Inclusive cultures and values are driving pay transparency across Europe

But some firms fear full disclosure due to possible employee reactions

European companies are becoming more attuned to the needs of their employees, with 86% of organisations having increased communication around pay programmes driven by more inclusive company values and cultures.

Other factors, such as confidence in pay programmes (79%) and employee expectations (77%), are driving change and companies to become more open about remuneration.

Increasing regulatory requirements and ESG agendas also led companies to become more transparent around pay, with 72% of companies attributing the rise to regulations and 51% due to ESG.

But many organisations are apprehensive about sharing more information about pay, as 59% of companies fear possible employee reactions. More than a third of companies (38%) have legal concerns about oversharing pay information, while almost a quarter (23%) hold back due to administrative complexity.

Yet, organisations that have decided to disclose pay rates (in line with new US regulations) are seeing less negotiation (57%) and fewer questions (50%) on pay from prospective employees. However, more than half of companies (57%) have noted that it results in more questions from existing employees.

Pay transparency

Most European companies are already communicating or planning to share job levels (87%), variable pay opportunities (68%) and how base pay is determined (59%). This is predominantly communicated via management, while 64% of companies use webinars or HR portals (56%) to share this information.

In addition, three in ten organisations across Europe (31%) currently disclose the adjusted pay gap locally, with a similar percentage planning to do so in the future (31%). Yet two-thirds of companies (68%) only share data required by local regulation. And when it comes to global organisations, almost all (95%) plan to provide a narrative on their approach to managing pay equity.

New regulations

Eva Jesmiatka, Europe Lead on Pay and Career Equity at WTW, said: “With North America announcing new regulations around disclosing pay range information to prospective employees and with European companies doing more to share their fair pay ambitions, it’s likely that openness around pay will only accelerate.

“Employees’ expectations are growing; they expect transparency and actions that align with the values being communicated, which is why openness around topics such as pay and career equity are becoming increasingly important.”

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