Would you like an official way to determine just how much your colleague, neighbour, partner, acquaintance or friend earns? Simply put, no more taboos or secrets about pay among those around you. Imagine if you could conveniently log on to an online-system available any time of day and find out just how many digits are on the pay stubs of the people you know, and how much the government actually deducts from their income. Salary disclosure can lead to pay equality while the overall trend now is to increase salary and compensation transparency.
Sci-fi? The same exact situation is commonplace in Norway, where salary and taxpayer transparency have long been in place and the government has taken steps to bolster these efforts and civic oversight. Norway imposes one of the highest income tax rates in Europe (up to 40.2%). Official tax documents disclose net income, net assets and taxes paid.
When this service removing the secrecy around pay rates was launched in Norway, browsing the earnings of others became a kind of national sport. People were originally allowed to browse the information anonymously, but this resulted in numerous scams and blackmail attempts. The system has been modified since 2014 and people can now learn who exactly reviewed their pay records, which curbed illicit activity significantly and the number of searches in the system dropped.
We are only human and naturally quite curious about how much others earn
Norway is truly an exceptional case, having actually rolled out public access to salary information, and it was accepted by society. Many other countries, such as Finland and Germany, have taken steps to make it possible to determine just how much one’s colleagues earn through official channels. Some companies disclose the salaries of top management as a minimum. However, pay and salaries remain taboo in many countries and are subject to personal data protection laws.
A recent survey completed by the international Paylab.com salary portal confirmed that pay is a very sensitive topic and that employed persons often think about their own salaries and the earnings of those around them; the survey focused on the attitudes of people in Europe towards pay and salaries.
The survey was conducted in 9 countries on a sample of 40,262 employees, and showed that 74 per cent of people want to know how much their colleagues earn. The same applies to employees at all levels of management. And that’s not all. Up to 62 per cent of people would also like to know how much their acquaintances, neighbours, friends and other people they meet on a regular basis earn.
Discussions about pay are generally restricted to those closest to us. Up to 6 out of every 10 people discuss their pay with their loved ones, while people who have below average pay in the country are much more open in discussing their pay with those around them. People in management positions are the least likely to share any salary information.
Despite this, there are tools available that you can use to get an approximate idea of how much your neighbour earns. The international Paylab salary portal allows employees to compare their pay against salary benchmarks for employees in more than 500 specific individual jobs.
Is salary disclosure a good thing?
Salary disclosure is a very unpredictable process in any company, and management and the HR department are often hesitant to take such a step. If a company is unable to clearly communicate its salary policy and compensation and benefits overall, then this process can result in more harm than good. Companies should be upfront in communicating the fact that they care about the adequate and fair compensation of their employees.
A natural response when employees gain access to salary information is a wave of emotions, questions and behind-the-scenes discussions. This is primarily because the chances of misunderstanding or misinterpreting the data are high. Pay is about more than just a number. Total compensation involves many factors that impact the final amount.
Every individual employee is considered separately based on their education, experience, qualifications, special mix of professional and personal talents, managerial experience, performance and loyalty. Other pay-influencing factors include region, company size, sector and company ownership and type of commitment, working hours and job level, meaning to what extent the employee is responsible for implementing a budget and managing other personnel. Finally work duties connected to a specific job must also be considered.
Companies themselves are made up of people with different skills and their salaries are derived from the market value of their job, i.e. the overall availability, or lack thereof, of qualified employees in the specific region. Every company must also consider its internal needs. If, as an example, there are numerous product managers in a company responsible for various products, the profitability and demands of the individual products and their impact on the company’s bottom line must be considered. Likewise, not all bosses are the same. The head of the accounting department will earn something different than the head of the IT department because they are both specialised in different areas with a different market value.
First and foremost, salary disclosure is a very difficult matter involving communication. It can result in greater work oversight and certainly may be expressed through increased expectations and pressure to perform from the surrounding environment. After all, a proper salary is only paid for proper work. Another potential threat is a kind of internal ranking of employees by earnings. Lower income employees may ultimately feel less appreciated as a kind of “second-class” employee.
The act of salary disclosure itself is rather admirable when the company itself takes such a step. The British BBC recently took the daring step of disclosing the salaries of its newscasters. This triggered a passionate wave of discussion in the UK on the adequacy of salaries and on the exorbitant compensation paid to individual media stars. The public learned about the astronomical amounts they earned and the major gender pay gap that exists among newscasters and their pay. Only 34 women, compared to 62 men, had an annual salary of higher than £150,000 per year in the highest pay grade at the BBC. The BBC itself faced a wave of criticism for this wage disadvantage for women.
The overall trend now is to increase salary and compensation transparency. How do you think your company would cope if it disclosed its employees’ salaries?