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Pay transparency: why it pays to be more open about what we earn

In Sweden everyone’s salary is publicly available, leading to increased trust and equality. But would the same thing work in the UK?
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In the UK, discussing money is often seen as taboo. We like to keep our wages private and asking people what they earn is still an unusual question which is likely to be met with reluctance to be open. Born from a habit of keeping our cards to our chests when it comes to money, this unwillingness to discuss financial matters only allows inequality to hide in plain sight.

Follow in Nordic countries’ footsteps

This summer, there was a public outcry when the BBC was forced to disclose the earnings of its employees and a large gender pay discrepancy was revealed. Only a third of the top 96 earners were female, and the top seven were all male. Despite receiving a lot of criticism for his earnings, Chris Evans, who topped the list with an annual wage of £2.2 million, said that it was “right and proper” that earnings be made public in this way.

The BBC has been warned that it is now vulnerable to prosecution under pay discrimination laws, although this has so far failed to materialise. The question is whether such discrepancies would have been tolerated in an environment of full pay transparency. For the answer we can look to Scandinavia.

Sweden, Norway and Finland publish everyone’s income tax returns annually. Sweden takes this transparency a step further and allows any citizen to find out another citizen’s salary with a simple phone call. The only catch is that the person whose information you request will be notified that you requested it. This openness has led to an atmosphere of trust which is highly conducive to successful business. While Brits and Americans often distrust the HMRC and the IRS, Swedes have a highly positive view of their tax agency. They are more willing to pay taxes because they trust the institution collecting them.

Pay transparency also seems to have led to increased pay equality. Sweden has a gender wage gap of around 13% compared to the UK’s 18%, although it is still lagging behind other countries such as Luxembourg. Along with full pay transparency, Sweden has also implemented the Swedish Discrimination Act which fines companies with more than 25 employees who discover a wage gap and don’t make efforts to close it.

Stein Reegard, chief economist at the Norwegian Confederation of Trades Unions, praised the country’s openness about salaries, saying that it allows “a better-informed public debate about the different levels of wages in society, whether it’s a question of leaders’ wages or equal pay.”

The UK needs to follow suit

The UK  will struggle to embrace full pay transparency on a national level. Historically, class has always been important here, meaning that a person’s wages define them to a greater extent than they do in less class-based societies. This might explain our reluctance to talk about money; our wages feel more intimate to us than they do to citizens of other countries. While this is understandable, it is not helpful. As a society, we need to shed our reluctance to talk about money.

Encouragingly, we seem to be opening up. From 2018, UK companies with more than 250 employees will have to publish their gender pay gaps, in a move echoing Sweden’s discrimination laws. Many individual UK companies, including GrantTree, have also embraced pay transparency and have seen positive results both in the morale of employees and trust in working as a team.

In a recent interview, our founder Paulina described the positive effects of being open about pay:

‘In my opinion restricted access to information – financial and other – breeds politics, power imbalance, gossip and jealousy. Transparent pay communicates that everyone is worthy and can be fully trusted with information and important decisions.’

Making salaries publicly available on a national level might be a step too far for British sensibilities but for the sake of trust and equality, we should all aim to be a little bit more open about what we earn.

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