The Ethnicity Pay Gap Matters

One of the many disappointments to arise from the UK's Commission on Race and Ethnic Disparities’ report, published in March, was the conclusion on ethnicity pay gap reporting.  On the one hand, the report acknowledged the increasing number of employers who wished to report their pay gap; while on the other hand, it highlighted the many obstacles to overcome before meaningful statistics can be produced.  Ultimately, CRED concluded that ethnicity pay gap reporting should remain a voluntary, not mandatory, exercise.
Business groups ask the UK Government to make ethnicity pay gap reporting mandatory
Now, the CBI, TUC and EHRC – three organisations which together represent employers, workers and the protection of minority groups - have together written to the Government throwing their support behind the introduction of a mandatory reporting obligation.  In their letter, they make a direct request to the Government to make it mandatory for employers to report their ethnicity pay gap.
In the view of the CBI, TUC and EHRC, reporting ethnicity pay gaps will transform the understanding of race inequality at work and drive action to tackle it.  They call for a timeframe to be laid down for the implementation of the obligation.
Addressing race inequality is a long-standing goal
Ethnicity pay gap reporting has been on the table since the McGregor-Smith review in 2017.  This prompted the Government to conduct a consultation in 2018, but no response to that consultation was ever produced.  Yet the issue continues to be a live one: two Private Members’ Bills proposing legislation were introduced to the House of Commons in 2020; a petition with over 100,000 signatures was delivered to Parliament and, earlier this year, the Women and Equalities Committee recommended that proposals for the introduction of a mandatory obligation should be introduced before the end of 2021.  Against this backdrop, the conclusions of the CRED report are both surprising and potentially unsustainable. 
The ethnicity pay gap matters
In the wake of the death of George Floyd and widespread Black Lives Matter protests, many employers have made race strategy a priority in their approach to diversity and inclusion in the workplace.  In much the same way as gender pay gap reporting succeeded in shining a light on gender inequality at work, ethnicity pay gap reporting should create transparency around race inequality and allow a more targeted approach to addressing disparities.  Despite the lack of legal obligation, many employers now report their ethnicity pay gap voluntarily with recent statistics showing that as many as 25% of large employers now produce ethnicity pay data.
The obstacles to reporting identified in the CRED report are not insignificant.  Lack of employee data, how to present multi-category (rather than binary) data and the unreliability of very small sample sizes are all problems well known to employers.  One positive message from the CRED report is that BEIS is to produce guidance to help employers wishing to report voluntarily.  The CBI, TUC and EHRC also volunteer to help develop tools and resources to support employers.    For employers who are committed to tackling race inequality in the workplace, disclosure of the ethnicity pay gap is an important first step.
Click here for our guide on ethnicity pay gap reporting in the UK.