Ethnicity pay gap reporting – what’s next

Mon 20 Sep 2021

Ethnicity pay gap reporting – what’s next

Debate in Parliament today will examine whether ethnicity pay gap reporting should be mandatory. The move follows on from a 130,000-signed petition calling for the change. The debate will be led by Petitions Committee member Elliot Colburn MP, and MPs from all parties are invited to take part. The House of Lords is due to debate on this very topic on 25 October.

Facts and the moral implication of supporting the need for racial equality in the workplace abound. For example, the Race at Work Charter by the Business in the Community (BITC) published its 2020 report and found that one in 16 people at senior levels in the private and public sector organisations are from an ethnic minority background. 

The report built on a survey conducted last year and concluded that only 33% of employees said they have a senior-level champion for diversity and inclusion in their workplaces.

The race equality agenda has been in the limelight since the release of the McGregor-Smith review in 2017. Entitled 'Race in the workplace', Baroness Ruby McGregor-Smith explored the issues affecting black and minority ethnic (BAME) groups in the workplace across the UK.

The review concluded that achieving race equality is a boon to the UK economy and could bring a £24 billion per year boost to the GDP – that is £481 million a week. It also found that organisations with more diverse teams have 36% better financial returns.

Progress is slow

The Chartered Institute of Personnel and Development (CIPD) is one professional body championing the close of the ethnicity pay gap. It has urged policymakers to make it mandatory for all large employers from April 2023.

The CIPD first published its ethnicity pay data in the 2018–19 annual report and has since promoting disclosure of the ethnicity pay gap in the same fashion as the gender pay gap. 

Early this year, the CIPD's 2020 ethnicity pay report revealed some progress. The median and mean bonus pay gaps were 14.8% and 5.6%, respectively. Last year the figures were 20.4% and 15.5%.

CIPD's chief executive Peter Cheese described ethnicity pay reporting as a lever for businesses and their stakeholders and a tool to assess if and where inequality based on ethnicity exists in their workforce. "That's why we believe it is so important that businesses both capture and learn from this data," he explained.

Official figures

Employers currently collect data on gender and bonus pay gaps as well as quartile pay bands. The CIPD revealed in its latest official figures that 13 of the UK's top 100 listed companies are now reporting ethnicity pay gap. 

"While it's positive to see some organisations voluntarily report their ethnicity pay, it's clear that progress is slow and reporting is very inconsistent," added Cheese. "Some companies just report their data while others report a commitment without sharing the data behind it." 

A study by PwC conducted in September last year also found an increasing number of companies reporting pay gaps affecting BAME staff. The survey found that the majority of organisations do not calculate their ethnicity pay gap because of a lack of ethnicity data. These organisations pointed out GDPR concerns, low response rates, HR system capabilities or unease around questions about race and ethnicity.

The CIPD has urged employers to add median and mean pay gaps for their staff with Black and ethnic minority backgrounds and to report on the proportion of their total UK workforce from BAME. In this vein, the professional body released guidance to help employers measure and report their ethnicity pay gap.

Fostering a race-inclusive workplace requires trust in disclosure and a culture where diversity is supported and embraced by all members of the organisation. 

Anyone interested in supporting their ethnic minorities employees is invited to join Race to equality: Achieving Racial Inclusion at Work. Taking place on 9 December, the day offers a space for constructive and open discussion and an opportunity to explore the role of all members of staff in enacting change.

Just some sessions you don't want to miss:
  • Race to Equality: From policy to workplace practice
  • 'Good Diversity' workshop: Achieving best practice in the recruitment and development of ethnic minority staff
  • Lightning Session: Ethnicity pay gap reporting

Explore the agenda and secure your place today!

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