Lion Co has become one of the first companies to ban questions to job candidates about their salary history in an effort to tackle the gender pay gap.
The brewer, which owns brands Boags, James Squire and Hahn, announced on Monday that it had scrubbed salary questions from its job applications and officially banned them from interviews after finding they perpetuated lower salaries for women.
Questions over salary history have been a hot issue in the United States, where 17 states have recently banned the practice, but Lion’s move is the first time the issue has received attention in Australia.
Lion chief executive Stuart Irvine said the company had introduced the ban at the end of July after piloting it as part of changes to its recruitment processes to help encourage more female applicants.
“One of those changes is being really clear that we’re never going to ask your salary details because that can be intimidating and we’re going to pay the fair rate for the job,” he said.
The brewer has been at the forefront of changes to reduce the gender pay gap but Mr. Irvine said basing salaries on past pay risked letting pay gaps from other employers back into the organisation.
“If there’s a female applicant and a male applicant and in the interview, they’re both successful and we say we’ll pay you 10 per cent more than you’re currently on – you’re just perpetuating the gap into the organisation.”
There have been no studies on how widespread the practice is in Australia, although a US survey from 2018 found 84 per cent of employers used salary history to evaluate salary expectations.
A US survey from 2018 found 84 per cent of employers used salary history to evaluate salary expectations.
Marian Baird, professor of gender and employment relations at the University of Sydney, said Lion’s ban addressed a “critical issue” in lifting women’s pay.
“We know the gender pay gap starts virtually as soon as you leave university and unless you break the cycle when you change jobs you’re always going to be building in pay difference between men and women,” she said.
The issue also pointed to a broader issue of underpaying jobs.
“The really underlying problem of pay equity is we have never properly valued work, whether it’s jobs within an organisation or jobs across a society,” Professor Baird said.
She argued the value of a job was a social construct, dependant on a range of factors such as historical legacies, individual or group bargaining power or how job evaluation schemes were run.
“All of those have got elements in them that are open to bias or subjectivity.”
‘More intensive interviews’
A US study into the effects of limiting access to wage history found employers responded by enlarging the pool of applicants, arranging more face-to-face interviews and evaluating them more intensively.
The result was workers with a lower salary history were more likely to be interviewed and hired and also struck better wage bargains.
Critics of the bans, however, claim employers will simply assume women who do not disclose their salaries are earning substandard wages and adjust their pay offers accordingly.
Employers could also shift to asking people to name their “expected salary” in job applications.
Professor Baird said such requests encourage applicants to low-ball pay to secure an interview and allow employers to exploit an asymmetry of knowledge in the recruitment process.
“People are playing the bargaining game with only half the knowledge,” she said. “You’re trying to pitch yourself to be the right person, thinking if you undervalue yourself you won’t be appropriate but if you overvalue yourself you’ll be excluded.”
University of Sydney Associate Professor in organisational studies, Sunghoon Kim, said salary history would become more significant for Australia as the US bans start to affect multinationals.
“If more than 10 states have this law, that means virtually all companies that have nation-wide operations in the US are under the influence of the ban,” he said.
“If a majority of major corporations are doing that, that means the multinational policies are affected and there are naturally some impacts across nations.”