Pay Transparency and Its Effects: A Comparative Analysis of Public and Private Sector

Abstract

This paper explores employee attitudes on pay communication and pay transparency and compares perceptions from private and public sector employees. Primary research was conducted among 353 employees working in the public and private sector in Croatia. Research results indicate that employees from the public sector, when compared to employees from the private sector, showed a more positive attitude towards pay transparency, higher preference for pay transparency and willingness to communicate one’s pay. Employees from the public sector perceive greater beneficial effect of pay transparency than employees from the private sector. The pay communication policy and level of pay transparency can act as additional factors that attract employees to the public or private sector and thus cause employee sorting between the two sectors.