Report calls for mandatory reporting of ethnicity pay gap

Black, Indian, Pakistani and Bangladeshi employees in Britain face an annual pay penalty of £3.2bn, according to new analysis by the Resolution Foundation.

The Foundation says that the scale of pay penalties facing BAME (black, Asian and minority ethnic) workers means Government should make employers report on their BAME pay gap in the same way they do no their gender pay gap.

The Foundation notes that BAME workers have long earned less, on average, than white male workers, and that these ‘pay gaps’ are in part due to differences in workers’ qualification levels and the types of jobs they do.

However, its analysis controls for this and converts these pay gaps into pay penalties by taking into account factors such as a worker’s occupation, contract-type, industry, education level and degree class in its calculations.

The analysis reveals that even after accounting for these differences, BAME workers still face significant pay penalties compared to white workers with identical characteristics doing the same types of jobs.

When looking at non-graduates, Pakistani and Bangladeshi men face the biggest pay penalties at £1.91 an hour (14 per cent), while black male non-graduates face a pay penalty of £1.31 an hour (9 per cent). The pay penalties for female non-graduates, while lower, are still significant at 55p for Bangladeshi and Pakistani women (5 per cent), 61p for black women (6 per cent), and 44p for Indian women (4 per cent).

The analysis shows that having a degree does not end the pay penalties facing BAME workers and that black male graduates face the biggest pay penalties of all groups included in the research, with an average penalty of £3.90 an hour (17 per cent). Pakistani and Bangladeshi male graduates face a pay penalty of £2.67 an hour (12 per cent). Among female graduate workers, black women face the biggest pay penalty of £1.62 an hour (9 per cent).

The Foundation estimates that 1.6m employees are affected and that collectively they have been losing out on an average £3.2bn a year (based on data collected between 2007 and 2017).

The Foundation says that, although collecting data on ethnicity and pay gaps presents more challenges than for gender, given the smaller number of workers, gathering it is essential to providing an accurate picture. So far only 3 per cent of employers voluntarily report their ethnicity pay gap.

The report was based on groups who responded as having ‘Other’ ethnicity, including those who identified as having a mixed ethnicity and ‘Other Asian’ including Chinese.

Meanwhile, a survey by the Young Women’s Trust has found that one in five workers age 18 to 30 are illegally paid less than the national minimum wage. The survey of more than 4,000 young people found 20 per cent of young women and 16 per cent of young men said they had been paid less than they were legally entitled to. The figure increases to 25 per cent, or one in four, among young black people.  Four in 10 young women say it is a “real struggle” to make their cash last to the end of the month and one in four say they are in debt “all of the time”.

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