Pay transparency is changing not only how much is disclosed, but when

The transposition deadline for the EU Pay Transparency Directive was June 7, 2026. Article 5 gives applicants the right to receive the initial pay or pay range for a role, with the information supplied in a way that enables informed and transparent negotiation — for example in the vacancy notice, before the interview or through another sufficiently early channel. Employers may not ask applicants about current or previous pay history.

That changes pay from a late-stage offer card into an early condition of the hiring process. Instead of discovering after several interviews that the budget is incompatible, both sides can assess fit while looking at the same economic range from the beginning.

If prior salary disappears as an anchor, the role itself needs a price

Previous salary has long been a convenient anchor for setting an offer. But it can cause the price of the same work to remain tied to what a person happened to earn at a previous employer rather than what the new employer believes the role is worth.

The EU framework pairs the salary-history restriction with requirements for objective, gender-neutral criteria around pay levels and pay progression. A hiring team therefore needs more than a minimum and maximum number. It needs a logic linking responsibility, skill, difficulty and career level to a credible salary band.

In the U.S., disclosure mandates changed both postings and measured wages

A 2025 NBER Working Paper uses recent U.S. state-level posting mandates and finds that the policies increased the share of postings carrying salary information by roughly 30 percentage points. Across three datasets, the authors report wage increases of 1.3–3.6%, with no detectable reductions in employment, posting volume, or skill and education requirements.

Those estimates should not be transplanted directly to Korea, Japan or Europe. The study exploits specific U.S. state laws and remains a Working Paper. What it does show is that pay disclosure can be more than a formatting requirement: it can alter labor-market competition and spill over beyond the individual vacancy.

But a visible range is not the same thing as a transparent price

Using Lightcast data, the New York Fed found that the share of U.S. online postings with pay information rose from an average of about 15% before January 2018 to roughly 53% since January 2024. Yet for postings estimated to be legally covered in early-adopting jurisdictions, about 24% still lacked pay information as of January 2025.

Even technically compliant ranges can be too wide to tell candidates what an offer is likely to be. The next competitive question is therefore not simply whether a salary field exists, but whether the range is genuinely hireable, how experience maps into it and what rules justify exceptions.

When pay is visible, applicants can decide earlier whether the job is worth pursuing

A 2025 IZA field experiment randomized whether real vacancies displayed wage information. Disclosure did not materially change average application volume. Instead, it made applications more responsive to pay: higher-paying vacancies attracted more applications and lower-paying vacancies fewer, while average applicant quality did not significantly change.

That is not a story in which every employer receives more candidates. It suggests that weaker-paying employers lose some ability to carry candidates deep into a process behind uncertainty, while employers with competitive compensation can turn the pay level itself into an earlier recruiting signal.

External salary disclosure eventually becomes an internal question: why am I paid this amount?

Once a company advertises a range for a new hire, the number inevitably connects to incumbents doing the same or comparable work. That is why the EU framework extends beyond pre-employment disclosure to employee information rights and transparency around the criteria used to set and progress pay.

Pay transparency therefore cannot remain only a recruiting project. Job architecture, levels, performance, promotion, variable compensation and exception offers need to connect through one logic. Otherwise the external price tag can expose internal inconsistencies. Firms with that structure in place can explain not just the ceiling of an offer, but what responsibility and performance move someone to the next price point.

For Asian employers and candidates, the first task is to build a pricing logic — not copy a disclosure rule

The EU directive is implemented through national legislation, and U.S. rules vary by jurisdiction. This does not mean every Korean or Japanese posting suddenly follows the same legal template. But companies recruiting internationally will increasingly encounter markets where candidates expect the pay range and its rationale earlier in the process.

Before sourcing begins, employers need a realistic band, criteria for placing experience within it, rules for exceptions and a clear separation of base, variable and equity compensation. Candidates should likewise look beyond “how much above my current salary” and ask where they sit in the band, what moves them to the next level and how total compensation evolves.

BANSEOG VIEW

The real effect of pay transparency is not showing a number — it is forcing a company to explain why a role has that price

When pay is hidden, firms have more room to price candidates through differences in information and bargaining power. As the range becomes visible earlier and prior salary loses weight as an anchor, the hiring question shifts from a person’s current “price” toward the value and scarcity of the role and where the candidate belongs within the band.

That also changes the value of executive search. Instead of finding candidates first and reconciling compensation at the end, the higher-value work moves upstream: defining market price, role level and acceptable exceptions with the client before the search. Negotiating power may increasingly come from pricing a role accurately rather than keeping its price opaque.

SOURCES

Primary sources and references

Directive (EU) 2023/970 requires national transposition, so effective dates, penalties and procedures depend on each member state’s implementing law. U.S. findings from NBER, the New York Fed and IZA are not directly extrapolated to Korean, Japanese or EU labor markets. The NBER and IZA studies cited are Working/Discussion Papers.