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Why the phrase 'pay is competitive' might be a warning sign

Young pensive coworker working at sunny work place loft while sitting at the wooden table.Man analyze document on laptop display.Blurred background.Horizontal wide
There are several reasons why businesses may not want to advertise the salary publicly when hiring. Photo: Getty (Pinkypills via Getty Images)

You’re scouring job websites for a new position and you come across a role that looks promising. It’s a step forward for your career, you’ve heard of the company and they seem to be amenable to remote working too. The only problem is you have no idea what the salary will be like, as they’ve listed the pay as “competitive”.

A competitive salary should mean that what is being offered is equal to — or even more than — the industry average for similar positions in the same location. Often, it’s used in cases where the salary for a job can vary.

So why do employers use the term “competitive pay” rather than being up front about salaries — and can it be a warning sign?

Firstly, a business may want to conceal pay to allow room for negotiation. Rather than advertising a set figure from the beginning, a company may decide on a candidate’s salary depending on their expectations or level of experience.

Employers may also want to filter out job applicants who are only interested in the money, too. Listing a salary as competitive allows them to attract candidates who are more interested in the job and the organisation than simply the pay and benefits.

Read more: Is Dyson right in saying work from home makes firms less competitive?

“Not all businesses want to advertise salaries, especially high salaries. For businesses where culture is very important, making the right hire is critical,” says Life Coach Directory member Alana Leggett. “A lot of businesses now also hire within bands, which means the salary might sit within a range — something else they’d rather not advertise.

“This is most common with large companies, who want to avoid people purely applying based on wages and encourage applications based on genuine desire or interest in the role and the business,” she says. “So in general, ‘competitive salary’ is not necessarily a bad thing, there are positive and negative reasons why a business might choose this approach, depending on their angle, success and what they’re recruiting for.”

Watch: How to negotiate a pay rise

However, some businesses may use the phrase “competitive pay” to conceal a low salary. And once you’ve invested time and effort into an application and interviews, you may be more likely to accept less money if you are offered the job.

“Competitive salary basically translates to ‘an industry average salary’ — that can be higher or lower but it certainly competes with average salaries for similar roles, at that level, with the experience required, at similar types of businesses. This in itself isn’t particularly worrisome,” says Leggett.

At times, though, there may be other reasons why businesses don’t want to advertise the salary publicly.

“In situations where the salary is average but perhaps not the most attractive for example, companies may bolster compensation packages with benefits and perks,” she explains. “Stating it’s ‘competitive’ avoids putting off potential candidates who might see higher salaries at competitors, and means there’s no need to share intimate details of their internal benefit packages.”

Read more: Should new hires be offered 'golden hello' joining bonuses?

Even if a salary isn’t publicised in a job advert, you can still find out what you could earn before investing too much time into the hiring process. You can always ask the recruiter for a ballpark figure at the interview stage. There are also salary checker tools online to help you find out what similar roles are paying, so you can ensure you are getting paid what you are worth. And if the salary isn’t what you expected, you can always negotiate.

“Having all the information you can in order to decide on a course of action is always helpful,” says Leggett. “So, understanding the business, the role, the expectations and the benefits you’ll receive is certainly never going to be a bad thing. Many candidates like to see salary upfront to see whether it’s worth an application. So in general, transparent information around salaries is helpful.”

However, only some companies are transparent about salaries, such as large and leading firms who want to ensure the role is attractive to candidates. But while pay transparency can save you time in the recruitment process, Leggett points out that it can help to think about whether you would enjoy the job without the finance element clouding your decision.

Read more: How to negotiate a higher salary in a job interview

“For example, would you be more likely to apply for something you’re not so keen on for a slightly higher salary?” she says. “Recruiters want to avoid situations like that because unhappy employees are not only less productive but a high churn is costly for them, hiring is both expensive and time consuming.

“Salary is important but businesses should also be focused on fostering a positive culture, after all you are going to spend a very large degree of your time at your workplace.”

Watch: A leading social psychologist explains how companies can help reduce bias