Wednesday, August 10, 2022

Is job advert pay secrecy serving rising income inequality?

If job seekers find it difficult to obtain potential employer pay information, it becomes harder for candidates to negotiate for fair wages from an informed position.

Income inequality data reflects workers who accept unfair offers, but do they know their pay is unfair?

Employers strip wage information from the internet, increasing the cost of job seeking and leading to the public perception that we are not entitled to know about employer pay.

This overt power is called Monopsony.

Can job applicants be coerced into accepting an unfair offer because they don’t know better?

Information Advantages

During wage negotiation, recruiters and employers usually have more information about pay than applicants.

This means they have the advantage. If one party involved in a negotiation has more information than the other, lawyers and economists refer to the situation as information asymmetry.

Asymmetry is Alarming

Recruiters and employers abuse positions of power when coercing job applicants into divulging their pay history and  compensation information without ever being upfront about pay themselves.

Unequal access to information

The South African Constitution says  ‘everyone is entitled to fair labour practice‘ yet clearly job applicants are not treated fairly.

When employers advertises vacancies without being transparent about pay, they adopt information asymmetry.

These unfair firms shift the balance of power and information in their favour. The less information applicants have about pay, the less power they have when negotiating.

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

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

Employer pay secrecy during recruitment places them at an unfair advantage when competing for talent.
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