Pay secrecy feeds pay gaps. Transparency can change that

Pay secrecy feeds pay gaps. Transparency can change that

We're taught, and sometimes legally required, to keep quiet on pay. This silence contributes to inequality, and it's time it changed.

This week, former Bon Appétit’s editor-in-chief resigned from his position after an image resurfaced of him in “brown face”.

Following this, the publication’s Assistant Food Editor Sohla El-Waylly alleged via her Instagram that white employees were paid for their appearances in videos, while people of colour were not.

In doing so, El-Waylly sparked very important dialogue about pay disparity and compensation.

We’re taught not to talk about our salaries, especially with our co-workers. There’s an understanding that our pay should be kept confidential – but the only thing this does is feed the gender and racial pay gaps. In order to empower employees and work towards pay equality we need to have more transparency around pay.

In Australia, as calculated by Workplace Gender Equality Agency (WGEA) using data from the Australian Bureau of Statistics, the national gender pay gap is 13.9 per cent. To put that in perspective, WGEA offers the following: “At November 2019, women’s average weekly ordinary full-time earnings across all industries and occupations was $1,508.50 compared to men’s average weekly ordinary full-time earnings of $1,751.40.”

This number is even higher when taking in total remuneration, including superannuation, bonuses and other additional payments. WGEA has collected data on more than four million employees across Australia and found that the full-time total remuneration gender pay gap based sits at a whopping 20.8 per cent. This means that men working full-time earn close to $25,679 a year more than women working in full-time roles.

The gender pay gap also disproportionately affects women of colour. American compensation and data software website Payscale claims that women of different races face varying degrees of discrimination in regards to compensation for their work. To further illustrate this, Equal Pay Day claims that for every $1 a man makes in the United States, Asian-American women make 90 cents, white women make 82 cents, black women make 62 cents, Native American women make 57 cents and Latina women make 54 cents.

In Australia, the gender pay gap most adversely affects Aboriginal women and women of colour.

One element working hard in this inequality’s corner is the taboo around taking about salaries with co-workers, and in some cases, legally not being allowed to. How is one supposed to know how their salary package stacks amongst their co-workers when there’s no transparency over it?

In Australia, it’s not uncommon for employers to prohibit employees from openly discussing or sharing details about their pay. This is known as ‘pay secrecy’. And in common law employment contracts in Australia, employers can even include a pay secrecy clause, which prevents employees from being able to discuss their salary and remuneration. These type of clauses are especially seen in industries with bonus payments or discretionary incentives, such as financial services.

Pay secrecy feeds the pay gaps by disadvantaging women and BIPOC in pay negotiations by limiting the information they can bargain with and use to argue their pay package. As a result of this, they often undervalue their market rate and are then offered lower packages in comparison with their male or white counterparts.

Underequipped with the necessary information needed to go into a pay negotiation or to spur on a conversation around a pay rise in the first place, women and BIPOC as employees are often put on uneven playing fields with their employers. By keeping pay a secret, they are disempowered from knowing their worth and bargaining accordingly for it.

Furthermore, it’s worth noting that in the event of pay discrimination, Trade Unions are prohibited from putting together responses for their members that have contracts with pay secrecy clauses. Otherwise they can be legally penalised. Therefore, not only are employees silenced by pay secrecies, but also denied the help they should rightly be entitled to when discrimination comes into play.

In order to change this, we need pay transparency. In the public sector, where pay is publicly transparent, the gender pay gap sits remarkably lower at 10.6 per cent than in the private sector, where it sits at 17.2 per cent and pay secrecy is rife. It’s still not ideal or an acceptable figure – as we want to see that number be at zero – but it’s an a lot more attractive amount nonetheless and a step in the right direction.

Pay transparency equips workers with the awareness of how they’re being paid compared to their colleagues, and in regards to market value. Openly discussing salary allows employees to assess whether any distinction between pay exists when duties don’t, enabling them to then bring it up with their employer.  As Shane Koelmeyer writes for SmartCompany, “On an industry level, greater knowledge about remuneration levels may assist women in the negotiation of their pay and conditions.” 

Being able to openly discuss pay also means that employees can seek outside support and advice, and point out when inequalities exist.

This can be particularly helpful to women and BIPOC on an industry level, as it offers greater knowledge about their terms of employment where experience lacks.

Now, there is an argument that pay transparency would result in discontent between employees. But when researchers analysed more than 600 people to find out whether pay secrecy generated positive workplace behaviour, it found that it did not. All pay secrecy caused was speculation about pay between co-workers, leading to gossip and a guessing game where a feeling being “unfairly treated” was common.

Silence has always been a key player on the side of inequality. In order to close the robust gender pay gap and other pay gaps in Australia, we need our voices. We need to be able to talk about our pay and remuneration packages, and be able to point out where disparities lie.

Pay gaps aren’t going to be fought while we’re taught to keep them under wraps.  

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