Call for ethnicity pay gap reporting to be mandatory

The Chartered Institute for Personnel and Development says ethnicity pay gap reporting should be mandatory for larger employers from 2023.

A black woman speaking at a work meeting


Just 13 FTSE 100 companies have reported their ethnicity pay gap in their current annual report – 10 for the first time, according to the Chartered Institute for Personnel and Development, which is calling for reporting to be mandatory for large employers from 2023.

The moves comes just before next week’s parliamentary debate on the need to introduce Mandatory Ethnicity Pay Reporting.

The CIPD has launched a guide to help employers and HR professionals navigate ethnicity pay reporting, from data collection through to analysis and reporting the results. It wants to see not just reporting being made mandatory, but also the requirement to publish a clear narrative and action plan, noting that “numbers without a narrative are less likely to drive real change”.

And it recommends that employers should publish reports based on a uniform set of defined statistics similar to those used for the gender pay gap, but with two additional data points on the proportion of their total UK workforce from ethnic minorities and the proportion of employees who have disclosed their ethnicity.

Peter Cheese, chief executive of the CIPD, said: “Ethnicity pay reporting is an important lever for businesses and their stakeholders 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.  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. Some companies just report their data while others report a commitment without sharing the data behind it.

“We know that gender pay gap reporting has driven greater transparency and accelerated progress, and we believe the same is needed for ethnicity pay reporting. Mandatory reporting of data, and the associated narrative that shows understanding of the data and the actions being taken to improve, for both ethnicity and gender pay, will help create fairer workplaces and societies and kickstart real change.”

Previous CIPD research has found that while most employers (77%) believe that ensuring workforce diversity is a priority, only 36% collect and analyse data to identify differences in pay and progression for employees from different ethnic groups.

Meanwhile, PwC has revealed that fewer than a fifth of its staff come from a working-class background, with the analysis also showing that staff in this bracket are typically paid 12% less than colleagues. The discrepancy between earnings for those in higher and lower socio-economic classes is greater than the median ethnicity and gender pay gaps at the firm, with only the disability pay gap wider than PwC’s class pay gap. While 80% of PwC’s UK workforce shared details of their socio-economic backgrounds, disclosure fell short compared with gender and ethnicity disclosure levels of 100% and 97% respectively.

And data from the Chartered Insurance Institute’s Insuring Women’s Futures initiative shows the average pension pot for a 65-year-old woman in the UK is £35,800 – just a fifth of the average 65-year-old man’s, while recent analysis by Aegon found that a woman in her 30s who takes two years’ maternity leave and returns to work part time could miss out on up to £50,000 in retirement savings.

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