CMA backs pay in job adverts but warns on competition risks
The CMA supports in principle requiring employers to publish pay in job adverts, and sets out two designs it says would protect competition.
The Competition and Markets Authority said on Tuesday that it supports in principle requiring employers to publish pay in job adverts, provided the rules are designed so they do not harm competition.
The regulator was answering the Office for Equality and Opportunity’s consultation on reforming the equal pay framework, and limited its comments to the job advert proposal.
The CMA said it is “broadly supportive of improving pay transparency in recruitment”, arguing that well-designed disclosure can cut search costs and improve matching between workers and jobs.
It set out two possible designs: a binding minimum salary, or a pay range with a binding minimum and an indicative upper bound.
Its concern is that publishing a specific salary, whether binding or not, could give rival employers a focal point for their offers and so weaken competition between them.
Under a binding minimum, the CMA said, an employer could still offer more after assessment or negotiation, which keeps room for individual bargaining.
It said government would need to stop firms using “excessively wide pay bands that provide little meaningful information”, and proposed that only the bottom of any band be binding.
Nothing is settled yet. The consultation is seeking views on a wider reform, and the Office for Equality and Opportunity said responses will be used to inform its next steps.
That consultation was extended to 15 weeks, and also asks about gaps and inconsistencies affecting disabled people, ethnic minority groups and outsourced workers.
The CMA, in a longer paper, said a staged implementation or a post-implementation review might show whether firms respond with excessively wide or standardised bands.
The authority said there has been limited empirical research on mandatory salary disclosure, but that the evidence available appears to support a link with competition and productivity.
It pointed to Slovakia, where starting pay rose across a wide range of industries and occupations after employers were required to publish basic salary in job postings from 2018.
It also cited a study of Colorado, which requires wage ranges in postings, that found a 1.3% increase in wages after the measure took effect.
On the jobseeker side, the CMA cited CV-Library research finding that 58% of candidates regarded salary information as essential when deciding whether to apply, and 41% would not apply without it.
A separate survey by GI Group found over 30% of UK job seekers are put off applying for jobs with no salary banding shown, the CMA said.
The authority noted that the EU’s Pay Transparency Directive takes a similar approach, requiring employers to tell job seekers the starting salary or pay range in the vacancy notice or before interview.
The CMA said government should test the two options further as it develops the policy, and that it stands ready to support and advise government on the detail.
