Private sector firms lag behind on pay transparency

To explore the extent of pay transparency that already exists, and why employers have or haven’t adopted it, we asked some questions in the CIPD’s Labour Market Outlook – Autumn 2023. 

Letting potential employees know what’s on offer 

Our survey found 63% of workplaces already advertise their job roles with salary information. The most common approach was to publish an amount, followed by either a range or an amount depending upon the role being advertised. 

However, Table 1 reveals that public (94%) and voluntary (87%) sector employers were more likely to say their job adverts contained pay information than those in the private sector (53%). 

Within the private sector itself, there was further variation. Sectors least likely to publish salary details in job adverts were: 

• construction (40%) 
• business services (43%) 
• finance (44%).

^{Source: CIPD Labour Market Outlook – Autumn 2023 
N=2,004} 

Letting existing employees know what’s on offer 

When it came to being pay transparent with existing staff, there was almost an even split among those who were (42%) and weren’t (40%). This included giving information about: 

• pay levels 
• pay rises 
• bonuses 
• pay structures 
• pay progression. 

The even split isn’t borne out by sector as Table 2 shows. Private sector firms are again less likely to be pay transparent.

^{Source: CIPD Labour Market Outlook – Autumn 2023 
N=2,004} 

Within the private sector, industries most likely to be less transparent about their current pay arrangements are: 

• business services (26%) 
• transport and storage (28%) 
• finance (31%). 

Why employers are transparent or not about pay  

Table 3 shows why organisations are either transparent with existing staff about pay or have plans to be so. The most popular explanations were that it helps foster a sense of fairness among employees, and that it promotes trust between management and staff. Though in the public sector, respondents were more likely to say that they either did not know or there were no specific reasons. This could indicate the transparency policy had been in place for so long that the original drivers have been long forgotten.

^{Source: CIPD Labour Market Outlook – Autumn 2023
N=988} 

The most common reasons for why employers weren’t transparent about pay were fears that being so could: 

• demotivate employees whose pay is below the average (29%) 
• create unrealistic pay expectations (29%) 
• cause a staff backlash (28%). 

There are increasing expectations from employees, investors, customers and politicians for greater openness about pay. Given this, we expect more firms will drop their anxieties about revealing all and review the steps they must take to become more transparent – for example, addressing legacy issues or defining what’s meant by pay. Otherwise, if they’re not transparent, people might assume they reward like Scrooge.