The São Paulo School of Business Administration (FGV EAESP) and the Talenses Group, with support from Talent.com developed an unprecedented survey with the aim of showing that the majority of Brazilians support the visibility of salaries, as it would serve to combat wage inequality between men and women. The study was conducted by Paul Ferreira, director of the Executive Master's Degree in Administration (MPA) at FGV's School of Business Administration of São Paulo (EAESP), Luiz Valente, CEO of Talenses Group, and Tiago Molon, owner of Besse.

Pay transparency is not a new subject, even more so if we look outside Brazil. In Canada, a pioneer in the field, there have been laws on the subject since 1996. In the United States, since 2004, the law has protected those who decide to ask for the salary of colleagues. In 2023, laws similar to the Canadian one went into effect in the states of California and Washington, a few years after Colorado and New York.

What are the practical effects of the measure?

A study conducted by economists at the University of Toronto found evidence that the law reduced the gender pay gap by 30 percent. The problem is that the leveling has often occurred from below: the average salary of the professionals analyzed in the survey (university professors) has fallen. Greater pay transparency is a recurring desire in several countries, but it is not known whether the consequences will always be positive.

In Brazil, an extremely diverse country, the discussion about the opening of individual gains is linked not only to gender inequality but also to the lack of opportunities for minority groups in the workplace. Bill 1149/22, by Deputy Alexandre Frota, is pending in Congress. Its purpose is to make it mandatory for employers to disclose the salary range and requirements needed to fill vacancies on offer.

Brazilians want more transparency

In our survey on pay transparency, only 5% of respondents were against the project. The support was massive among women and men, from different generations and in all regions of the country. This likely reflects a majority perception: 75% of respondents do not believe that companies are transparent about salary and argue that legal provisions should mandate the disclosure of payments in a job vacancy.

The concept of wage discrimination refers to situations in which two or more individuals with the same productive characteristics (work experience and technical ability) perform similar work and are remunerated differently. Our research revealed that 61% of women have experienced this discrimination, while the rate among men is 49%. The imbalance also extends to minority groups, reinforcing the importance of mechanisms that promote pay equality and justice. Therefore, the transparency of earnings is a fundamental tool in the search for a fairer and more equitable society.

The reduction of gender disparity is seen as the most direct consequence of the measure. In Brazil, according to the Brazilian Institute of Geography and Statistics (IBGE), a woman earns 78% of a man's income. Black or brown women receive only 46% of what white men do. It's a situation that has never been good, but it has worsened in the last decade: in 2013, Brazil was the 62nd country with the highest gender inequality, according to the World Economic Forum. In 2022, it fell to 94th out of a list of 146 countries.

It's a hot and universal debate. Most government programs in this context focus especially on the issue of gender pay inequality. Recently, the European Union issued a directive urging member states to establish mechanisms to reduce the gender pay gap. It is not for lack of legislation. According to the World Bank, 97 countries have specific laws regarding wage parity.

Challenges and complexities

Reducing the disparity is urgent, and the majority of respondents believe the law will be helpful in doing so. But that's not all. They also believe that other segments can benefit, such as minority groups or young people. Another improvement would be in the job applications themselves, which would be more honest. But it is a complex issue, in which not everything is more transparent. In Germany, since 2017, companies with more than 500 employees have been required to periodically publish the gender pay gap. The law was not very effective, because even with this data it was difficult for a person to prove, in front of a judge, that he suffered wage discrimination. Then, in 2021, the courts began to assign companies the burden of proving that employees who filed a lawsuit are not victims of pay discrimination. In Canada, a new law, enacted in 2021, prohibits companies from asking about candidates' salary histories, punishes employees who discuss their salaries with each other in the workplace, and, on the other hand, requires the disclosure of salaries along with job openings. The idea is that organizations don't base a potential new employee's salary on how much they earned in other jobs, which would give them more powers to pay less. Colleagues, on the other hand, can't discuss salary in the workplace because that would create a toxic environment.

This complexity is reflected in the possible consequences that the interviewees themselves see. More than 50% of them agree that pay transparency is a positive and fundamental practice, but they understand that it can come with some obstacles. Employees who feel wronged when they see their colleagues pay tend to decrease their productivity. A study released by the U.S. National Bureau of Economic Research says that conversations about wage increases would become more stilted, and in favor of the employer, because companies would tend to use the "hands tied" argument, that is, if they negotiated with one employee, they would have to negotiate with everyone.

There are valid doubts about the implementation of pay transparency, how it will be done and what it will mean, for example, regarding different incomes, among other criteria. People seem to expect a pay raise, but it wouldn't be something for everyone. Depending on how it is done, as indicated by studies abroad, a pay cut could be the new reality. Is everyone up for it?

In any case, the lack of transparency has become a cultural part of the workplace. When asked if they would be comfortable talking about salary with colleagues, only 30% of respondents said yes. Among friends and family, even if there is some resistance, people are more open. Why? There are a few reasons.

Hierarchy

When analyzing the resistance or ease of discussing salary in the workplace, we noticed a trend. Employees at the bottom are the most comfortable: only 20 percent disagree with the idea, while managers show the highest level of discomfort, at 32 percent. This phenomenon likely reflects managers' fears that the disclosure of salaries could affect the work environment. This is not the case with senior leadership, which does not deal directly with employees and, therefore, has less inhibition in showing salaries. Therefore, hierarchy is one of the challenges to be faced. Leaders must be proactive with potential fears, concerns, and frustrations that arise in the process.

Income

When one looks at the discussion of wages and the wage level itself, it is clear that there is a relationship. Those who are in the range above R$35,1 and those who survive on a minimum wage (R$320,5) are the ones who feel most uncomfortable sharing. The ones who would be less uncomfortable are precisely those who are in the middle of the seven levels analyzed, with salaries between R$ 10 thousand and R$ <> thousand per month. It's simple to understand. Probably those closer to the minimum wage do not like to compare themselves to colleagues who earn more, just as those at the top of the pyramid are afraid of the discomfort they can generate between colleagues and subordinates.