The state of pay transparency in Europe: half of European employees currently open about pay

European employees are increasingly demanding transparency regarding their pay packages, and it seems their employers are taking notice. Recent research by HR and payroll provider SD Worx reveals that 46% of employees across 16 European countries are comfortable with open and transparent communication about their salaries. 

Jasper Spanjaart on May 31, 2023 Average reading time: 3 min
Share this article:
The state of pay transparency in Europe: half of European employees currently open about pay

This trend is reflected in an ongoing shift towards more personalised and flexible remuneration schemes to attract and retain talent. While 64% of respondents understand their pay slips, over 70% in some countries struggle to understand the complexities of the documentation. We delve into SD Worx’s research to learn more about the shifting demands and expectations surrounding pay packages.

Increasing focus on transparency

As employees increasingly demand more personalised and transparent pay packages, employers are starting to respond. Currently, 50% of the employers surveyed in SD Worx’s research are openly and transparently communicating about their reward policies and pay packages, with Polish and English companies leading the way. However, 20% of employers still prefer to keep this information private, with Norway standing out as the most reticent country.

New legislation

It appears things could now finally change, however. New legislation will require EU companies to disclose information that makes it easier for employees to compare salaries and to expose existing gender pay gaps. Under the rules, adopted by Parliament’s plenary by 427 votes to 79 against and 76 abstentions, pay structures to compare pay levels will have to be based on gender-neutral criteria and include gender-neutral job evaluation and classification systems.

Vacancy notices and job titles will have to be gender neutral and recruitment processes led in a non-discriminatory manner.

As part of what will change under the new legislation, vacancy notices and job titles will have to be gender neutral and recruitment processes led in a non-discriminatory manner. According to the directive, if pay reporting shows a gender pay gap of at least 5%, employers will have to conduct a joint pay assessment in cooperation with their workers’ representatives. Member states will have to put in place ‘effective, proportionate and dissuasive’ penalties, such as fines, for employers that infringe the rules.

Employees want to know what their colleagues are earning

SD Worx’s research indicates that nearly 40% of employees know what their colleagues in similar positions are earning, with the remaining 60% remaining in the dark. This information is important, as it can help employees gauge their value within the company and ensure they are being paid fairly. It also helps to foster a culture of open communication within a company.

Benefits are becoming more personalised

Along with personalised remuneration packages, employees are also increasingly interested in personalised benefit packages that fit their lifestyle and help support a work/life balance. These benefits can include everything from more flexible work arrangements to specific health and well-being benefits. Nearly 23% of employees surveyed have the option to put together their own benefit package within a certain budget, with Irish employees most likely to have this opportunity.

Expense allowance the most popular benefit

The research indicates that expense allowances are the most popular benefit, included in 40% of surveyed employees’ pay packages. Supplementary social security (38%) and leisure-related benefits (36%) are also popular. However, the types and composition of benefits can vary significantly from country to country, with Finns being particularly well looked after in terms of health and well-being benefits.

Understanding the complexities of the pay slip

The complexity of the pay slip is often linked to the complexity of local legislation, making it difficult for employees to understand their pay packages fully. Over 70% of employees in some countries, including France, struggle to understand the complexities of their pay slip.

In the Netherlands, 21% of employees do not know the full pay package, compared with 46% who do know.

Finnish employees score the highest (74%) with regards to knowing what the pay package entails, followed by Croatian (73%), German and Irish employees (66%). Remarkably, a quarter of the French still do not fully know what their salary includes, 43% of them say they do know, while 32% have a neutral stance in this respect. In the Netherlands, too, 21% of employees do not know the full pay package, compared with 46% who do know.

Transparency is the future

“The shift towards more personalised and transparent pay packages is becoming increasingly important for employees and employers alike”, said SD Worx’s Chief People Officer, Bruce Fecheyr-Lippens. “While many employees are comfortable with open communication about their pay packages, there is still much work to be done to ensure all employees understand the complexities of their pay slips. Companies that offer a more personalised and flexible approach to pay and benefits are likely to be more successful in attracting and retaining the best talent.”

Read more:

Share this article:
Jasper Spanjaart

Jasper Spanjaart

Editor-in-Chief and Writer at
Editor-in-Chief and writer for European Total Talent Acquisition platform
Watch full profile

Premium partners View all partners

Intelligence Group
Recruitment Tech

Read the newsletter about total talent acquisition.