Pay transparency: Are UK employers ready? 

Globally, the momentum for transparency is growing. The UK is no different, experiencing a shift towards a greater focus on pay transparency. This is influenced by both external pressures and evolving expectations of talent. Although there’s no legislative mandate yet, the upcoming EU Pay Transparency Directive and global trends are prompting UK organisations to reassess their approach to reward transparency.

To understand the dynamics around pay transparency among UK businesses today, Mercer surveyed more than 100 organisations between May and June 2024.

Our survey revealed that half of UK employers are addressing or planning to address pay transparency within the next one to two years, despite the lack of specific UK legislation. With more than two-thirds (81%) developing a global pay approach, it’s clear that this is partly driven by the global focus on pay transparency.

Pay transparency covers a broad range of topics, with the communication of pay ranges often the most visible. Our research indicates a growing trend in the market towards communicating these ranges. Currently, 59% of organisations are either communicating or planning to communicate pay ranges internally. And while only 13% are sharing these ranges externally in job postings, 48% intend to share them externally in the future.

The drive for pay transparency is fuelled by the need to stay competitive in a global talent market, a commitment to diversity, equity, and inclusion (DEI) and ethical business practices, as well as the forthcoming EU Directive. Compliance is also a significant factor, with more than half (52%) of respondents in our UK pay transparency survey citing it as a key motivator.

Industries like fast-moving consumer goods (FMCG) and financial services are leading the way, while sectors such as professional services and oil and gas are slower to act on being transparent around pay.

To help organisations navigate this shifting landscape, preparing for pay transparency is critical. This involves conducting a readiness assessment, focusing on data collection and stakeholder engagement, and setting a clear vision for transparency.

As the UK moves closer to adopting transparency measures, whether through market forces or future legislation, organisations must be prepared to act.