Editorial

Wednesday 20 August 2014

Lifting the lid on salary secrecy won't be easy in our closed culture

Opinion

Richard Curran

Published 25/06/2014 | 02:30

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We have a culture of secrecy around salaries
We have a culture of secrecy around salaries

Have you ever looked at the jobs section of a foreign paper when you are abroad on holidays? Ads tend to give a pretty good indication of what the job will pay. Yet in Ireland, when you trawl job ads, it will often say 'very competitive salary' or 'great earning potential'.

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In Ireland, we give away as little detail as possible when it comes to how much people get paid. It is seen as a very private thing, between the employer and the individual. Very often, employees have no idea what colleagues earn.

Why is it like this? One obvious reason is that Ireland is a small place. Advertise the pay with the job and chances are, somebody will know somebody who ends up getting that job. And they will know what they are earning.

Also, it is clear that in Ireland, employers do individual salary deals with employees all the time. Advertise the salary with the job ad, and everybody else in the company will know what the last guy was on, and whether they think they are being underpaid.

In the past, pay rates in non-management jobs in any company, would have been in line with agreed trade union pay grade guidelines. As the economy and workplaces have changed dramatically, it has all got a little more complicated. Foreign multinationals that do not recognise trade unions, employ hundreds of thousands of people. It isn't that they don't pay well – very often it is the opposite – but they have much greater discretion about what they pay. Without unions, they can reward staff on an individual basis for their contribution, without causing an industrial relations mess. This in turn paves the way for individual pay deals to be done, which could cause trouble if the details were known.

The Irish secrecy over pay doesn't just apply to employees on the shop floor. Top executives at Irish companies still do not make anything like the level of disclosure that must be made in the UK. For years, directors at Irish companies listed on the stock market did not have to disclose how much each one of them earned. A combined total figure was published for all of the directors. Shareholders, who own the company, had to guess how that money might have been split between them.

That situation did eventually change in Ireland about a decade ago.

Yet in the UK, detailed breakdowns of pay were the norm for a very long time. Even today, private British companies, not on the stock market, must disclose how much the highest paid director received when they file their accounts in the Companies Office. In Ireland, that is not the case.

Some of the reasons for the salary secrecy are cultural. Others are practical. The practical reasons relate to the fact that the place is so small and somebody knows somebody else. When you look at some of the financial scandals around pay, pensions and expenses to emerge in the voluntary sector recently, you can see that in many cases, people did have something to hide. Similarly, tax evasion was so rampant in Ireland, that people did have genuine secrets about their earnings.

Culturally, we are not comfortable talking about money and pay. It is seen as something deeply private, but at the same time, people love to find out.

Is it a bad thing? Respecting people's privacy is not a bad thing. But a lack of transparency about these things within a company can lead to secrecy and speculation about who earns what. This can actually affect morale, as some people make inaccurate assumptions about who earns what.

On a wider economic level, it can be a positive and a negative. Some international companies will view Ireland as a worse place to do business if its transparency levels are not up to scratch. On the other hand, many companies love secrecy and are happy to make as few disclosures as possible about sensitive things like pay.

In the public sector, or sectors funded by public money, it is about accountability. Any organisation benefiting from public funds, or actually owned by the citizens, must have very high levels of disclosure about pay.

During the last few years of recession, many large companies, particularly in the services sectors, let hundreds of people go. Many of these would have been older, better paid staff. The same companies have gone and hired lots of new young graduates, on lesser pay and conditions. The yellow pack culture is rampant.

To some extent, this is companies replenishing their workforce, as they try to become more competitive.

However, as we enter a post-recession era, lots of companies have lots of pay secrets and anomalies among their workforce that they really do not want to talk about. Lack of openness may reflect weak management at the top of Irish business. Surely bosses should be able to stand over their decisions about pay levels. Change is coming, but it is slow.

Irish Independent

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