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Calls for income transparency in recruitment ads

PayslipBanSA plans to use the constitution to help close the wage gap.

A growing number of countries have implemented legislation that forces companies to be transparent about how much they pay their employees – the aim being to expose and eliminate salary disparities between different race and gender groups.

Some US cities, including New York, Philadelphia and California, have also passed laws designed to tackle wage discrimination at recruitment stage by making it illegal for employers to ask potential candidates about their salary history.

When the New York law was instituted, Carmelyn Malalis of the NYC Commission on Human Rights was quoted as saying that the legislation would enable women and people of colour to negotiate based on their skills and to not be “held back by their current or previous salaries”.

The World Economic Forum’s 2018 Global Gender Report looked at gender equality across four dimensions: economic participation and opportunity, educational attainment, health and survival, and political empowerment. South Africa was ranked 19th out of 149 countries in terms of gender equality. However, when it comes to equal pay for equal work, the country came in at 117.  

Read: Not just the pay gap – women experience ‘punishment gap’ too

The 2018/2019 Global Wage Report produced by the International Labour Organisation (ILO) found that women continue to be paid, on average, approximately 20% less than men. When the ILO looked specifically at low- and middle-income countries, it named South Africa, Namibia, Tanzania and Malawi as “the countries with the highest levels of wage inequality among the 64 countries considered”.

It is this inequality that PayslipBanSA is seeking to tackle through its campaign. The advocacy body ultimately aims to legally challenge the lack of remuneration transparency and the demand for payslips and pay history during recruitment as constitutionally unfair and anti-competitive.

No to obscure ads and payslip requests

“Income inequality is something that is negotiated … we might as well call inequality a labour market function because right now it is being propped up by the labour market,” Leonie Hall, founder of the advocacy group, told Moneyweb.

PayslipBanSA wants to take its fight to the Constitutional Court and has partnered up with JustLaw, a crowdfunding and legal rights advocacy platform that assists people who want to take legal action but cannot afford to.

Hall says the group believes that the law provides space to question this labour market conduct – particularly Section 23 of the Constitution, which states that “everybody is entitled to fair labour practice”.

“No transparency means problems,” says Hall, adding that if an employer has more information than an applicant, it has more power, which allows it to create an opportunity to prevent job seekers from fairly negotiating pay.

“If they were upfront, they would not need to ask for your payslip,” she says.

Government leading the way

Maphutha Diaz, head of human resource standards and projects at the SA Board for People Practices, says that the practice of asking for payslips is influenced by particular companies’ policies or procedures, adding that the public service is known for its transparency.

Diaz says employers use payslips to place potential employees within specific remuneration pay scales relative to others in the same jobs or job categories.

“If new employees are placed incorrectly relative to existing employees, you could end up creating anomalies which are a source of employee grievances,” says Diaz.  

He adds that there are other risks associated with the recruitment and placement process. “It is said by some that out of every 10 job applicants you get, up to four of those could be inflating their profile or being dishonest.”

There is no law that requires job seekers to disclose their payslip or permits employers to request them.

Context

Hall says recruiters don’t have context around an employee’s previous salary, which could include being underpaid in a previous position. “These recruiters are operating as gatekeepers because they are preselecting candidates based on financial criteria and limiting the talent pool to employers,” she says.

On the issue of employees lying about their profiles, Hall argues that recruiters can easily remedy this by contacting the company or the job applicant’s references. “Since when did payslips offer a narrative on my competency?” she asks.

Hall points out that the lack of transparency also reduces competition between employers in the labour market, saying that if the employment patterns and salary offers of an ‘ethical’ company were made public this would force any company that “cheats” its employees to increase salaries or benefits in order to retain its workers.

However, Diaz says this is not necessarily true because companies benchmark themselves against their competition through extensive salary surveys conducted by remuneration consulting firms.

“Companies are mostly guided by their remuneration policies and related processes. If there are companies that still pay their existing and potential employees below their established pay scales, they could be violating the Employment Equity Act.”

Read: Real-life gender pay gap far bigger than thought, US economists say

The Act requires employers to uphold the code of ‘Equal pay for equal work of equal value’. Employers with more than 50 employees are required to submit, among other reports, an income differential statement to the Department of Labour. Should an employee believe they are not being paid fairly, they can challenge the employer.

In a statement, Anita Bosch, associate professor in organisational behaviour and leadership at the University of Stellenbosch Business School, says research indicates that the gender pay gap shifts when public reporting is required by legislation and when there is proactive effort to close it.

“When trade unions place specific emphasis on pay equality, the gender wage gap reduces,” says Bosch. “For instance, the standardised manner in which positions in government service are advertised — with wage transparency — has resulted in a low gender pay gap.”

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Let me get this straight: If you, as an interviewee, should exaggerate your present salary because you know that your present employer is underpaying you, you would be the bad guy for “lying”to the interviewer?
OTOH glamourising your resume is expected and interviewers usually ignore that unless you tell real porkies. The world is odd.

How can fair labour practice even be applicable when the person is not an employee yet.This whole idea is political correct bunk. It may work in a civilized first world economy like the USA where people actually WORK.

Simple.. you cannot base decision on something other than work or cost. You will be amazed how many managers ask female candidates if they in stable relationship (or if married) if they will have kids or planning to in the near future. <– that is constitutionally illegal yet ask you female peers, family members etc how often this is asked in an interview. While the constitution does not govern employment, employers are discriminating on sex in this case which has legal repercussions. To me it seems than people pushed into management positions do not understand the basic laws and responsibilities associated with a people management role!

Wrt to providing salary misinformation.. i completely disagree with" exaggerate your present salary because you know that your present employer is underpaying you" strategy. You will be found lying..most jobs have a salary bracket and companies additionally usually have a policy limiting increases to 50% max of present.. exception being new entrants.. but you have to question this practice on the low-end when some employed cheaply for not reason.

Typically if you upfront about it they could structure if such that you paid bonus and work towards an annual increase.. but lying is a MAJOR career limiting move. If the company is not accommodating or able to structure a plan then either your expectations are out of the norm or its a mismatch.. either way this is set before you start.. which is better than lying and then leaving a year later with a bad reputation.

Hi Lulu! Recruitment is a labour market process, as such it must be regulated. This means terminology such as ’employee’ is irrelevant.
The process must be fair or it is in contravention of S23.1 of the Constitution: everybody entitled to fair labour practice. Job seekers are part of the labour practice value chain and as such must be protected.
Besides, spying on other employers pay is a crime as per the Competition Act.

Second thought: If employers have access to industry pay scales, so they can know when an interviewee is lying, why ask one’s present salary in the first place?

Industry pay scales only apply to certain people of an un-PC hue. An EE candidate with my experience and qualifications would earn 1.5 times to double my salary. I’ve interviewed enough people to realize this.

My experience and research puts it at around 1.8 to 2 times. Even had situations were recruiters told me that certain experience requirements (specific skills such ass knowledge of a particular software package,) would be overlooked for an EE candidate, but not for anyone else…

@Drachir “My experience and research puts it at around 1.8 to 2 times” hahahaha……

really?

When these employers advertise vacancies without being transparent about pay, besides violating the Constitution, they are also unfairly using information asymmetry to their advantage.
The less real information about pay job seekers have, the less wage negotiation power they wield.
When you apply to unfair ads and recruiters respond with questions about pay without being upfront themselves, it’s a second information advantage.
This is done to find the most talented individual willing to be coerced into accepting an unfair offer.

On one hand, I agree that prospective employers shouldn’t be allowed to ask for payslips, as I know for a fact that they do use that to assess what to pay the prospective employee.

On the other hand, I do recognize that someone’s current pay in general is a fairly good indication on their abilities. Very few companies will pay someone more than what they are worth. Coupled to that the fact that some people are very good at selling themselves, but when it comes to the rubber meeting the road, they don’t measure up.

A difficult one to answer, but on a balance of probability, with our country being a nation overrun with scammers, thieves and liar’s, I think the asking of a payslip is sadly needed.

In more developed/civilized nations, I think this idea has some merit…

Hi Octavian! Research findings actually indicate that recruiters and employers are the ones with morality problems, not jobseekers.
In addition, they wield unfair power in contravention of both the Constitution and Competition Act. Please read about recruiter morality here https://www.payslipbansa.co.za/2019/05/07/recruiter-morality-findings/ and read our response to payslip sharing as described by Diaz, here https://www.payslipbansa.co.za/2019/05/27/sabpp-bastion-of-baasskap/

So according to the Employment Equity ACT I can not be paid based on my performance?
Due to my salary scale I never got paid for overtime and had to be available 24/7 to resolve any problems at my customers.
Should my salary now be the same as my colleague that was only working 8 to 5 as he had no direct customer responsibility all though we had the same title, number of years of service etc and on the same pay scale?

The whole world is hell bent on ensuring the equality of outcome instead of the equality of opportunity. There is simply no incentive to put in the extra mile anymore. Why would one if the next guy or gal will get what you have anyway….In fact – you will be ridiculed for your good performance and accused of enjoying some sort of privilege! Soon the world will be run by people who could not pass a single exam but really, really wanted to be an engineer, or doctor……so we let them…

Income transparency in recruitment ads will leave candidates with unrealistic expectations…the reality is that most ads will state the minimum requirements in order to qualify for the role, however the salary band will also account for more experienced candidates applying.

In an ideal world companies will pay you what you want opposed to what they think you are worth based on your current package.

Yes! The double standards are rife! At school, human resources practitioners are taught to price the job, not the person.
Organisations such as SABPP corrupt the process of recruitment by violating the Constitution and Competition Act when endorsing payslip sharing and employer pay secrecy.

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