The Eu directive requiring many firms to be clear about salaries might be an actual problem for HR departments and bosses. As a result of if variations in wages may also be justified, we should be in a position to give an explanation for them, which isn’t at all times simple when cash stays a taboo. As for the workers, how will they react once they uncover that they’re being paid roughly than their colleagues in an an identical place? This can be a main upheaval for companies.
Till June 7, 2026, French firms with greater than 100 workers should agree to the Eu directive of Might 10, 2023 on wage transparency. This legal responsibility, which in particular calls for measuring and publishing wage variations, declaring salaries in activity gives and explaining the interior common sense of salaries, represents probably the most structural adjustments for HR departments because the social and environmental reporting rules.
We will be able to subsequently ask how wage transparency will grow to be remuneration practices, inside equality and the social contract in French firms. Underneath what stipulations can it turn out to be a efficiency lever?
Finish of wage opacity
The coming of this directive brings an excellent advance: the tip of salary opacity because the default control means. Corporations will now have to respond to questions they might keep away from prior to: why do not two workers in identical positions earn the similar? What position can we give to enjoy, experience, efficiency or profile rarity? Is the praise coverage in step with the values that the corporate shows?
A contemporary survey by way of the Employment Govt Company (Apec) displays that this want for rationalization is already very provide. Part of the managers assume that their corporate’s conversation concerning the wage common sense is inadequate, and 46% of them assume that their corporate’s remuneration coverage is opaque (see beneath). The Directive will now require us to precise explicitly what has continuously been unstated and even taboo.
Remuneration coverage thought to be extra difficult to understand in France
Writer supplied (no reuse)
Supply: Apec (2025, p. 5).
A triple revolution for HR managers
As a result of wage transparency isn’t just a prison transformation. For HR departments, this forces a threefold evolution.
The primary is to elucidate the wage construction. In lots of firms, present shortages are the results of person tales, opportunistic hiring or one-off negotiations. The directive calls for a transition from a selection of particular instances to a transparent and coherent wage structure: activity households, ranges of duty, building standards. On the other hand, in keeping with APEC, 66% of businesses don’t be offering an internally obtainable wage scale, which displays the volume of labor that must be completed. This structuring is difficult paintings, now and again very political, however important.
The second one evolution is narrative. HR managers should learn how to say what has been implicit till now. It’s not sufficient to put up numbers or levels. You wish to have so that you could make the common sense of the associated fee comprehensible. Why is a cyber safety engineer paid greater than a mission supervisor? Why do not two workers in the similar group earn the similar? Pedagogy turns into a central component of reimbursement control. With out this pedagogy, Apec warns, transparency dangers fueling social comparability and fueling frustrations.
The 3rd evolution is managerial. In lots of organizations, managers are uncomfortable speaking about reimbursement. For concern of opening a declare, for lack of knowledge or just for the reason that matter continues to be taboo. Transparency will drive us to rethink this place. Managers should be skilled to give an explanation for the factors, to respond to questions and to regulate the feelings related to comparisons and perceptions of injustice. An even wage coverage this is poorly defined can turn out to be unfair within the belief of workers.
Invisible dangers
In fact, transparency comes with dangers. It might expose historic variations which might be exhausting to justify, generate cascading assessment requests, or weaken groups if positive “talents” uncover they are being paid not up to their friends. It might additionally divulge the corporate to litigation if discrepancies can’t be satisfactorily defined. The Apec learn about additionally recollects that just about one in two firms foresees an build up in social tensions if transparency is mismanaged.
Transparency is not going to create issues: it’ll spotlight them. On the other hand, the absence of preparation can grow to be the revelation right into a social explosion, therefore it is very important await, record and provide an explanation for discrepancies prior to publishing information, but in addition to coach managers and construction a social discussion that might give a boost to this delicate transition.
Transparency in employment
To those dangers is added any other, offered by way of the Eu directive: the duty to signify salaries or wage levels in activity commercials. This transparency of beginning wages, which is observed as a device to scale back inequality, has ambiguous results. It might entrench hiring practices by way of proscribing the facility to regulate reimbursement to profile rarity or candidate enjoy.
It might additionally create inside tensions when current workers uncover that new entrants take pleasure in upper ranges of remuneration, a phenomenon already observed in sectors beneath stress. Apec effects verify this chance: 36% of executives say they have got already came upon that new hires are being paid greater than they’re, fueling a way of injustice.
After all, it could inspire sudden marketplace dynamics: salary inflation in positive uncommon professions or, conversely, downward agreement if firms search to restrict candidate expectancies. Right here once more, the problem isn’t such a lot transparency as the facility to contextualize and set up.
Revitalize collective bargaining
Those difficulties, then again, must no longer difficult to understand probably the most promising results of the directive, the relaunch of collective bargaining. Through requiring firms to give an explanation for their praise standards, record their scales and justify their variations, transparency creates a brand new want for law. Skilled branches and firms should increase not unusual requirements, explain classification ranges and outline building common sense.
Transparency may subsequently give a contribution to the revitalization of collective bargaining, particularly in sectors, which has lengthy been weakened by way of the upward thrust of person negotiations and salary opacity. The CFE-CGC union, as an example, intends to make use of this directive to toughen its place on pay fairness problems and give a boost to managers in adopting those new obligations.
BFM Trade, 2022. Equity Discoverer
Contemporary analysis sheds helpful gentle in this transition. A learn about by way of Cedric Gutierrez, Tomas Obloy and Todd Zenger displays that salary transparency does no longer purpose the cave in in productiveness that businesses continuously concern. Examining greater than ten years of information on 20,000 American lecturers, the authors display that wage disclosure does no longer have an general unfavourable impact on worker effort; it could even build up a little bit.
The primary factor occurs in different places: transparency acts as a equity revealer. People who in finding that they’re higher paid than their efficiency would justify a vital build up in effort to “legitimize” their place, whilst those that in finding themselves underpaid average their productiveness (see beneath). In different phrases, workers react much less to gross inequality than to perceived injustice.
The have an effect on of inequality on productiveness
Writer supplied (no reuse)
Supply: Gutierrez et coll., 2025, web page 1846.
Notice: The coefficients proven correspond to the years prior to and after the transparency surprise, with 95% self belief durations.
And girls’s wages?
For his or her phase, economists Klara Kantova and Mihaela Hasikova display – via a meta-analysis that mixes 268 estimates from 12 research carried out in different international locations of the Group for Financial Co-operation and Building (OECD) – that salary transparency rules on moderate result in a modest however vital relief in salary variations in choose of fellows and women2. This impact basically comes from a slight build up in ladies’s wages, but in addition from salary compression, i.e. slowing down the development of fellows’s wages.
The evaluation unearths, then again, that no longer all sorts of transparency produce the similar results: one of the best insurance policies are those who require public disclosure of wage information, whilst extra restricted measures (easy inside data duties or citing the variety in activity gives) have little and even 0 impact. After all, those effects be offering necessary benchmarks for designing insurance policies which might be in point of fact able to correcting salary inequalities.
Salary transparency is subsequently neither a treatment nor a danger: it unearths. Badly anticipated, it brutally exposes the inconsistencies of the salary coverage. Smartly ready, it turns into a lever of self belief, consistency and function.
The Eu directive gives an extraordinary alternative: to reconsider the way in which firms articulate person efficiency, perceptions of justice and popularity. We nonetheless need to conform to adopt this deep paintings – paintings this is simply starting for lots of firms.
