‘Long lag between ethnicity pay gap reporting and publication’

It could take until 2075 for companies currently capturing their ethnicity pay gap data to publish what their pay gap is, according to a report for Business in the Community. 

Its analysis, taken from the 2021 Race at Work survey, also found that unless the Government makes ethnicity pay gap reporting mandatory, it will take 23 years for businesses to know what their own ethnicity pay gap is.

It came as the government-commissioned Parker Review showed that almost nine in 10 FTSE 100 firms met boardroom ethnic diversity targets by the 2021 deadline. A similar target was set for FTSE 250 boards, with a deadline of 2024. However, despite the progress, just six FTSE 100 and 16 FTSE 250 chief executives come from a minority ethnic background, with just three minority ethnic chairs in the FTSE 100 and five in the FTSE 250.

BITC has been calling on the Government to introduce legislation that would require employers to publish their ethnicity pay gap. Some employers already publish their ethnicity pay gap alongside their gender pay gap, but numbers and the rate of growth in those numbers is small.

Experts hope that voluntary publication could increase the pressure on the Government to make reporting mandatory as it is for the gender pay gap and argue that publishing the figures keeps the issue in the public eye. Many have been calling for it to also be compulsory for employers to publish an analysis of their gender pay gap figures and action plans on how they will address them.

Sandra Kerr, Race Director at BITC, said: “Our research shows we could be waiting decades for companies to know what their ethnicity pay gap is unless the government intervenes and makes reporting mandatory. Businesses want action on this, they want to play their part to create a fairer and more equal society and ethnicity pay gap reporting is a vital part of that.

“And while it’s great to see an increase in the number of businesses capturing their ethnicity pay gap data, unless mandatory reporting is introduced, we could be waiting until 2075 for the companies currently capturing this data to publish what their pay gap is.

“We must be very clear though that reporting this data isn’t going to solve everything. Once ethnicity pay gap data is published with an action plan, this doesn’t mean that the work is done, it is only the beginning. Publishing this data ensures transparency but it also helps employers ensure that action is directed to where it is needed most.”

Meanwhile, on the gender front, the European Union has given initial approval to board quotas requiring that at least 40% of non-executive director roles or 33% of all board jobs are female by 2027. The proposed legislation would apply to companies that are listed or have at least 250 employees. Estimates indicate it could affect some 2,300 companies. The proposal does not, however, include strict sanctions for failure to meet such targets. The agreement in principle on the proposal by the bloc’s 27 member states’ employment and social affairs ministers allows them to begin talks on the plan with the European Parliament. “In October 2021, only 30.6% of board members and just 8.5% of board chairs were women. The gap between member states is wide,” the ministers said in a joint statement.

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