Wage transparency brings benefits and blues

[Badshah Mamun]

Wage transparency brings benefits and blues

By Kelly Burke


IT'S one of the unwritten taboos of the workplace: discussing pay with your colleagues. But new research from the US suggests the introduction of a transparent payroll may narrow the gender pay gap, by making it more difficult for companies to discriminate against women doing the same job as men.

There's a catch, however.

Alternative research has found that employees who know what their workmates earn tend to be more dissatisfied with their jobs than their peers who toil away under secrecy.

Constantly comparing ourselves with the people around us may not encourage healthy competition in the workplace but simply make us disgruntled, because of the human urge to only ever compare ourselves with those who are better off.

The Institute for Women's Policy Research has suggested that while there is no direct link between pay secrecy and wage discrimination, there is some evidence that pay transparency reduces the gender pay gap.

The institute was following up on a survey which found that in the private sector, nearly half of all employees interviewed said they were either contractually forbidden or strongly discouraged from discussing their pay with their colleagues.

The institute found that among federal government workers, whose salaries were strictly graded and publicly available, the gender pay gap was just 11 per cent, compared to 23 per cent across the entire full-time workforce. In Australia, the gender pay gap is lower, at 17 per cent, but the introduction of transparent payrolls here is just as unlikely to prove to be the silver bullet in the pay gap war.

In fact the concept may have as many pitfalls as benefits, according to the US's Bureau of Economic Research, which has also looked into the issue. Employees at the University of California were told of a new internal website which published all employees' salaries, resulting in a flurry of workers accessing the pay details of colleagues in their own department. They were then interviewed on job satisfaction.

The survey revealed that although those who learnt their salary was below the median for their pay unit and occupation reported lower levels of job satisfaction than before, those earning above the median reported no higher satisfaction.

Professor Sue Richardson, principal research fellow and deputy director of the National Institute of Labour Studies at Flinders University, said it was more likely pay comparisons would fuel misery.

''We have a propensity to compare ourselves to people better off than us - we rarely compare ourselves to those worse off,'' she said.

''But employers should be aware of the consequences of paying people differently for the same job and whether the competition generated - as distinct from the co-operation sacrificed - is going to work for or against the company.''

Professor Richardson said the main cause of the gender pay gap in Australia was the simple fact that men continued to occupy higher paying positions.

Published: 01 August 2011

Source: http://content.mycareer.com.au/advice-research/salary/wage-transparency.aspx