Trans­parency helps close pay gap

The Witness - - YOURMONEY -

WHEN work­ers know how their pay com­pares with their col­leagues’, the dif­fer­ence be­tween what men and women earn gets smaller, ac­cord­ing to new eco­nomic re­search.

Pay trans­parency has long been sus­pected to help close the stub­born gap be­tween men’s and women’s av­er­age earn­ings, but a rel­a­tively new Dan­ish law gave re­searchers from sev­eral busi­ness schools, in­clud­ing INSEAD, Columbia Univer­sity and the Univer­sity of Copen­hagen, the chance to prove it.

In 2007, Den­mark re­quired com­pa­nies with over 35 em­ploy­ees to dis­close pay data by gen­der.

The re­searchers looked at what hap­pened to salaries be­tween 2003 and 2008 — be­fore and af­ter the law took ef­fect. They also an­a­lysed pay at com­pa­nies that didn’t have to com­ply with the law. Women saw big­ger wage in­creases at firms that had to re­port their pay data. Men at those firms got raises too, but they were smaller. The over­all ef­fect was a seven per­cent re­duc­tion in the gen­der pay gap, the re­searchers found. “For the first time we are able to doc­u­ment, that pay-trans­parency re­ally works,” INSEAD eco­nom­ics pro­fes­sor Morten Benned­sen wrote in a state­ment.

Pay dis­crim­i­na­tion based on gen­der is il­le­gal in most in­dus­tri­alised coun­tries, but women still earn less, on av­er­age, than men do. In an ef­fort to shrink the dis­par­ity, coun­tries such as the UK and Ice­land have com­pelled com­pa­nies to re­port in­for­ma­tion about what their fe­male em­ploy­ees earn ver­sus their male work­ers.

In the U.S., where Pres­i­dent Don­ald Trump re­scinded an Obama-era pay trans­parency rule be­fore it took ef­fect, com­pa­nies that have vol­un­tar­ily moved to­ward more trans­parency of­ten re­port find­ing and fix­ing pay in­equal­i­ties.

The re­sults of this study, Benned­sen added, raise the bar for pol­icy mak­ers and busi­ness lead­ers. “From this point, it is re­ally just a ques­tion of whether or not the politi­cians ac­tu­ally wish to do some­thing about the pay-gap be­tween men and women,” he wrote.

— Bloomberg News via Fin24.

“For the first time we are able to doc­u­ment, that pay-trans­parency re­ally works.

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