Bayes Business School, UCL and the University of Cyprus have recently analysed data from 50,000 full-time employees at 7,000 workplaces and spanning 13 years. They were investigating the relative importance of “between-workplace segregation” (the segregation of workers of different ethnicities into high- or low-paying firms) and “within-workplace differences” in wage-setting. We consider some of the key takeaways from the study below.
- Ethnic minority males are paid 11% less than their white counterparts.
- Women from ethnic minorities earn 7% less than white women.
- Both men and women from ethnic minorities are more likely to feel overskilled in their current role than their white counterparts.
- Male and female employees with ethnic minority backgrounds are, on average, less satisfied with their earnings than white employees.
What does this mean for employers?
This research provides a stark insight into the difficulties and challenges that ethnic minorities continue to face in the workplace. Although ethnicity bias is not going to be fixed overnight, greater ethnicity equality can be promoted by employers.
The study found an association between narrower ethnicity pay gaps and the presence of a recognised trade union and the use of job evaluation schemes. Whilst, of course, trade union presence will only be appropriate for some employers, all employers can consider making their pay systems and promotion processes more transparent.
Whilst the focus of this study was on fairness in wage determination, the first step in this process is often promoting diversity in recruitment. To minimise the risk of discrimination and unconscious bias, employers should make job advertisements more inclusive and the hiring process more transparent by removing names and questions regarding personal characteristics from job applications before they are passed to the hiring managers. Training should be provided to line managers to support them in talking about and resolving issues concerning diversity and inequality. Employers can also support programmes that ensure people from ethnic backgrounds are given equal access to mentorship and progression.
There have been calls for ethnicity pay gap reporting to be made mandatory, much like gender pay gap reporting (which is, arguably, what prompted the UK government to launch a consultation on this in October 2018). The government has not yet formally responded to the consultation, which ended in January 2019. However, the government has accepted the Commission on Race and Ethnic Disparities’ recommendation that ethnicity pay gaps should continue to be reported, albeit on a voluntary basis. It is clear that this research, and other developments, are increasing the pressure for government action on ethnic wage differentials in the workplace (read more about other developments in our previous blog here).