Green MP Jan Logie campaigning for pay equity last year. She narrowly lost a parliamentary vote that would have allowed workers to ask about pay by gender for workers doing the same kind of work.

OPINION: Is sunshine the best medicine? British companies recently had to publish their gender pay gaps. There were recriminations, and the odd resignation in anger.

A private member's bill by Jan Logie lost by one vote in the last Parliament, which would have allowed workers to ask about pay by gender for workers doing the same kind of work. The bill will be back.

Pay transparency has counterintuitive consequences if you look at how employers react to it.

Believe it or not, employers prefer pay rates to be public, so they can drive harder bargains with recruits and employees. Their final offers are more credible.

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If a pay deal for a top recruit or star employee must be made public, others will demand a flow on, there will be grumbling, office politics and resignations. Too much time will be spent on pay renegotiations and not enough on running the business.

About two-thirds of jobs are filled by a take-it-or-leave-it offer based on the going rate for that job in that occupation and industry. But as you go further up the skill ladder in the labour market, wages are more likely to be the subject of bargaining.

The responsibilities of higher-skilled jobs are more idiosyncratic, and the gap between the best and average applicant in skill and experience grows. Here, cutting a secret deal to sign the best applicant or retain the best employee pays off big time.

When pay raises are secret, employers can cut private deals with valuable employees and outstanding applicants. Other employers know that, so they want to cuts secret pay deals too.

The wage-setting process unravels, with every employer keeping their pay rates close to their chests because other employers are doing the same to cut private deals with the better applicants and employees. The result is higher wages for all, because competition between employers is stronger.

A study of Task Rabbit, a US online jobs board for urgent deliveries, transcription services, cleaning and other odd jobs found that greater pay transparency reduced wages.

Firstly, employers bargained harder because, if other bidders know what they pay for this and prior similar jobs, they would press for the same pay. Secondly, workers low-balled their starting wage offers in anticipation of finding out what the wages were for that job later, and then asking for a pay rise.

Transparency increased the gender wage gap for Task Rabbit jobs, because men gossip more about their pay. Men also have larger networks of friends and colleagues with who they can check with to see if they are underpaid. Women are more reticent about discussing wages, and their networks were smaller because more were returning from maternity leave, or they work part-time or from home.

Pay transparency plays into the hands of the bosses. They can make more take-it-or-leave-it offers because they can credibly say, "If I cut a deal with you, everyone else will know and want the same."

Men are known to negotiate their pay more often than women, and have bigger networks to check if they are underpaid. Pay transparency gives men a leg up in a game that already favours them.

Pay privacy is a result of employers trying to outbid each other under-the-table for the best workers. Everyone's wages are higher because of the greater competition between employers.

* Jim Rose is an economic consultant who blogs at utopiayouarestandinginit.com