Tech UK: The UK needs to catch up on pay transparency… and the tech sector could lead the way
By Sarah Stone
Published in TechUK February 2024
Equal Opportunity - Reduce the disability employment gap and tackle workforce inequality.
Job adverts are usually packed full of crucial details as companies seek to bring on board the brightest and best in their sectors but in the UK, one key piece of information is becoming increasingly conspicuous by its absence: pay, the very thing that will often be the deciding factor in whether or not someone applies.
Tech candidates cite salary as the most significant factor for men and women, with 46 per cent prioritising it when deciding whether to apply for a role, according to IT recruitment firm Absolute Recruit.
Yet salaries remain shrouded in secrecy. One recent study found that only about 16 per cent of UK companies are currently disclosing individual pay ranges to employees, while a quick check of around 100 vacancies in social value-related positions that Samtaler carried out over the last six months found only a handful had clear pay scales for applicants.
📰 Link to original article: ‘The UK needs to catch up on pay transparency… and the tech sector could lead the way’
When we started disclosing the salary from the outset for jobs at our company, we found the quality of applicants improved and the whole system was more streamlined.
A published wage for prospective candidates can help not just in terms of people dropping out of the process because they can’t take a pay cut, but can also indicate in the other direction for those who may not be ready for the seniority or expertise of the post on offer. It’s time for UK employers to catch up and ensure they are up front and transparent about salaries.
Losing the global race
The stakes are high but the timing has never been better. Across the globe regulations are being introduced compelling employers to publish information about pay rates. In the US, which is sometimes considered to be behind the curve when it comes to workers’ rights, pay transparency laws are spreading across the country with a wave of states, including New York, Washington and California, introducing laws and Congress debating Federal legislation.
While the UK is no longer in the EU, lawyers anticipate that the recently adopted EU Pay Transparency Directive will be highly influential for large UK-based EU employers who are likely to want to have a single approach that covers all their jurisdictions to ensure employees are all treated the same.
The new rules will require all companies operating in the EU to share information about salaries and take action if their gender pay gap exceeds 5 per cent, with fines for companies who fail to comply. Given that the technology sector currently has one of the biggest gender pay gaps, at 16 per cent (compared to the national average of 11.6 per cent) that should give companies cause for concern.
Social Value provides an opportunity for the UK Tech Sector to take the lead
In the UK, rules on publishing the gender pay gap in large companies have been in place since 2017, but there is currently nothing in relation to wage transparency more generally.
And where there’s an opportunity to catch up, there’s an opportunity to take the lead. The UK Government is currently conducting a pilot on pay transparency and with a General Election looming, the cost of living crisis putting salaries front and centre we should expect to hear more about it. The Labour Party is proposing more reporting requirements for employers, with ethnicity and disability pay gap reporting being made mandatory so it’s not unreasonable to expect to see this as one of their manifesto pledges.
Promoting pay transparency can help rectify wage disparities and attract a diverse workforce, with the UK tech sector well-positioned to lead the way.
Another thing to consider for UK employers is this: will a lack of pay transparency put them at a competitive disadvantage with EU and US firms when it comes to hiring and retaining the best talent? We work with big companies to develop programmes which help them create and deliver social value outcomes, which often means showing them how they can go over and above minimum legal requirements. Tackling workforce inequality is one of the key areas public sector procurers are looking to see suppliers take action and “introducing transparency to promotion, pay and reward processes” is one of the examples cited in the Social Value Model as a way the can do that.
Promoting pay transparency is an area where the tech sector could take the lead. Recent research by tech recruitment firm Robert Half found that more than half of UK tech hiring managers are planning to increase headcount for permanent roles in 2024, which means there are a lot of roles about to be advertised. With the UK’s technology industry flourishing, employers are facing a shortage of talent across areas including software development, data science and cyber security. It’s not just about attracting candidates; evidence also shows that pay transparency can significantly benefit minorities and traditionally underpaid groups by promoting fairness and helping rectify wage disparities across all demographics, not just gender.
The UK tech industry knows that diversity and inclusion is vital to the continued success of the sector with significant efforts being made to recruit and retain diverse workforces. Taking the lead and championing pay transparency is a natural extension of that work. Much of social value is about promoting transparency, which is something that tech professionals naturally embrace.
Indeed in the US, many tech employees are now taking pay transparency into their own hands with voluntary grassroots publishing of salaries and benefits being widely shared across spreadsheets and Google docs. It is likely, looking at the way the wind is blowing, that it will sooner or later be a legal requirement to publish pay scales in job adverts – therefore it makes sense now to get ahead of the game. But how exciting would it be if technology companies embraced and adopted this voluntarily?
What can you do about it?
Committing to salary transparency is very easily done – it essentially just involves will on the part of the employer. You can just start by publishing pay scales for roles.
A reputational boost
Despite so many employers being seemingly reluctant to do this, there are hardly any downsides to pay transparency. It helps attract better talent, is fairer to present and future employees, and also spares a number of potentially difficult and frustrating conversations in the interview room when it comes to the crunch subject of pay.
Above all, it’s reputation.
A clearly communicated pay structure will help a business show they are committed to equality, whether that’s in relation to gender, race, age or social class.
It’ll likely be law soon enough: employers may as well take the leap themselves first and reap the many benefits that will follow. And whether it’s law or not, in the world of recruitment the words “competitive salary” are no longer cutting it.