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Pay Day May Day
Equal pay for equal work may seem like a straightforward concept, but not always easy to achieve. In Belgium, for example, a law on pay transparency has been in place for about a decade, but it emphasises awareness-raising through reporting rather than enforcement. As the pay gap has not decreased quickly enough, the European Directive of 30 March has added a legal dimension to this issue and gives EU member states three years to translate it into national legislation.
This new law shifts the focus to the employee, who now has the right to transparency. This means that employers will need to provide more data reporting, and employees will have more power to access information about their salary and compare it to others in similar positions. By giving employees more information and power, the hope is that this will help to reduce the pay gap and promote greater fairness and equality in the workplace.
The Belgian legislation on pay gap transparency focused on employers and trade union negotiation through reporting. New European directives now provide employees with more transparency about compensation and the job application process. Employers are required to demonstrate that they do not discriminate. Does this mean a new era of openness and equality in the labour market? Who benefits from this, only the employee or can the employer also gain any positive outcomes?
Preparation pays off
Arne Coutteau, Lead HR Analytics at Attentia, believes that legislation is necessary, but even without legislation companies should be working on this topic because they are currently missing out on many opportunities in human capital: “Developing a transparent pay policy tailored to the organisation is the message. Custom business management that fully understands the nuances can make all the difference in the war for talent. Employees who experience transparent, correct compensation policies are less likely to look for another employer. Attentia is already preparing its clients for future legislation in several steps. Initially, it is a matter of identifying what equivalent work is. The whole process of being prepared as a company takes time and effort. We need to start now instead of waiting for legislation.”
Employee expectations are increasing, and this raises the need for transparent systems that respond to those expectations.”
Wout Dejaeghere
“It seems very simple, but it is not”, says Wout Dejaeghere, Compensation & Benefits specialist at Attentia. “Take two consultants who handle different matters within the same company. Is that an equal job? Which one is more complex? Especially across departments, this is a sensitive issue. Even if people have the same job, there is often a difference in salary between them based on seniority or competency levels. It is important to define, analyse and communicate the criteria used to evaluate the complexity and relevance of a job.
In the next step, differences in total compensation, including bonuses and benefits, can be examined to uncover (un)conscious discrimination. By structurally collecting and governing data throughout this process, we enable the usage of statistical analysis, our best chance at making correct inferences. A final step can then be taken towards eliminating possible unwanted differences.
In other words, Attentia helps establish a structure within which a company can develop a transparent policy based on relevant data. The goal is to offer quick and clear insight. A dashboard that allows HR managers to filter the right information easily is desirable.”
Societal context
As an organisation, you do not have control over all the factors that play a role in equal pay processes. The societal context can sometimes weigh heavily. Traditionally, for example, women have been employed less in technical jobs that are highly valued. “But, even though part of the pay gap is due to external factors that organisations cannot control, they can be transparent about this and ensure that no additional biases are added,” Arne explains.
Besides male-female, there are also a number of other, dynamic factors that can significantly affect pay. Consider, for example, immigrant-native, older-younger, part-time and full-time work, or sectoral differences. “Once the structure is in place to address the gender gap, companies can also scale up to these other factors more quickly. After all, the fundamentals are the same,” Wout explains.
Thinking out loud
Arne: “Data and AI can help to shape the future for equal pay. Self-service dashboards, for example, that can be accessed directly and intranets with complete transparency for all employees.”
If you take a positive attitude on social issues as a company, it will have a big impact on your image in the labour market.”
Arne Coutteau
“Employee expectations are increasing, and this raises the need for transparent systems that respond to those expectations,” Wout adds when asked about his view of the future. “Companies that do not embrace these changes may find it harder to retain employees, as suspicion is aroused by a lack of transparency.”
“If you take a positive attitude on social issues as a company, it will have a big impact on your image in the labour market. An organisation that promotes positive values will also reap the benefits,” Arne concludes.