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A new report from the Women and Equalities Committee calls on the Government to make it mandatory for larger companies to report on their ethnicity pay gap in addition to their gender pay gap.
Reporting the ethnicity pay gap should be mandatory and is the first step to addressing pay disparities between employees from different ethnic backgrounds, according to a report from the Women and Equalities Committee.
It states that there are clear incentives to extend gender pay gap reporting to ethnicity, which many companies already voluntarily report on. For instance, it points to research estimating that addressing race inequality in the UK labour market could boost the UK economy by £24 billion a year. It argues that companies who currently report gender pay gap figures are ‘already well resourced’ to also report on ethnicity and says this should be brought in for employers of over 250 employees by April 2023.
The report is based on evidence taken from business and employment experts and notes the challenges presented by the mandate – notably, the smaller sample size of ethnic minority groups as opposed to the rough 50:50 gender split of the workforce, which raises anonymity issues in smaller organisations. It therefore calls for a clear explanation of how new rules will be enforced and states that the Government must provide employers with data protection guidance.
The Committee also calls for the legislation to require businesses to publish an accompanying statement and action plan, allowing employers to account for pay gaps and outline steps to be taken to address them. Currently there is no requirement for employers to publish an action plan or analysis of their gender pay gap figures.
Caroline Nokes, Chair of the Women and Equalities Committee, 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.”