Is pay transparency the new normal in 2025?

Few topics have undergone as profound a transformation as pay transparency. Once considered a niche practice adopted by progressive organisations, it has become a focal point of legislative and cultural change worldwide.

As we enter 2025, the question arises: Is pay transparency the new normal? But the answer is multifaceted, reflecting evolving legal frameworks, societal expectations, and corporate strategies.

Pay transparency refers to HRs disclosing salary ranges, compensation structures, and often individual pay levels to employees and job applicants. This shift aims to address long-standing issues of pay inequality and to foster a culture of fairness and trust. Advocates argue that transparency can reduce wage gaps, improve employee morale, and attract top talent. However, its implementation is not without challenges, particularly for organisations unprepared for this level of openness.

The growing trend of pay transparency..

The push for pay transparency is underpinned by a combination of legal mandates and cultural shifts. For example, several U.S. states, including Illinois and Minnesota, enacted laws on January 1, 2025, requiring employers to disclose pay ranges in job postings. Similarly, the European Union’s Pay Transparency Directive, set for full implementation by 2026, demands that companies with over 100 employees report pay levels and gender pay gaps while taking corrective action when disparities exceed 5 percent. These changes underscore a global momentum toward greater accountability in compensation practices.

Despite this progress, the transition has been uneven. A 2024 Aon study revealed that 75 percent of U.S. employers were unprepared for transparency laws, with only a fraction conducting pay equity analyses or allocating resources to address identified disparities. Furthermore, cultural resistance remains strong in certain regions, such as the Middle East, where societal norms may hinder the push for openness. Nevertheless, the trend is clear: pay transparency is becoming a cornerstone of modern employment practices, reshaping the employer-employee dynamic.

Pay transparency: What are we seeing globally?

Globally, the adoption of pay transparency policies varies significantly, influenced by regional legislation and cultural attitudes. Here are the key trends shaping the landscape:

Legislative Momentum:

In Europe, the Pay Transparency Directive mandates detailed reporting on pay and gender disparities. Countries like Belgium and Germany are already integrating these requirements into national laws.

In the United States, pay transparency laws now cover 14 states and eight cities, impacting a significant portion of the workforce. Large corporations such as Microsoft and Citibank have adopted nationwide pay transparency practices to simplify compliance.

In the Asia-Pacific region, countries like Japan and Australia have introduced measures to address gender pay gaps, including mandatory reporting and public disclosure.

Corporate Adoption:

According to a Korn Ferry survey, 12 percent of global companies have fully implemented pay transparency strategies, while another 29 percent are actively exploring the concept. Early adopters include multinational corporations aiming to align with both local and international regulations.

Cultural Shifts:

Younger generations are driving the demand for transparency. Surveys show that 86 percent of Gen Z workers are comfortable discussing salaries, compared to 59 percent of Millennials and even lower percentages among older cohorts.

Nordic countries, known for their openness, set the gold standard, while more conservative regions are experiencing gradual shifts in societal attitudes toward transparency.

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Challenges in Implementation:

Organisations face hurdles such as internal resistance, fear of employee dissatisfaction, and the administrative burden of compliance. Additionally, businesses must navigate varying legal standards across jurisdictions. It begins with identifying any discrepancies in compensation for employees performing same work. As Maggie You, Partner and Head of People Advisory & Analytics at Talent Solutions for Aon-APAC underlined, "Organisations that have started to conduct pay equity analyses have also begun to articulate their remediation or pay equity implementation strategy."

What do employers need to know:

Pay transparency is no longer a question of if but when and how organisations will adopt it. Here are the critical points employers should consider as they adapt to this new reality:

• Compliance is crucial: Failing to meet legal requirements can result in penalties, reputational damage, and loss of employee trust. Staying ahead of legislative changes is essential.
• Building a trust culture: Open communication about pay fosters a culture of trust and fairness, improving employee engagement and retention.
• Prepare before implementing pay transparency policy: Conducting pay equity analyses and addressing disparities proactively can mitigate risks and enhance organisational readiness.
• Cultural sensitivity matters: Tailoring transparency efforts to align with regional norms and employee expectations can ensure smoother implementation.

While discussions about salaries are still considered taboo in the workplace, implementing pay transparency is a step forward in ensuring that employees at the same level are paid equitably, irrespective of gender, race, or other potentially discriminatory factors. Addressing these discrepancies is vital for legal compliance and promoting fairness within the workplace.