Wage it a means of favoritism and discrimination in salaries?

Charles Cotton: An employer who thinks the impact of publishing salary data will be negative may have a fairness issue among employees.

Mostly, co-workers do not exchange salary details with their colleagues except in secret, and one of the reasons for this is that some employers prohibit or discourage the exchange of information in this regard.

The position of these parties contradicts the trend towards more transparency in this field, which was encouraged by campaigns demanding equal pay, according to a report published by the Financial Post newspaper (financialpost) Canadian.

bridging the gap

Finland sets a good example in this regard, as it is considering a proposed law that would force employers to disclose data about workers’ salaries to colleagues who are suspicious of gender discrimination in salaries.

This could help close the gender wage gap, which is estimated at 16% in Finland. But on a broader level, expanding wage disclosure cannot guarantee a salary increase for everyone, and this is exactly what a recent working paper by the National Bureau of Economic Research finds. The salary information they end up earning bigger salaries collectively.

Co-workers who share salary information end up making more salaries collectively (Pixabe)

Low wage rate

Since 2004, 18 US states have passed laws to punish employers who mistreat workers who share wage data. Accordingly, many companies have withdrawn non-disclosure clauses from their employees’ employment contracts.

Many workers used Google Sheets to build databases of their wages, and the result was that average wages fell by 2.6% in the three years since the laws were implemented.

Accordingly, researchers Zoe Cullen and Bubak Pakzad-Horsson theorize that transparency over wages reduces workers’ bargaining power, and thus strengthens the employer’s position in setting wage rates.

wage secrecy

The aforementioned findings do not apply to union workplaces, where transparency has little effect on changing wage rates, collective wage bargaining makes individual bargaining less important, and contributes to bringing the wage differential closer to the average.

However, the reasons that employers rely on for seeking wage secrecy are mixed, as some are credible while others are not.

On the one hand, they can withhold salary data that many employees might see in person from their curious colleagues, and it may be that some employees are given lower salaries because they are less useful than others, and knowing this can be demotivating.

Why do women get paid less than men?  Here are 5 important factorsWomen are abundant in workplaces that follow a wage secrecy policy in the United States (Shutterstock)

women’s salaries

On the other hand, wage secrecy may also be a means of favoritism and underpaid women and minority workers. Data from the Institute for Women’s Policy Research indicates that women are more likely to be found in workplaces with wage secrecy in the United States.

An employer who thinks the impact of publishing salary data will be negative may have an equity issue, says Charles Cotton, of CIPD, a British human resources organisation.

He adds that the culture of “don’t ask, don’t tell” is slowly declining, and that the disclosure of CEO salaries has not caused their salaries to decline.

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