British Government urged to make ethnicity pay gap statistics mandatory

By Derek du Preez

February 8, 2022

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(Image by Gerd Altmann from Pixabay )

The British Government has been criticised by MPs on the Women and Equalities Committee for dragging its feet on mandating larger companies to collect and publish data on wage disparity between different ethnic groups. 

Large companies - those with more than 250 employees - already have to collect and publish gender pay gap data. The Committee is now calling for ethnicity pay gap data to be made mandatory by April 2023. 

The MPs behind the report have suggested that the current administration isn't committed to reducing inequality in the workforce, despite all of its ‘levelling up' rhetoric. 

This agenda goes back a number of years. For instance, in 2018, the Department for Business, Energy and Industrial Strategy launched a consultation in which it recognised that 'it is time to move to ethnicity pay gap reporting'. 

The consultation then closed in January 2019 and the Government has yet to publish a response. 

The MPs recognize that whilst there are some challenges involved in collecting and comparing ethnicity data, versus data on gender, the British Government already has the systems and structures in place to broaden its reporting requirements. 

Also, any claims that GDPR is a blocker to collecting such data, or that there is a lack of ‘statistical robustness' for pay data by ethnicity, should be placed within the context that a number of firms already report such data publicly.

The number of employers that are pursuing integrated D&I strategies and report ethnicity pay gap data has increased from 11% in 2019 to 19% in 2021 in the UK - many of which are technology firms - highlighting that this isn't an unrealistic demand. 

In reality - as diginomica has reported previously - collecting broader diversity and inclusion data (beyond gender stats) is just the first step in achieving greater inequality in the workforce. Data brings disparity to the fore, but greater awareness and action is required by leadership teams to drive real change. 

In fact, the Committee seems to understand this, and suggests that the legislation should also require companies to publish an accompanying statement and action plan. It argues that publishing data in itself doesn't necessarily deliver what's needed and that organizations should be outlining how they are making moves to address pay inequality, as it relates to ethnicity. 

The Committee also notes that, besides it being the right thing to do, the UK labour market could also benefit from a £24 billion a year boost if it addressed race inequality. As diginomica has noted time and time again, companies that reflect the diverse communities that they serve are typically more profitable and create better products. 

Chair of the Women and Equalities Committee, Rt Hon Caroline Nokes MP, said: 

The Government's failure to move forwards on ethnicity pay gap reporting is perplexing. We already have the systems and structures in place to start reporting on the ethnicity pay gap, as well as a clear impetus- tackling inequality benefits not only marginalised groups, but the whole economy. The Government has no excuse. All that is lacking, it seems, is the will and attention of the current administration. 

Last week, the Government made bold promises to 'Level Up' geographically. Time and again it proves itself to be blind to the importance of levelling up within our communities and address long-standing disparities along the lines of protected characteristics. By taking this small step, the Government would demonstrate its commitment to working with business to reduce inequality.

Tech industry in focus 

Given that publishing such data isn't yet mandatory or required by legislation, you can imagine that it is quite difficult to get a comprehensive overview of wage gaps between different ethnic groups in the UK. 

However, some firms have attempted to provide snapshot data that highlights the extent of the problem. 

For example, a recent report by PwC's consulting arm, Strategy&, explored broadly how different ethnicity groups experience pay disparity. For instance, it found that there is a 4.1% pay penalty experienced by UK-born ethnic minorities, whilst this jumps to a 10.% penalty experienced by non-UK born ethnic minorities. 

Furthermore, PwC found that white and Black Caribbean women are the lowest female earners, earning as little as 70p for every £1 earned by the average White British man. For full-time workers, this amounts to a difference in earnings of around over £8,000 a year.

But women from ethnic minority backgrounds experience systematic structural inequalities across the labour market that see them overrepresented in insecure jobs, and at a higher risk of being underemployed, as well as facing discrimination in the workplace.

Cord - a messaging tool that gives job hunters direct access to tech companies in London - did its own research recently and found that black engineers are facing a significant pay gap compared to their white and Asian colleagues. 

Cord notes that the average Asian engineer expects a salary of £78,454, while the average black engineer expects a salary of £62,772 and the average white engineer expects a salary of £71,076. This represents a difference of almost £15,000 between the average black and Asian engineer - a 24.98% difference. White engineers earn, on average, 13.22% more than black counterparts.

In addition it found that amongst developers, black developers are the lowest-paid in back end, full stack and front end positions, with Asian developers the highest-paid in all three positions. The disparity is greatest in back end, where Asian developers earn 23.25% more than black developers, and lowest in front end, where Asian developers earn 13.91% more than black counterparts.

My take

Whilst some of this data is useful, and does indicate a clear disparity in pay in the workplace - particularly between black colleagues and their peers - it is nowhere near comprehensive enough to draw strong conclusions. Which is why the mandated reporting required by government is so essential. What's needed is common structures, methodologies and reporting functions so that bodies such as the Office for National Statistics can provide a thorough breakdown of data that could genuinely guide diversity strategies in the enterprise. The government should introduce this legislation as soon as possible.