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Employment ethnicity pay gap

  • United Kingdom
  • Technology, Media and Telecoms

12-01-2019

Employment – ethnicity pay gap

On 11 October 2018, just over one year on from the introduction of compulsory gender pay gap reporting, the Government has published a consultation regarding the potential introduction of a similar scheme for disclosure of differences in pay according to ethnicity.

Population census figures show that Britain is increasingly ethnically diverse, yet labour market participation, earnings and progression vary widely between ethnic groups. The Government has a stated aim to break down the barriers that hold back under-represented ethnic groups, on the grounds of fairness and because it makes economic sense for employers and the country.

Importantly, beyond societal demands resulting from an increasingly diverse UK population, there is an increasing body of research as to the positive impact inclusion and diversity has on business growth and performance. A study by McKinsey, for example, found that companies in the top-quartile for ethnic and cultural diversity amongst their executive teams were 33% more likely to have industry-leading profitability. There are real and tangible benefits to employers, therefore, in engaging with diversity issues, including differentials in pay.

There is no doubt the reality of reporting ethnicity pay will require significant effort and buy-in from employers. It is believed that some 60% of larger employers collate data as to ethnicity. However, even amongst those, the nature of the data collected and the degree of participation by employees is known to vary considerably. In the latter respect, many employers report reticence amongst their staff in sharing such data, being suspicious of its purpose or intended use, reluctant to identify themselves with a particular ethnic group or perceiving such questions as intrusive.

A not insubstantial part of the consultation focuses on the options for employers in terms of what they can do to improve employee perception and engagement with the collation of ethnicity data. It also enquires whether the type of ethnicity data collated should be standardised. Surely that is essential if the reporting process is to be meaningful. But what that may also mean is that some employers who already go to some lengths to collate such data will need to revise their approach. For the remainder of employers, a whole raft of policies and procedures will need to precede pay reporting, from what ethnicity data is collected, how and the steps taken to reassure and encourage staff that sharing their details is a good thing.

What the consultation furthermore re-enforces is the Government’s commitment to progress its Industrial Strategy aims. With the approach of Brexit, in whatever form that takes, recruiting and retaining workers will be more critical than ever. Ensuring as many of those workers as possible reach their potential is an important facet of this challenge. To that end, it seems unlikely that Government strategy will rest here and we anticipate further proposals and measures in due course, including the reporting of work opportunities and pay for those with a disability.

For more information please contact: Naeema Choudry

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