Do you tend to disclose salaries when advertising jobs for your hotel, restaurant or bar? While you may avoid disclosing pay for the purpose of preventing pay comparison and resentment among employees, a lack of pay transparency can widen the gender pay gap. Consequently, pay gaps in your company can disproportionately affect members of marginalized communities who already face increased discrimination at work.  Considering these effects, the European Union has proposed a Directive on Pay Transparency to increase pay equality.
Read this article to find out how big the gender pay gap is, and what the EU pay transparency directive is about. You’ll also learn how this policy may affect your hiring process, and which changes you’ll need to make to reflect pay transparency. Lastly, we cover the pros and cons of implementing pay equality measures for your business.
How Big Is the Gender Pay Gap in Hospitality?
The gender pay gap continues to be prevalent across almost all industries (including hospitality) despite various diversity, gender equality, and women empowerment initiatives. For instance, in 2020, women's gross hourly earnings were on average 13.0% below those of men in the European Union. In fact, a new report from WiHTL shows the average mean pay gap in the hospitality industry has increased from 5.4% to 7.7%, while the overall mean pay gap in the Hospitality, Travel & Leisure (HTL) sector has increased from 7.4% to 9%.
What Is the EU Pay Transparency Directive Geared At?
This policy is aimed at empowering travel and leisure sector workers to enforce their right to equal pay by giving them access to the necessary information on pay, in compliance with GDPR. If implemented, your employees will have the right to request information about their own pay and the average pay levels of colleagues doing the same or similar work.
This transparency will allow your employees to compare their salaries with colleagues, and ensure you’re paying them fairly. Implementation of this policy may also reduce the gender pay gap by encouraging EU employers to evaluate staff pay based on skills, rather than socio-political factors.
Changes to Job Applications, Interviews, and Salary Data
The EU hospitality industry will see the biggest changes in how workers apply and interview for jobs if this directive comes through. As an employer, you will be required to provide information about the initial pay level or range in the job ad or before the job interview.
This may mean updating your current job posts with new salary information, creating a user-friendly portal for potential employees to view pay data, and proactively offering pay details during hiring rounds.
Moreover, you may have to negotiate with trade unions for new salary ranges in your collective labour agreements. If you are employing more than 250 employees, you will also have to report gender pay gaps, and work towards remedying the difference if the report shows unjustified pay inequalities.
Effects of the EU Pay Transparency Directive on Certain Countries and Regions
If you’re a hospitality employer in France, you can’t ask potential candidates about their past salary and have to provide pay information during the hiring rounds.
If your company has a pay gap of more than 25%, you will be required to explain the difference.
It will now be mandatory for Italian employers to submit pay transparency reports. Businesses that were already generating such reports will be required to expand on the details provided to ensure the data is in line with the EU directive.
The EU pay transparency directive will not be implemented in the UK. However, UK businesses operating in EU jurisdictions will still have to follow the guidelines.
→🙂 Can’t seem to find talent for your business? Learn how to navigate the current hospitality staff crisis here.
Pros and Cons of Implementing Pay Equality Measures for Travel and Leisure Businesses
While the EU pay transparency directive can be a beneficial instrument for attracting and retaining talent, there are potential pros and cons you may need to consider as an employer.
Reduce the gender pay gap:The biggest benefit of implementing pay transparency and equality measures is companies and nations as a whole can significantly reduce the gender pay gap, creating a fair work environment.
Reward good work:Pay transparency and equality can ensure good work is rewarded, irrespective of which gender is performing it. This will help you retain talent, as employees are more likely to give their best and stick with a company for longer if they feel they are fairly rewarded.
Offer better working conditions:The EU pay transparency directive looks at pay as more than just salary. It also includes benefits like bonuses, overtime compensation, travel facilities, housing allowances, training reimbursement, and more. Transparent and equal pay will ensure all your employees can enjoy better working conditions with a fair salary and desirable benefits, helping you build a better employer brand.
Comparison may lead to disappointment and resentment:A 2019 study conducted in Norway found that there was a life satisfaction gap of 21% between high and low-income earners when they viewed the pay records of others. High-income earners felt good about themselves, knowing they were making more money than most others, while low-income earners felt dissatisfied with their life and work as they weren't as valued at their workplace. 
May affect performance:A 2015 study found that reward transparency decreased performance among those who knew others were getting better rewards. 
Women may be dismissed:Once pay transparency and equality are made mandatory, it may be tempting to hire men in positions where they are perceived to be more productive, so make sure you’re not overlooking women. 
However, these cons don’t mean pay transparency is a bad thing. The current staff shortages faced by the travel and leisure sector may even be reduced by building a strong employer brand that focuses on pay transparency and equality.
Additionally, you may need to increase your efforts to ensure the pay transparency measures aren’t adversely affecting your staff. Clear communication is the best way to do this. Being transparent about how salaries are determined, which outcomes are considered for a raise/promotion, and why some people are paid more than others could help your employees understand where they stand now, and how they can move towards a better position. Even making sure your employees feel safe discussing pay can help bring everyone on the same page about salaries and benefits.
→😃 Want to offer your employees a dynamic and appetising future? Learn how to craft outstanding career paths with our tips!
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