Thursday, August 22, 2019

Information Lock Down

When a recruiter and job applicant negotiate wages, the person with the most information about pay has the advantage. If one party involved in a negotiation has more information than the other, lawyers and economists refer to the difference as information asymmetry.

Under lock and key

Recruiters and employers have decided it’s their right to access job applicant pay history along with rival firm compensation information without being upfront about pay themselves.

Unequal access to information

Important terms to know:

    1. Symmetry refers to balance, equal.
    2. Asymmetry means something isn’t balanced, unequal.

The South African Constitution says  ‘everyone is entitled to fair labour practice‘.

Information asymmetry means information is not equal or fairly accessed by all parties.

When a hiring firm advertises a vacancy but is not transparent about pay in their advert or during discussions with applicants, they are practicing unfair recruitment.

Unfair firms attempt to shift the balance of power and information in their favour. The more information about pay you have, the more equal the power during negotiation.

So by claiming more access to pay information than a job applicant, employers and recruiters abuse their position in the economy to assume power they are not entitled to.

C’mon Gov’

The less government knows about remuneration trends and wage negotiation behaviors, the less protections for job seekers and consequences for employers. Government needs to fund research into pay secrecy in order to create better policies for transparency and the dismantling of inequality.

To push against inequality, Government can step in to prevent information asymmetry. Regulations can ensure job applicants are exposed to fair, legally compliant recruitment practice. Government can regulate against pay secrecy coupled with pay history questioning. If employers wish to be secretive about pay in job adverts, then they should not ask any questions about pay expectations.

If pay is not worth publishing, it’s not worth asking about either. Fair is fair.

Stop information asymmetry in favour of employers knowing more about job applicant’s pay than what applicants know about their remuneration. Employers relying on information asymmetry are less likely to practice fair wage negotiations.

The less job applicants know about a potential employer’s wage offer, the more likely they are to accept unfair pay. 

Pay Slip Ban SA champions the cause of fairness during recruitment processes and wage negotiation.

We believe it’s in the public interest to take up this up and lobby for a Really Fair labour market.

Help us create the awareness and process for change to close the inequality gap in South Africa.

It takes less than 10 seconds, click HERE and add your name! 

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