Is Discussing Pay a Taboo Subject at Work?
18th September 2023
When I started my career in the 90s, it was an unwritten rule: do not discuss your salary. This culture of silence is still prevalent. In fact, a recent poll found that only one-third of UK workers surveyed would discuss pay with their colleagues.
Words: Lucy Kallin, Executive Director, EMEA, Catalyst
The gender pay gap is a global issue. Among the OECD’s 38 member countries, the disparity stood at 11.9% in 2021, a slight improvement on 13% in 2019. Some countries are obviously doing better than others, with Norway reporting a gap of 4.6% compared to Korea’s 31%. Ireland is at 7.3%, while countries such as the UK (14.5%), Germany (13.7%) and the US (17%) sit somewhere in the middle. Research shows that women from underrepresented racial or ethnic groups and older women experience an even larger pay gap.
The gender pay gap is a combination of issues involving pay equity (equal pay for work of equal value or similar work) and the representation of women at each level across an organisation. To close the gap, we need pay equity as well as greater representation of women in senior leadership.
Most companies I speak to do not think they have a problem with pay inequity. One senior leader my team met refused to believe that the company’s annual intake of men and women trainees were paid differently. A pay audit across their organisation revealed a pay bias in favour of the men recruits, which they quickly pledged to resolve.
Many women face a glass door at the onset of their careers. From day one women are paid less and start at a lower level than men, despite being similarly qualified and sharing the same career aspirations. The explanation often goes, women do not negotiate. But research shows the opposite. Women do negotiate, almost as often as men:
Catalyst found 47% of women, compared to 52% of men negotiated for a higher salary during the hiring process for their current position.
It still may not close the pay gap.
Other reasons cited for the gender pay gap include the motherhood penalty, with women’s earning power dropping by 4% for each child. In Germany, a study by the Bertelsmann Foundation estimated that a combination of losing pay during maternity leave, followed by women working part-time or being a stay-at-home mum resulted in a financial loss of “up to two-thirds of their lifetime earnings”.
As this gap widens over time, women often face a chasm in pension provision known as the gender pension gap.
Old-age poverty is very real for women, who are penalised for gaps in their tax contributions due to unpaid (and unvalued) care-giving responsibilities. In 2022, a US survey of 401,000 women found their median annual pension contributions were 43% less than men, resulting in a 65% lower account balance.
To tackle the gender pay , the EU Gender Pay Gap Directive will come into effect in member countries in the next three years.
It requires companies to share information about how much they pay women and men for work of equal value, and to take action if their gender pay gap exceeds 5%.
Employers will also have to inform job seekers about the starting salary or pay range of advertised positions and are forbidden from asking about a candidate’s pay history. Importantly, workers will be able to ask employers for average pay levels by gender for categories of employees, i.e., doing the same work or work of equal value. In addition, an organisation’s pay and careers progression criteria must be transparent.
This move will complement Ireland’s own gender pay legislation, which will require smaller companies to report on gender pay gaps, in advance of the EU law. Last year, employers in Ireland with 250 or more employees reported their gender pay gap statistics for the first time. Next year, the reporting requirement drops to 150 employees and from June 2025, employers with just 50 employees will have to comply.
As well as government intervention, closing the pay gap requires intentional action from employers. This can only happen when organisations have an objective view of whether they have a pay equity issue.
Without fair and transparent recruitment and promotion and salary procedures in place, gender bias can creep in. This must be rooted out.
In March, an American woman, Kimberly Nguyen, applied for her own job, when she saw it advertised on LinkedIn for ‘$32k-$90k more’ than she was being paid. New York State’s new salary transparency law allowed her to see the pay discrepancy. Nguyen told media outlets that she had repeatedly asked for a pay rise, but it had been refused. She described the new transparency laws as “life-changing”.
A good starting point for organisations is to conduct regular wage audits to establish metrics that drive action on pay equity.
It is also time to end the divisive culture of secrecy around pay scales, as well as banning salary history requests, ensuring that employees have the knowledge to be paid fairly and equally.
Businesses that continue to ignore their gender pay gaps risk losing talent. A 2022 ADP global report found that 76% of workers would consider looking for a new job if they discovered their company had an unfair gender pay gap or no diversity and inclusion policy.
Now is the time to end pay secrecy and entrenched biases and to build new transparent, meritocratic pay systems where all talent is paid fairly for the true value they contribute to their organisation regardless of their gender.
