Win-win: how salary transparency strengthens companies and employees

Key insights

• Salary transparency is becoming increasingly popular: more than 8 out of 10 people in Germany and the UK are now in favour of it.
• Lack of transparency increasingly means a loss of potential candidates to fill vacancies. 6 out of 10 people have already rejected an application due to a lack of salary information.
• Companies can use salary transparency measures to counteract the effects of unemployment and position themselves better against the competition.

Why salary transparency is becoming increasingly important

Salary transparency is increasingly becoming the norm internationally. More and more countries are introducing measures that are essentially aimed at identifying and avoiding gender-specific salary differences or specifying salary ranges in job adverts. A strongly positive attitude towards transparency can also be observed on the employee side. Our data shows that 86% of people in Germany and 85% in the UK are now in favor of salary transparency. This figure rises again for younger people in particular, for example, to 92% for people under 30 in Germany. But there is still potential: 31% of people in Germany (36% in the UK) do not know what their partner earns.

It is no secret that greater salary transparency has advantages for employees. It allows employees to make more informed decisions about their career and can also have an impact on trust and satisfaction with their employer. Although salary is still a key factor when it comes to jobs, employees have been faced with the rising cost of living and inflation for some time. As a result, salary information is becoming even more important than it already is, as it provides more guidance for making important decisions. For example, one of the most important sources of information for 4 out of 10 respondents in Germany (41%) and the UK (39%) is salary information in job adverts, which enables people to make a good assessment of their own market value. This figure has risen by almost 9% for Germany since our last survey in 2022, as more and more employers are becoming aware of the benefits of salary transparency. In fact, 9 out of 10 respondents (90% in Germany and 93% in the UK) in both countries say that they have a more positive perception of companies that publish salary information in job adverts.

Salary transparency as a competitive advantage

There is no doubt that the move towards greater transparency is associated with fears for many companies. Concerns about limited flexibility in salary negotiations, internal tensions, and standardization problems for specific roles. Or the reduced competitiveness of companies that cannot pay top salaries. Nevertheless, salary transparency offers huge benefits for organizations, starting with a greater number of applications.

Around 6 in 10 respondents (59% in Germany and 64% in the UK) say they have not applied for a suitable job because no salary information was available. This proportion rose by more than 14% from 2022 to 2023 alone. Conversely, this means a significantly higher proportion of candidates for transparent companies. A full 89% of people from Germany and 92% from the UK would be more likely to apply if specific information on salary or salary range was provided. Especially in times of labor shortages, it is more important than ever that companies make themselves more attractive with a comparatively simple step.

Another incentive can be cost reductions in recruiting, as The Stepstone Group subsidiary Recruitonomics has found in an internal analysis. According to this analysis, not only does the interest of candidates in job advertisements containing salary information increase, but the positions are also filled more quickly as a result, which can drastically reduce vacancy costs.

Last but not least, salary transparency also has a positive impact on the company's image. Candidates are empowered to make decisions and can meet the company at eye level. It also promotes an atmosphere of trust, which can lead to greater employee satisfaction and increased commitment in the long term. Companies that are unable to offer top salaries benefit in particular. While a better corporate image and a basis of trust help to attract the right talent, recruitment processes become more efficient. This saves time and resources and can, for example, address the effective control of operating costs, one of the biggest concerns for UK companies in 2024. Most importantly, it remains important not to emphasize salary-related benefits and advantages. The Stepstone Group subsidiary Totaljobs has published a report on what companies can do, especially in the UK, and what the current industry-related salaries and trends look like.

What companies should do now

By being open and clear about salaries in job advertisements, companies can not only increase the trust and satisfaction of their employees but also secure a decisive competitive advantage in the tight labor market. Transparent salary structures promote a culture of openness and fairness, which is particularly appreciated by the younger generation that is increasingly shaping the labor market. Companies can thus position themselves as attractive employers for the future generation of workers and counteract the effects of labor shortages.

About the study

In November 2023, The Stepstone Group surveyed around 5,700 employees in Germany on the topics of salary and salary transparency, including around 1,200 managers and around 750 recruiters. The survey is representative of the German labor force by age, gender, and education.