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Is ethnic pay gap reporting on the horizon?

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The Office for National Statistics (ONS) released an analysis this week of ethnicity pay gaps in the UK using earnings data from the Annual Population Survey. Its findings show that, on average, employees from the Chinese and Indian ethnic groups have consistently earned more than the White British employee since 2012. However, employees in all other ethnic groups consistently earned less, on average, than White British employees.

Employees in the Black African, Caribbean or Black British, Other and White Other ethnic groups on average earned 5% to 10% less than their White British counterparts between 2012 and 2018. The pay gap between employees in the Other Asian ethnic group and White British employees peaked at 20.1% in 2014 but has since narrowed to 4% in 2018.

The ONS found that the pay gap between White British employees and most other ethnic groups narrows once other characteristics such as education and occupation are taken into account. However, some significant gaps still remain, particularly for those born outside the UK.

These figures follow two other developments in this area from last year.

Firstly, in 2018 the independent McGregor-Smith review released its report entitled “Race in the workplace”. The review concluded that too many people are uncomfortable talking about race, and if Black, Asian and Minority Ethnic (BAME) talent was fully utilised, the economy could receive a £24 billion boost. It recommended that “daylight is the best disinfectant” and that the Government should legislate to make larger businesses publish their ethnicity data by salary band to show progress towards racial pay equality. In response to this report, the government launched a consultation on ethnicity pay reporting. That consultation closed on 11 January 2019 and the government is currently analysing the public feedback.

Secondly, the Equality and Human Rights Commission (EHRC) called for mandatory reporting on staff recruitment, retention and promotion by ethnicity. This followed its finding that only 36% of employers collect data on employee ethnicity, and just 3% of organisations measure their ethnicity pay gaps. The EHRC reported that, due to a lack of data, employers who are striving to ensure workforce diversity are unable to remove the barriers to the progression and representation of ethnic minority staff in the workplace.

The introduction of gender pay gap reporting has been criticised for failing to produce any tangible change but, as the McGregor-Smith review noted, “we cannot change what we do not measure”. The value of mandatory pay gap reporting is that it highlights the disparities in pay. Once employers are aware of how white and BAME people are paid within their organisations, they are likely to be encouraged to tackle the issues identified head on. The figures released by the ONS this week provide further evidence that there is still a long way to go to close the ethnicity pay gap.