Significant challenges around gender pay gap (GPG) reporting have been revealed by data from Mercer’s latest pay transparency study.
Results showed that employer adoption of more transparent policies is low, with just 8 to 9 percent of UK companies publishing pay ranges externally today. This is despite commitments from almost half of UK firms to share pay data.
The study also highlights particular concerns about employees’ understanding of pay transparency requirements. In response the report sets out ways employers can better communicate decisions on pay.
Industry differences
Pay transparency is affecting industries differently, with the fast moving consumer goods sector at the forefront. In this sector, 78 percent of employers are engaged in or planning to address pay transparency in the next one to two years. Among companies in financial services, just 33 percent are engaged in this process, with the percentage dropping to 28 percent for professional services employers.
Mercer found that only 30 percent of the UK companies it surveyed calculate their ethnicity pay gap. Of those that do, 7 percent report it internally and 10 percent share the finding externally.
Almost half of the study respondents (48 percent) said they plan to share pay ranges externally, which Mercer said indicates a growing trend towards increased transparency. However, the researchers added that this is starting from a low base of between 8-9 percent.
EU directive
The EU Pay Transparency Directive, which must be transposed into EU countries’ national laws by July 2026, in addition to increases in demand for transparency, means organisations must start preparing now for greater openness on pay, even without a legislative mandate for employers with staff solely in the UK.
Mercer warned that failure to prepare for the changes mean that employers risk being left behind in a competitive global market as peers that take action will be able to show their equity in numbers.
Lucy Brown, UK DEI and pay equity consulting leader at Mercer, said: “Our UK pay transparency report shows that to stay competitive and attract global talent, UK businesses need to recognise this shift and speed up their adoption of pay transparency. Disclosing your pay used to be a taboo subject, but research shows more employees are sharing this with each other.”
UK lags world on transparency
Brown said that only 8-9 percent of companies in the UK are publishing pay ranges externally, which is low compared to companies worldwide. In addition, firms around the world are “planning significant increases in the disclosure of pay information”, she said, with the percentage sharing hiring pay ranges on job postings and employee pay ranges expected to rise from 41 percent to 87 percent.
“According to our research 81 percent of organisations recognise this shift and have developed or are planning to develop a global strategy and approach towards pay transparency.
“UK companies delaying may face challenges in attracting and retaining top talent as competitors embrace transparency. It is vital for businesses to begin the work now to be prepared to align with best practice, attract top talent, and foster a culture of equity and fairness.”
