Having spent a decade working in fashion PR and marketing, Carlota Ganduxe Icart had grown accustomed to painful salary negotiations and a niggling feeling that colleagues at the same level were probably earning more. But then, in 2022, she joined SafetyWing, a startup that provides travel insurance designed for digital nomads, remote workers, and frequent travellers. Not only did Icart’s salary double, but she found she was on the same salary as the CEO. And the graphic designer. And the CFO. And the content writer. And the software engineer.
Regardless of location, status, role, or longevity, all of SafetyWing’s 68 remote, full-time employees, who are scattered across 60 countries, including Indonesia, Thailand, Canada, Switzerland, Mexico, Hungary, and Slovenia, earn the same amount. Inspired by its native Norway’s flat-salary society, this has been the case since the company was founded in 2018. Salaries have increased considerably since it launched, and according to CEO and cofounder Sondre Rasch, compensation is competitive, even in the context of high-salary locations like Silicon Valley.
Although the market for remote jobs is momentarily shrinking, the mass migration of workers during the Covid-19 pandemic has dramatically weakened the case for location-based pay. Extreme, global rises in the cost of living have meant that everyone is feeling the pinch, wherever they are. And new salary transparency laws across Europe and the US are making people far more attuned to pay disparity. That makes it harder than ever to get away with golden hellos and inflated salaries offered to new starters. Gartner research finds that 35 percent of managers report that new hires are making the most money in their organization. At a time when the gap between CEO and worker pay is at the highest recorded level since 1965, perhaps it’s finally time for flat salary structures.
Paying employees equally no matter where they live is a reflection of today’s internet labor market—a global landscape of suppliers and buyers who connect as if they were on the same street. “There’s a lively debate in big companies about flat salaries across geography, and, of course, I think everyone should do it,” says Rasch. “People often counter the policy with points about the different costs of living, but put simply, is it fair to pay someone who lives in a poorer part of town a lower salary? No.”
For workers in the global south, where wages are on average one-fifth of those paid to northern workers, the benefits of location-agnostic remuneration are manifold. Living in Peru, Adrian Salazar’s jobs had mostly been with US-based tech startups, and in his most recent role, he had peers in New York who were earning twice as much as him. “I was constantly trying to convince employers that it was a good idea to pay me the same as someone from Europe and the United States,” says Salazar. “I dropped out of high school, so I always had imposter syndrome, but automatically earning less because of where I lived certainly didn’t help.”
After joining SafetyWing as head of culture in 2021, Salazar moved to Medellin, Colombia, and he says that earning the same as his counterparts has boosted his confidence. “I know I shouldn’t need a salary to feel that way, but it validated my worth,” he says. For graphic designer Abril Carli, the package enabled her to move from her hometown in Argentina, where design work was scarce. “I was doing three jobs to pay the bills and rent a place by myself,” says Carli, who has since made a base in Andorra, with plenty of nomadic working in between.
SafetyWing isn’t the only remote tech company to offer elements of location-agnostic pay—Basecamp, Gumroad, Daily, Sourcegraph, HelpScout, RevenueCat, and Wildbit have all removed geography as a consideration when determining a salary, with all employees who do the same job earning the same amount. However, an entirely flat salary hierarchy like SafetyWing’s also deals with gender parity issues that most businesses have been unable to make progress on. Gender pay equity in almost every country has been depressingly slow—and in some cases, even regressed. In the UK, for example, the gender pay gap has stagnated at 9.4 percent since 2017, with opaque pay structures only serving to bake this in.
At one stage, Icart worked at the same company as her then boyfriend and discovered he was earning more than her, despite being on the same level. “He had the guts to ask for much more, even though he was working less than me,” says Icart. “But the reality is, lots of people aren’t comfortable asking for more, even though they’re equally capable of commanding that kind of salary.” Indeed, there are discrepancies in how women and men negotiate, with women fearing it will hinder, rather than help, their careers. They do so when given the chance, while men tend to negotiate even when the rules of wage determination are ambiguous.
Without having to agonise over whether they’re being paid fairly, and how to get there, employees have more headspace to do their actual jobs. “In traditional companies, you need this elaborate plan for negotiating a raise, and sometimes you spend more time making that than actually doing the work,” says Icart. Instead, employees focus on reviewing and adjusting personal and company goals regularly. When SafetyWing hits a pre-agreed revenue milestone, all employees see the same pay increase hit their bank account.
Salazar, who hates pay negotiation and would rather leave a company than try to drive up his salary, has experienced several company-wide raises at SafetyWing. “It’s been a considerable amount—something like 10 percent each time,” he says. “Celebrating that success with other colleagues, rather than behind closed doors with people outside the company, is very motivating.”
Based on interviews with several of SafetyWing’s staff members, at both the most senior and junior levels, it’s clear that the flat salary hierarchy boosts harmony, motivation, and freedom, in a geographical and professional sense. None of these effects should come as a surprise—countless studies have shown that pay transparency and equity improves employee engagement, motivation, and productivity. It helps keep employees too. SafetyWing has seen a 97 percent retention rate over the past five years.
Despite the clear business incentives for greater pay equity, many companies are still only tinkering at the sidelines—while 71 percent of executives think pay equity is important, only 14 percent have allocated budget and staff to address the challenge. And admittedly, it’s not realistic to assume that all companies could adopt its flat pay hierarchy—or even keep it once it’s been introduced. Rasch often comes up against pushback from investors about whether it can really deliver on its promises. Mostly though, these concerns are quelled by concrete proof that it works.
“SafetyWing’s principle is fantastically disruptive, but extremely difficult to copy and paste into other contexts,” says Antonio Giangreco, a professor at IÉSEG School of Management in Paris, who researches pay equity, pay structure in companies, and location-based pay. “It’s not a fit for every business, but companies can start with small steps.’’ That might be introducing greater salary transparency, abolishing location-based pay, or working to narrow the exorbitant gaps between C-suite and entry-level pay bands. According to the Economic Policy Institute, in 2021 a CEO at one of the top 350 US firms was paid $15.6 million on average, up 9.6 percent since 2020. The ratio of CEO-to-typical-worker compensation was 399 to 1, up from 366 to 1 in 2020, and from 20 to 1 in 1965.
“This kind of inequality has grown to an extreme level, and it’s not acceptable,’’ says Giangreco. “A policy like this shows what’s possible—and we need more of that if we want to move forward.”
This article was originally published by WIRED UK
