Jury still out on full salary disclosure in ads

KUCHING: Insisting on full salary disclosures in job advertisements might not be the solution to improving the job market as many believe, warns Centre for Market Education (CME) economist Carmelo Ferlito.
In his view, such a move could instead hinder efficiency and potentially discourage employers from recruiting.
The ongoing debate on job advertisement transparency recently heated up as the Ministry of Human Resources announced its intention to draft the ‘Salary Advertisement Act.’
This proposed Act would mandate employers to be more transparent by requiring them to state a salary scale in their job offer advertisements.
“A communistic utopia,” was Ferlito’s response when questioned about the proposal to compel employers listing exact salaries in job advertisements.
Drawing a parallel, he quipped: “Even two machines doing the same job aren’t paid the same, are they?”
Ferlito acknowledged that salary ranges like RM2000 to RM2500, for example, could be useful for applicants, providing them with a clearer idea of what to expect.
However, he said it is important to understand that the final salary is usually determined through negotiations between potential employers and job applicants.
“How much experience and skill the person has will matter a lot,” said Ferlito.
Interestingly, Ferlito viewed that salary, though crucial, might not be the first thing on a candidate’s mind.
“Candidates often look at the nature of the position first. The specifics of the offer, including salary, often come to light after negotiations,” he said.
Reflecting on his hiring experiences, Ferlito also pointed to the value of the initial interviews.
“The first interview should revolve around mutual understanding between both parties. Salary should not overshadow this.”
Looking into why many employers choose to exclude salary details in their job postings, Ferlito said the reasons run deeper than just the role on offer.
“It’s an oversimplification to tie salary solely to job function. Every candidate brings a unique mix to the table – experience, character, potential and a combination of hard and soft skills. All these factors can be more influential than the job function itself,” he explained.
Meanwhile, Universiti Malaysia Sarawak (Unimas) economist Jerome Kueh, suggested that having a clear law on salary transparency can be decisive in matching the right candidate with the right job role.
“When we place an employee in a role that isn’t a fit, it’s more than just a mismatch. It disrupts the labour market, wastes resources and you have talent that’s underutilised,” Kueh said.
Salary transparency, he argued, can help address the labour market’s issue with asymmetric information.
In simpler terms, this is a scenario where one party in a deal knows more than the other, often leading to imbalances in decision-making.
With transparent salaries, both employers and job aspirants will be on an even footing, armed with the same information.
Yet the playing field isn’t always level.
“There are instances where factors like gender influence salary discrepancies,” Kueh pointed out, adding, “being transparent about pay can mitigate such inequities.”
But should companies be mandated to disclose salaries or ranges? Kueh said the answer isn’t a straight ‘yes’ or ‘no’.
“The nature of the job role is crucial. For some positions, exact salaries might be more appropriate, while for others, a range works better,” he said.
He said that unless there’s a continuous dialogue with relevant stakeholders, it’s premature to cement salary transparency into law.
However, the concept of salary transparency does present clear advantages.
For one, companies specifying a salary or its range can more efficiently filter potential candidates, quickening the recruitment process.
“If you see a job that aligns with your salary expectations, you apply. It’s as simple as that,” Kueh said.
Additionally, offering a salary range offers a degree of flexibility in negotiations, benefiting both businesses and job seekers.
Companies can thus approach hiring more holistically, focusing on the overall candidate fit rather than just what’s on the CV.
Yet, there are nuances.
He said high-demand roles or ones requiring niche skills might often have detailed salaries showcased as an attraction tool. On the flip side, roles in sales or commission-based jobs might see employers holding their cards closer to their chest.