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What is Wage Transparency?

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  • Written By: Mary McMahon
  • Edited By: O. Wallace
  • Last Modified Date: 09 September 2016
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Wage transparency is a situation in which compensation information is made freely available, rather than being kept confidential. Most governments mandate wage transparency for government jobs, under the argument that taxpayers deserve to know what they are paying for, and wage transparency is also present in some industries. There are a variety of ways in which information about compensation and benefits can be used, ranging from negotiating an employment contract to protecting workers.

Some people use wage transparency in salary negotiations, gathering information about prevailing wages and specific compensation at particular companies to use in the process of deciding on a contract. Some feminists argue that wage transparency is especially valuable for women, given the common wage gap between women and men. By knowing how much men at a company make, a female candidate for a position can argue for wage parity when working out a contrast with her employer.

Social justice advocates also use wage transparency in their work. College students at a university, for example, might lobby for wage transparency at the companies which make spirit ware, pushing for better compensation for people who make things like college-branded sweatshirts. Wage transparency may also be used to push for equal wages for people in similar industries, or to highlight wage disparity between the developed and developing world.

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Employees should be careful about wage transparency. Some companies specifically ban discussion of compensation and benefits in their contracts, and people who disclose this information could potentially be terminated. It is a good idea to read the terms of an employment contract carefully, and if information about someone else's compensation is being used in negotiations, he or she should be asked first. Even a casual mention about compensation could be viewed as a violation of an employee contract, and if employees aren't sure about whether or not wage transparency is acceptable, they should ask their supervisors.

Some companies actively promote salary transparency, both to show employees that the company has transparent business dealings, and to illustrate the wages which people can earn when they are performing at their peak. In these instances, employees are freely allowed to discuss compensation, benefits, and bonuses with each other, and people are welcome to use this information in negotiations and to ask why someone in a similar position is making more or less money.

When working in foreign countries, people should be aware that attitudes about salary transparency vary considerably in different regions. In some nations, discussions about rates of compensation are taboo and considered highly inappropriate, while in other regions, new employees may find themselves routinely asked about the terms of their contracts.

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