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Why pay transparency benefits both companies and candidates

European legislation requires transparency and equal pay, making pay management a key factor in attracting talent and improving recruitment processes

by Tomaso Mainini*

6 August 2026

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3' min read

Translated by AI

Versione italiana

3' min read

Translated by AI

Versione italiana

pay transparency is set to become one of the key factors in competitiveness in the labour market. With the transposition of EU Directive 2023/970, organisations are required to make the criteria guiding pay decisions clearer and more verifiable, and to reinforce the principle of equal pay for women and men for the same work or work of equal value.

But the point is not simply to comply with a rule: it is to rethink the relationship of trust with candidates and employees.

When information on remuneration, assessment criteria and career progression is made clear from the outset, dialogue becomes more effective and informed. This reduces mismatched expectations, speeds up recruitment processes and helps build stronger professional relationships.

The data confirms this trend. Our latest report, Talent Trends 2026, shows that 73 per cent of active candidates in Italia come from companies with non-transparent remuneration structures. At the same time, 50% of companies with transparent pay policies say that recruiting has been easier over the past year.

Transparency has a tangible impact on the effectiveness of recruitment processes and on an employer’s reputation, and is a practical tool for improving the effectiveness of HR processes, strengthening employer branding and enhancing the quality of the candidate experience.

Are Italian companies ready? The answer is: to some extent. Many organisations have already taken significant steps towards greater equity and the review of their remuneration systems, but the Directive calls for a more structural shift.

It is not simply a matter of communicating more effectively, but of addressing fundamental aspects of the organisation: how the value of roles is defined, how career paths are structured, how performance is assessed, and on what basis remuneration decisions are made.

Transparency means adopting objective and verifiable criteria, monitoring any imbalances and taking action when unjustified differences arise.

In practical terms, this translates into a number of key actions:

• to define pay bands that are consistent with market rates and internal equity;

• draw up clear, inclusive and realistic job descriptions;

• to communicate transparently to candidates the selection process, the criteria and the salary range for the role.

When people know what to expect, they make more informed decisions and perceive the company as a trustworthy partner. At the same time, clear and consistent systems reduce the perception of arbitrariness and help to improve staff retention.

What really changes with the

Directive?

The Directive introduces a series of obligations designed to have a significant impact on business processes, but above all it changes the way in which transparency becomes an integral part of corporate governance.

The main changes relate to three areas:

Selection and recruitment. Companies will be required to provide information on the salary range before the interview and will no longer be allowed to ask candidates about their previous salary history. This reduces the risk of perpetuating existing inequalities and makes the process fairer from the outset.

Job structure and evaluation. Job classification systems must be based on objective criteria, such as skills, responsibilities and working conditions. This will require greater attention to be paid to the design of job architectures and the assessment of the relative value of roles.

Transparency and reporting. Workers will be entitled to receive information on their individual pay and on average pay levels, broken down by gender, for categories of workers performing the same work or work of equal value. Companies will be required to monitor and report on their pay structure. Where significant, unjustified pay gaps are identified, corrective measures will need to be taken.

The message is clear: pay transparency is no longer an optional initiative, but a structural component of corporate management.

From regulatory constraint to strategic lever

For businesses, the real challenge will not be to comply with the Directive, but to turn it into an opportunity for organisational development.

Companies that are able to tackle this change with vision and a systematic approach will be able to improve the quality of their HR decisions, strengthen their reputation and build more robust relationships with the labour market.

Pay transparency is not a constraint, but a test of an organisation’s maturity.

And, increasingly, it is also a deciding factor for talented individuals.

* Managing Director of Michael Page