Blaming pay transparency for wage disputes is self-delusion
Every manager who opposes wage transparency should ask themselves: Is there even one colleague whose salary differs unfairly from that of others?
Imagine if, before women were given the right to vote, governments had tried to hide this glaring inequality by allowing only men to know and hear about the election and by strictly banning women from attending campaign rallies. Or, if a parent tried to cover up the fact that they were giving one child much more chocolate than the other, by sending them to a separate room to eat it, and taking great care to ensure that the chocolate wrappers were thrown into an individual, hidden trash can!
Just as absurd is the ostrich policy, when someone thinks that concealing wages from colleagues and in job advertisements is the solution to avoiding wage tensions, and that if employees at a workplace discuss their earnings, it would cause unmanageable conflicts.
If we cause someone any unfair disadvantage, it’s an unsustainable solution to rely on concealing any related information from the victim. Suppose wage differences at a workplace are unjustified because people doing the same or very similar work are paid significantly different wages. In that case, managers who are aware of this practice are rightly expecting that underpaid colleagues will be angry when this is revealed.
However, it’s nonsense to think that the solution is to shoot the messenger! Threatening someone with sanctions, or, horribile dictu, even dismissal, for sharing a figure with a colleague is insane. If only because no authoritarian iron fist can keep workers in complete darkness: industry surveys, job advertisements with salary ranges, or the statistics bureau’s net median wage data will always provide them some clue.
It is a common misconception that colleagues who earn less would resent their better-paid colleagues after realising a significant pay disparity. It is conceivable that this would be the case for some employees with little experience, let’s say, a career starter. But I believe, with minimal professional history, most would realise that wages are not a zero-sum game; if someone earns less, others don’t automatically get more. Therefore, if there are unjustified, unfair wage differences in a workplace, the only solution is to abolish them.
The only acceptable limitation on wage transparency is when the company management asks for a few months to assess the situation and resolve the differences satisfactorily.
The case is entirely divergent when wage differences are justified. If, in addition to their base salary, someone receives commissions, bonuses, or similar incentives for achieving specific, clearly defined performance indicators, and the conditions are the same for everyone, then the situation is clear. It can also be argued that different jobs are priced differently on the labour market, so certain workers have to be paid more to keep them.
If this is based on actual data, then it can also be revealed. It is obviously unpleasant to be faced with the fact that you earn less as a result of clear and transparent criteria, but it is hardly fair to blame any management for that. After such a bitter awakening, affected people probably vent their frustration and then, at most, decide to switch jobs or professions, as they cannot thrive in a framework that, although fair, does not allow them to excel.
Every company manager who opposes the principle of wage transparency should therefore ask themselves one simple question: Is there even one single colleague in the company whose salary differs unfairly from that of others?
If there is, this must be rectified immediately. If there isn’t, then there’s no problem. In this case, company management doesn’t need to invent anything new; it’s enough to explain the existing wage-differing mechanisms to all employees clearly. Besides that, in that case, they can openly discuss salaries in job advertisements and among colleagues without any issues.
Summa summarum, there should be pay transparency in every workplace!
The good news is that an EU directive can solve the problem soon. According to that, even workplaces with fewer than 100 employees will no longer be able to prohibit workers from discussing their salaries, which is a huge win for transparency.
Finally, here is an excellent video on this subject from a great show:
The featured image is an illustration, source: Redd Francisco, Unsplash. It is the translation of this Hungarian piece of mine. I’ve corrected the paragraph referring to the EU directive after publishing.
I am Kristóf Ábel Tarnay, a Budapest-based classical liberal Hungarian journalist born in Szeged, a city you may not have heard of, but which is worth visiting sometime. My Substack publications are free, but if you enjoy what you’re reading and would like to support classical liberal thinking in Central Europe, you can consider supporting my work here.