Renewed call for action on ethnicity pay gap reporting

The Women and Equalities Committee this week heard renewed calls for mandatory ethnicity pay gap reporting.

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The success of gender pay gap reporting – despite room for improvement – has led to calls for pay linked to other protected characteristics to be similarly monitored and many employers have started doing this on a voluntary basis.

However, despite calls for action to make these mandatory, there has been little progress. A Women and Equalities Committee hearing this week heard how efforts to bring in mandatory ethnicity pay gap reporting have stalled since the McGregor-Smith review on race in the workplace in 2017.

Sandra Kerr, Race Director at Business in the Community (BITC), detailed how BITC worked with the Government in 2018 and 2019 on the review’s recommendations, including on ethnicity pay gap reporting. She said progress appeared to be being made, but everything had changed after the 2019 election and Covid. BITC has followed up with employers through its Race at Work Charter, which has 800 + signatories, and through an open letter to the Prime Minister in 2020 signed by 30 business leaders. BITC’s research shows support for the move with voluntary reporting of the gap gap rising from 11% to 19% since 2018.

Wilf Sullivan, Race Equality Officer at the Trades Union Congress, said the TUC believes that unless reporting is mandatory nothing much will change and he added that the slow progress to date underlines the need for regulation so that there is a level playing field. He emphasised that data collection should be accompanied by an action plan.

Matthew Percival, Programme Director of Skills and Inclusion at the Confederation of British Industry, said CBI members support ethnicity pay gap reporting for larger employers and added that collecting such data led to greater transparency. Meanwhile, Charles Cotton, Senior Performance and Reward Adviser at the Chartered Institute of Personnel and Development [CIPD] called ethnicity pay gap reporting an opportunity for employers to explore how they recruit, develop and promote people and said it is more holistic than equal pay audits which look at similar pay for similar jobs. It shows, for instance, if people from ethic minorities get stuck in lower paid roles and if there are barriers at other levels of organisations.

Action plans

All the organisations represented have voluntarily published their own ethnicity pay gaps. Conservative MP Philip Davies questioned the purpose of reporting, saying it just delivered a lot of “meaningless figures” and read out the pay gaps of the speakers’ organisations. However, as they pointed out, none had claimed to have solved the issue of pay gaps and all of them said their reporting was helping them to make progress.

Matthew Percival added that pay gap reporting is not just about ranking employers from worst to best based on a single statistic, but about encouraging employers to look deeper and explain what they are doing to address any inequalities identified. He added that jobseekers are increasingly looking at organisations’ record on diversity and inclusion and want to know that they are looking at the issue and taking action based on the data.

The speakers were asked about the message the decision to suspend gender pay gap reporting in 2020 had given employers. Sandra Kerr said many employers had had their figures ready, but decided not to publish because they were not forced to do so.  She felt this was short-sighted.  Percival said he felt that reporting should have been delayed for 2020 due to Covid, but not cancelled altogether because now there is now a year with no data. Wilf Sullivan said it sent a “worrying message” about whether tackling inequality is a priority for the government.

The speakers agreed that using the model of gender pay gap reporting for ethnicity pay gap reporting is a good idea – it keeps reporting simple and consistent. That includes making it mandatory for employers with over 250 employees.

However, they acknowledged that there are additional challenges when it comes to winning employees’ trust to disclose their ethnicity and ensuring that sample sizes are big enough to deliver useful data. For this reason, they suggested that bringing in mandatory reporting should be done with enough time to enable employers to explain to employees what the data would be used for. The CIPD has suggested that ethnicity pay gap reporting could be introduced in April 2023, with the first reporting deadline being April 2024. Kerr said guidance was available for employers who are worried about issues around data protection.



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