Report: EU Directive Prompts Businesses to Set Global Pay Standards, But Progress is Slow

The report, Countdown to the EU's New Law on Pay Transparency, notes that there are strong concerns among employers about the new requirements. Many are apprehensive about how the regulation will affect wage bills, competitiveness, and the ability of managers to reward their best performers.

The report was launched at The Conference Board's Future: Reward Europe event, held in Brussels. In a separate live poll conducted at the gathering of senior executives responsible for pay, 44% of participants said that they were "concerned or very concerned" about the impact on wage bills, with only 3% "not at all concerned". Of the 75 respondents to the live poll, 43% said that the Directive could increase their European wage bills by between 2.6% and 5%.

"Our analysis shows that complying with the Directive is data-intensive and requires a high level of cross-functional collaboration, so it is a concern that many businesses have not yet begun to prepare for it," said Jean-Marc Verbist, Leader of The Conference Board Human Capital Center, Europe. "Compliance is likely to come with a significant cost.Beyond the anticipated short-term rise in wage bills, businesses will also need to invest in training, data gathering, and internal and external communications. Chief Human Resource Officers need to ensure their boards and senior managers are aware of the risks of non- and low-quality compliance: not just potential fines, but also increased workplace tensions and loss of productivity."

Key highlights from the report include:

SETTING GLOBAL STANDARDS:

Pay transparency is gathering momentum around the world:

REGULATORY READINESS

Businesses are off to a slow start in preparing to comply with the EU Directive:

IMPACT ON EMPLOYEES

Managers see the upside of pay transparency regulations, but there are risks:

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