In October 2018, the UK government launched a consultation on mandatory ethnicity pay gap reporting, stating that it was “time to move on ethnicity pay reporting”. The consultation outlined proposals to make ethnicity pay gap reporting mandatory (much like gender pay gap reporting) and sought employers’ opinions on matters such as: the method of reporting; the size of employers that should be targeted by the requirement; and how to alleviate any challenges associated with collecting and analysing ethnicity pay information.
Although the consultation closed on 11 January 2019, the government has not yet formally responded. There have, however, been other developments short of a formal response. In 2020, a petition for the introduction of mandatory ethnicity pay gap reporting received 130,567 signatures and Parliament debated the topic on 20 September 2020. Lord Boateng of Labour, the first black member of Cabinet, put forward the debate. It was acknowledged that the poverty rate for black, Asian and minority ethnic (BAME) groups is twice as high as that of white groups. Furthermore, it was argued that not only would mandatory ethnicity pay gap reporting potentially be a “game changer” for those groups, but it would also benefit the UK economy. Research has estimated that having full representation of ethnic minority workers in the labour market could boost the economy by £24 billion a year. The members taking part in the debate called on the government to take action and set out guidance for employers.
There have also been developments outside parliament. In October 2020, Legal & General Investment Management (the UK’s biggest fund manager) wrote to FTSE-100 companies to warn that there will be “voting and investment consequences” for firms that fail to diversify their senior leadership by 2022. In July 2021, the FCA published a consultation on its proposals to amend the Listing Rules and Disclosure and Transparency Rules to, amongst other things, require UK companies to publish data on the gender and ethnic diversity of their boards and most senior executive management.
Most recently, on 12 January 2022, the House of Commons’ Women and Equalities Committee examined the case for mandatory ethnicity pay gap reporting. Whilst acknowledging the challenges of collecting ethnicity data, the Committee has recommended that the government introduce legislation to make ethnicity pay gap reporting mandatory for large companies by April 2023.
When the government will respond to its 2018 consultation is currently unknown, with one MP stating that it will respond “in due course”. However, what is clear is that there is pressure building for the government to take action.