The State of Pay Transparency in Europe

In this article, I share a recent report from Hiring Lab, which is Economic Research by Indeed. It offers great insights in today’s state of pay transparency. It also shows there is a long way to go. Hope you enjoy it, and if you’d like to read the full article, go here.

Is pay transparency increasing in Europe?

Yes, pay transparency has been growing across Europe. It’s part of a larger effort to promote pay equity, particularly around issues like gender and ethnicity with an eye on the European Pay Transparency Directive. The United Kingdom is leading the way, with over two-thirds of job postings including salary information by the end of 2024. The UK has had mandatory pay gap reporting in place since 2019. Countries like France and the Netherlands are following, but in other countries growth is a lot slower.

Why is pay transparency slowing down?

As you can see in the chart, pay transparency has made progress in recent years, but the increase recently plateaued. After the initial progress until 2023, the growth in salary disclosures slowed down, with the last 12-18 months showing little to no significant change. This suggests that after an initial push driven by debates and tighter labor markets, momentum may have slowed down, with some employers taking a “wait-and-see” approach until new laws are enforced. I expect this to pick up considerable in the next quarters as more companies prepare for the directive.

Why is there less transparency in high-wage sectors?

One of the most interesting charts (see below) is that the level of pay transparency is different depending on the salary amount. Disclosures for low-wage jobs are higher than for high-wage jobs, with one exception. It seems that employers in high-wage sectors are not as inclined to disclose salaries yet. This could be because these roles are more complex and specialized, and pay is often negotiated based on experience and qualifications. It could also mean that as companies compete for talent, employers withhold salary information to maintain a competitive edge or to allow for more flexibility in negotiations.

How does salary transparency differ across various job sectors?

The report also indicates that Salary transparency varies depending on the job sector. For example, sectors like cleaning and sanitation, and driving jobs, have high levels of salary transparency, especially in the UK, where transparency rates are above 80%. In contrast, sectors like industrial engineering, software development, and law tend to have much lower levels of salary transparency, with many postings not including salary details at all, particularly in countries like Germany and Italy. And considering these job sectors, the same division in high and low wage might be the driving factor behind this finding.

What about the gender pay gaps?

The research shows that salary transparency tends to be lower in high-wage, professional sectors, where gender pay gaps are often larger. In countries like the UK and Germany, the gender pay gap is particularly pronounced in managerial and executive roles, which tend to be male-dominated. Greater salary transparency, especially at higher wage levels, could help reduce these gaps by providing better insights for underrepresented groups, allowing them to advocate for fairer pay.

What’s next?

The EU Pay Transparency Directive, with the first report due in June 2027, requires employers to disclose salary details early in the hiring process—either in job postings or before interviews. The current state shows that there is a long way to go. With only two years left, I am curious to see if projects will reignite progress in countries where salary disclosure has slowed down, or if employers will continue to delay full compliance until the laws are fully in place. I hope for the first, but based on the report, I expect the latter.