How pay transparency can help close the gender pay gap in tech

A recent survey from the International Labour Organization looks at gender inequalities and shows how pay transparency can promote fair salaries.

Women are still paid 82 cents for every dollar earned by men.

The gender pay gap has only worsened since COVID-19 as many women joined the Great Resignation, became the de-facto caregivers and educators in their family, or were relegated to lower-wage work.

“The World Economic Forum expects that it will now take more than 130 years to close gender gaps worldwide, up from about 100 years before the pandemic,” said Gita Gopinath, IMF first deputy managing director, in a speech delivered at the Korea Gender Equality Forum in September 2022.

A recent study by the International Labour Organization, Pay transparency legislation: Implications for employers’ and workers’ organizations, offers a solution to the gender pay gap: pay transparency.

Why pay transparency?

If workers are in the dark about what their coworkers earn, it means they lack information that could be necessary to know their own value on the job, which is essential in negotiating better salaries and combatting pay discrimination. Employers can also benefit from pay transparency because they can more easily prevent and address this kind of discrimination before it becomes a problem, and it also increases trust, which is a net positive for everyone.

SEE: The COVID-19 gender gap: Why women are leaving jobs and how to get them back to work. (free PDF) (TechRepublic)

Pay transparency can have economic benefits for employers, as well. According to the ILO report, correcting the gender pay gap “can result in an increase in labour force participation and working hours for women (since incentives are stronger where pay is higher).” It can also lead to “better use of women’s skills and increased productivity.”

A lack of pay transparency can keep women and minorities working for lower wages than their male cohorts. A March 2022 study by job site Glassdoor showed that 85% of employed women believe they deserve a pay increase.

Knowing what their colleagues earn could help these women ask to be compensated for what they’re worth, and the survey showed that while 63% of employees would like their company to disclose pay information, only 19% said that their company actually does so.

Asking colleagues about pay is also a tricky business, as the study showed that less than half of employed women (45%) felt comfortable disclosing their pay with a coworker. Even fewer, 29%, had actually made the move. Dishearteningly, more than a quarter of workers (28%) reported that their company discouraged the practice.

How can pay transparency legislation help?

According to the ILO, countries may use a range of approaches to solve the gender gap — from periodic pay disclosure, to pay audits, to access to pay data. The organization suggests that governments get involved too and work with organizations on behalf of employees during the creation of legislation to promote pay transparency.

The ILO report offers various ways that pay transparency legislation is currently being offered:

• Allowing employees to request and access information on pay levels in their enterprise
• Requiring employers to disclose individual pay information to employees
• Requiring employers to disclose an advertised position’s salary to prospective employees, either during the interview process or in job advertisements
• Prohibiting employers from requesting an employee’s or prospective employee’s salary history
• Creating an independent body to provide employers with equal pay certification if they meet certain requirements around gender-neutral pay
• Obliging enterprises with a certain minimum number of employees to publish information on gender and pay within their organization
• Carrying out regular audits on gender and pay in enterprises with a minimum threshold level of employees
• Undertaking regular pay assessments in enterprises with the involvement of employee representatives
• Promoting the discussion of equal pay and pay audits during collective bargaining

According to Glassdoor career expert Alison Sullivan in a previous TechRepublic article: “Greater pay transparency is a critical tool in closing the pay gap. It’s imperative that both employees and employers not only destigmatize the pay taboo but actively encourage and participate in pay discussions.”

These are “early days for pay transparency,” said Manuela Tomei, director of the ILO Conditions of Work and Equality Department. “We see countries pursuing different approaches to advance it, which shows that there is no ‘one-size fits all’ solution.”