Will salary transparency become more adopted in 2023?
Recruiting
January 23, 2023
5
min read

Will salary transparency become more adopted in 2023?

Adnan Pavlovic
Adnan Pavlovic
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The situation with tighter talent markets, combined with the economic downturn and massive layoffs in the IT industry, makes experts predict that 2023 will be the year when most companies will pay close attention to salary transparency.

Tech companies have been leaders in pay transparency for some time. This is due to the years-long fierce competition to attract promising candidates.

Knowing what they will earn while working for their employer is extremely important to software engineers. Our latest dev survey argues that 24% of participants will withdraw from the interview process if salary options aren’t discussed by the end of the second interview.

The salary transparency movement is gaining momentum everywhere, but the next step demands broader and more strict legislative support from the states.

Salary transparency fast adopters

Some countries like Austria, Belgium, Denmark, Germany, Sweden, Spain, France, Italy, Portugal, and Finland became fast adopters regarding pay transparency.

In the UK, interest is picking up, attracting the support of 28 organizations.

Salary transparency become more adopted in 2023

Unfortunately, the largest labor market, the US, lags significantly, according to Adzuna, trailing only India for the last place out of the 19 surveyed countries.

The uprising in US legislation made experts believe it would provide a spillover effect on a global scale in 2023.

Latest legislation acts in EU and US

As of January 2023, job ads in California, New York City, Washington, Colorado, and Rhode Island-based companies (with more than 15 employees) will be obliged to disclose salary ranges, helping to create an environment for applicants to get easier information about salary ranges.

On the other side, equal pay for equal work was one of the founding principles of the European Union. With a lack of transparency about pay rates, including the gender pay gap, it's been difficult to enforce it for years.

EU Pay Transparency Act is a political agreement active since 2022 and made between European Parliament and the Council on the Directive on pay transparency measures. It governs these areas:

  • Pay transparency for job-seekers — Employers will have to provide information about the initial pay level or its range in the job vacancy notice before the job interview
  • Right to inform employees – Employees will have a right to request information from their employer on their individual and average pay level, broken down by sex, for categories of workers doing the same work or work of equal value.
  • Reporting on gender pay gap – Employers with at least 100 employees will have to publish information on the pay gap between female and male workers.
  • Joint pay assessment – Where pay reporting reveals a gender pay gap of at least 5%, and when an employer can’t justify the gap, it will have to carry out a paid assessment.

Legislative acts like these aim to ease candidates looking for an appropriate salary for the skills and responsibilities demanded in the open job position and will help recruiters waste less time on salary negotiation.

This is extremely important as it brings similar acts to enhance talent market mobilization further. Especially in light of recent layoffs and organizations seeking immediate employment for laid-off tech candidates.

Benefits of salary transparency

Salary transparency improve the attractiveness levels of any company or startup. It provides more time for hiring managers to assess potential candidate skill levels instead of wasting time on a ‘cat and mouse’ game centered around salary negotiations.

Pay transparency might come in handy, especially in the light of recent tumultuous years, where company culture has become one of two major deciding factors for a job change. Sensitivity to a toxic environment makes 40% of software developers confirm it’s the second most important reason for a job change, according to WeAreDevelopers Dev Survey 2022.

Salary transparency become more adopted in 2023

Here are five benefits of adopting a culture that supports pay transparency.

1. Attracts more qualified talent

Job positions with transparent pay levels attract individuals seeking to earn more and grow skills in an organization that interests them.

2. Improves workplace happiness

People worry about how their salary compares with similar jobs in their organization, and that’s where transparency helps improve trust within the organization.

3. Close potential pay gaps

Current legislation requires employers to post minimum and maximum salary information in job advertisements. It makes employees aware of any disparity and encourages them to negotiate better terms when they see significant differences. This helps reduce the pay gaps, especially the gender pay gap.

4. Improves workplace diversity

Minorities and women earn less than their white male counterparts on average. Adopting pay transparency puts an end to any suspicion of unequal pay and encourages these groups to work for companies that embrace pay equity policies.

Pay gaps can be significantly reduced with access to qualified information.

Tools such as salary calculators are hiring managers helping hand in estimating minimum and maximum expected salary levels compared to candidate skill level. When looking to recruit software developers in Austria, Germany, and Switzerland, always use an up–to–date developer salary calculator.

Don’t be scared - act transparently

Even though they are currently leading in the field of salary transparency, many tech companies are still afraid to publish their pay ranges. It can be due to how companies educate their employees, especially managers, on workforce progress through pay ranges and how it directly affects struggling with the moment.

Unfortunately, it’s still easier for some companies to lose promising candidates in the game ‘who is revealing salary numbers first’ than to gain more time to decide if the candidate has the right skills for an open position.

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