it remains complex to implement and is not shared in a standardised way. In fact, only a minority of European companies, less than one in ten, share pay scales internally and externally, going beyond regulatory requirements. France is a leader in complying with local laws, but does not seem to want to go beyond what is required, while the UK is exploring how to share pay bands more widely. As for Italy, the legislation has not yet been transposed locally, but Mercer's survey shows a growing interest among both multinationals and SMEs, including in implementing new HRM projects.