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The raft of new pay transparency laws can only do so much in ending the gender pay gap, compensation experts tell Agenda. For the laws to have a sustained impact, companies will need to inject other measures of transparency into workforce management, according to Beth Florin, CEO of executive compensation consultancy Pearl Meyer.

That means being open about employees’ room for growth within the company, as well as their potential career path, she explained.

“It’s those conversations that are going to be beneficial to employees to understand better where they are, what their opportunities are, and what their career path might look like,” she said.

“But in the absence of any other information, I think that it has the potential to create confusion and frustration among employees,” Florin added. She recommended that boards overseeing workforces in affected jurisdictions consider the impact of increased pay transparency and what additional context employees might need regarding pay disclosures.

Though the idea of pay transparency isn’t new, whether it influences pay equity remains to be seen. A 2019 study from the National Bureau of Economic Research examining the impact of public sector salary disclosure laws on university faculty salaries in Canada found that the laws reduced the pay gap between men and women by as much as 40%. However, the same study found that the gap shrank, in part, due to a slower relative growth in men’s salaries.

While these laws only require that companies provide salary information when advertising positions, true pay transparency goes beyond the job listings, said Florin, who advised that the disclosures should be accompanied by greater communication on pay and advancement opportunities for workers.

For the most effective conversations, managers should be trained and guided on communicating pay information with employees, Florin said.

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