Pilita Clark: Get ready for salaries to become more public

How would you feel if your employer decided to publish a list online showing the first names of all its staff as well as what they do, where they live and exactly how much each is paid?

A 12-year-old company called Buffer that helps businesses market themselves on social media has been doing this since 2013.

Its British-born co-founder and chief executive, Joel Gascoigne, (salary: $298,958/€282,395; address: Boulder, Colorado) thought the benefits of being so open could include cutting its gender pay gap.

For people who believe that making salaries more public helps to close these stubbornly rife gaps, his company became something of a poster child.

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It is still a lonely child. Few other businesses have taken its radically transparent path and I was never entirely sure they should, considering Buffer had a gender pay gap of 15 per cent as recently as 2019, and 12 per cent in 2020.

That was not a huge amount better than the overall pay gap in the US, where women working full-time all year round typically made 17 per cent less than men in 2020, a disparity that is even worse for women of colour.

But this year, Buffer revealed its gender pay gap had dropped to just 0.4 per cent, meaning it had virtually disappeared.

Since the company only has 84 workers, this did not make big news. Also, Buffer’s analysis at the time suggested a range of reasons for its achievement, including changes at the top that created a nearly all-woman executive team.

Still, making salaries public played a role, a spokeswoman told me last week: “We believe that this level of transparency has held us accountable to continuing to improve and reduce this gender pay gap year over year.”

That matters at a time when efforts to make salaries more transparent are rising in the EU, the UK, the US and elsewhere.

I know of none as bold as Buffer’s public salary list but perhaps they do not need to be.

One common measure, which the UK intends to test in a pilot scheme unveiled in March, is a ban on asking prospective employees their salary history. Those questions make women, in particular, feel less confident about negotiating for more money, says Andrew Bazeley of the Fawcett Society, a gender equality charity that has campaigned against such queries.

The society cites studies of 21 US states or cities with some form of ban, which tend to show the move narrows gender pay gaps.

Another measure due to be launched in places such as New York city requires employers to publish salary ranges in job adverts.

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Meanwhile, publishing the size of pay gaps appears to be having an effect.

In the UK, where employers of 250 or more staff have had to report their gender pay disparities since 2017, Bazeley says those with more than 250 staff have closed their gaps faster than the rest.

Ultimately, none of this effort should be necessary. Countries worldwide have had laws requiring equal pay for equal work for decades. Pay gaps remain in part because women still dominate low-paying jobs, but also because even when doing the same jobs as men, they are less likely to do things like negotiating for higher pay.

I wish more countries would follow that bastion of woman progress, Iceland. A groundbreaking pay policy that took effect there in 2018 ends the pretence that progress requires women to change by, say, being more assertive about pay rises. Instead, employers with more than 25 staff must prove they pay men and women equally for jobs of equal value.

Organisations are certified once they do this and those that don’t risk a daily fine of up to 50,000 Icelandic króna — about €358.

Of the 414 groups that should have been certified by now, 79 have not finished the process, Iceland’s directorate of equality told me last week. None has yet been fined and the directorate says that, although there are signs the policy is helping to narrow the gender pay gap, the full impact will not be known for a few years.

Still, if any country cracks this enduring inequality, my money would be on this one. — Copyright The Financial Times Limited 2022