Companies in Britain would have to report pay disparities among ethnic groups in their workforce under a rule being considered by Prime Minister Theresa May’s government.
The idea is a response to a study published last year that showed significant pay disparities between ethnic minorities and their white counterparts in Britain.
It comes after the government began requiring large companies to report pay disparities between men and women.
“Too often ethnic minority employees feel they’re hitting a brick wall when it comes to career progression,” May said in a statement.
The Race Disparity Audit, a survey of 24,000 workers last year, found that white British adults were much more likely to be employed and to own their own homes than people from ethnic minorities.
A file image of city workers in London. Source: AAP
The audit found that the unemployment rate for black, Asian and other ethnic-minority people, at 8 percent, was nearly double that of white British adults, at 4.6 percent. It also found that people who identified themselves as Pakistani, Bangladeshi or black received the lowest average hourly pay among ethnic groups.
“Overall, the findings will be uncomfortable,” May said when that report was released. “But it’s right that we’ve identified them, shone a light on them and we need to confront these issues that we have identified.”
When Britain’s government started requiring companies with over 250 employees to report their gender pay gaps last year, it found that average pay for men was higher than that for women at more than three-quarters of the 10,000 businesses that reported. Overall, it found the gender pay gap in Britain was just over 18 percent. Many hope that as the data accumulates and is publicized, businesses will be forced to do more to reduce the gap.
Sandra Kerr, the race equality director at the charity Business in the Community, said in a statement that the Race Disparity Audit “showed that all too often ethnic minority staff are still encountering significant disparities at work.”
The government said it would invite employers to offer ideas on how, exactly, to report on pay by ethnicity.
Their input will influence how such broad and complex data would be collected. At the moment, businesses in Britain report the racial background of their employees only on a voluntary basis, and such data reporting is relatively rare across Europe, where data protection rules may limit how much information about their employees the companies can store.
Some concerns about data collection were hinted at by the Confederation of British Industry.
“Reporting must be done in a way that is supported by both businesses and employees, to recognise the wide range of ethnic groups and legitimate staff concerns about intrusiveness where sample sizes are small,” said Matthew Fell, the organisation’s chief policy director for Britain.
Still, collecting such data would be just the beginning of a much longer process to establish why disparities exist.
“While this comes with challenges, it is essential, as we believe that what gets measured gets done,” said Suki Sandhu, who has founded an executive search firm and a membership organisation focused on championing diversity. “When organisations see in clear figures that they have a problem, there is no other option but to act on it.”
Larger organisations with significant human resources departments would have a much easier time collecting the data than smaller businesses, which may not already have the software in place, said Sarah Gregory, a partner focused on diversity and inclusion at the law firm Baker McKenzie. So the government may consider applying reporting requirements only to larger organizations, such as those with 250 employees or more, as it did with gender pay gap reporting.
“There are lots of businesses in the UK that don’t currently monitor ethnicity data, and you can’t report if you don’t have the data,” Gregory said. “Even when you put that monitoring in place, it takes a while for people to respond. That is one of the challenges.”
But, she added, “it does galvanise action in looking at why these issues exist.”
The consulting firm PwC is one of the companies that have voluntarily started tracking and analysing pay by ethnicity, using the same methodology it does for the gender pay gap. Last year, it reported its pay for black, Asian and minority ethnic employees was 12.8 percent lower than that of its white employees, and the company attributed that entirely to the lack of ethnic minorities at senior levels and a higher concentration in junior roles.
“While consultations like today’s show progress is being made and awareness is rising, far more needs to be done,” Laura Hinton, PwC’s chief people officer, said in a statement. “Reporting on ethnicity pay gaps may reveal harsh truths but that’s a real trigger for action.”
