According to the study, wage transparency in companies was unsuccessful

Since 2011, companies with a certain number of employees have had to publish salaries internally – a measure to reduce the gender pay gap that, according to a new study, was unsuccessful. “It was surprising that we didn’t find anything at all,” said the Austrian study author and junior professor at the University of Mannheim, Andreas Gulyas. In order to achieve an effect, wage transparency could be sharpened.

The Equal Pay Day on Tuesday, February 15th, shows that Austria’s women work 46 days a year for free. According to “Business & Professional Women Austria”, the gender pay gap is currently 12.7 percent. One measure to combat this is income transparency: since 2014, all companies with 150 or more employees have had to create income reports that show the average income in different employment groups and employment group years and publish them internally.

That this measure was not crowned with success, found three researchers in a study that will soon appear in the “American Economic Journal: Economic Policy”. They compared companies with more than 150 employees to smaller ones that don’t have to prepare income reports.

No effects were discovered even when “zooming” into the results, Gulyas said. According to the study, there is not only no effect on the gender pay gap and individual salaries. For example, the researchers found no change in employees who had worked for a company for a longer period of time and could have used the disclosed salaries to renegotiate their own income.

Gulyas believes that tightening up salary transparency is a good idea: the state doesn’t have to spend any money on this, and the measure doesn’t cost companies much either. But how could wage transparency be designed in such a way that it reduces the gender pay gap? The economist suggested that companies should not only publish average salaries internally. Because salary differences also arise from the fact that women tend to work for lower-paying companies – possibly because they don’t have such good networks. If it is publicly known how much a company pays, women can compare better and use the information in salary negotiations. Companies could also be forced by a critical public to correct the salary allocation.

Another approach is to force companies to react to salary differences between women and men. Because if she is confronted with a lower salary, an employee still has to take action and negotiate herself. The literature shows that women are more risk-averse in salary negotiations. According to the study, in order for employees to become active, the difference in salary must currently be large and unjustified enough.

Perhaps the salary differences within Austrian companies are not unknowingly very large, Gulyas speculated, which is why the measure could not have borne fruit. The researchers found that employees find the salary information interesting and are less likely to change jobs once they have seen it. According to the study, this may have eliminated previous assumptions about unfair wage distribution.

Wage transparency is “not the political measure that can solve all the problems in the world,” Gulyas concluded. Because especially after the birth of a child, women have to struggle with problems in the working world: “Women take on more duties than men,” said the researcher; while men continue to work full-time, women take on more flexible part-time jobs. The researcher believes that a fairer distribution of childcare, the expansion of childcare facilities and financial incentives for men to take parental leave are more effective methods of reducing the gender pay gap.

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