Government urges employers to publish ethnicity pay gap as it launches equality review

Research will assess employer progress in tackling barriers to BAME career progress

Employers should publish breakdowns of their workforces by race and pay band, to address structural and historical biases that black and minority ethnic (BAME) employees face, the government said, as it launched a new review today (21 February) into how employers have tackled barriers to ethnic minority progression at work. 

The Department of Business, Energy and Industrial Strategy’s (BEIS) newly-commissioned report will scrutinise actions taken by employers, one year after the 2017 McGregor-Smith Review into race in the workplace.

That report, led by Ruby McGregor-Smith, former CEO of Mitie Group, found that the economy could benefit from a £24bn-a-year boost if BAME employees were given the same opportunities as their white counterparts. 

Recommendations included encouraging employers to publicly disclose their actions on improving racial equality in the workplace, and that the government provide free online unconscious bias training for employers. 

“It is unacceptable that people are being held back in the workplace because of their ethnic background – we want to make sure that the economy works for everyone, so people have the same opportunities to progress and can achieve their true potential,” said business minister Andrew Griffiths in a press statement today. 

“This new research will establish what steps employers have taken to haul down workplace barriers and harness the talent of a diverse workforce, helping us to assess if further action is needed.” 

The review, to be carried out by charity Business In the Community (BITC), will reveal whether companies are reporting on their ethnicity pay gap – a key recommendation of the McGregor Smith Review – which called on companies with more than 50 employees to publish a breakdown of their workforce by race and pay band. 

“Data shows these pay disparities exist – if you are a black graduate coming out of university you will get paid less than a white counterpart,” Sandra Kerr, race equality director at BITC told People Management

“We know salary is compounded to your future economic prosperity, and that this could be worth £24bn a year to the UK economy if we get it right, so it’s good for the UK if we can ensure not only that people are being paid at the correct level, but are operating at the correct level for their skills and qualifications in organisations.” 

“Despite this I anticipate employers will not be reporting on their ethnicity pay gaps, because they are currently too busy getting to grips with gender – but they may as well do both”, said Kerr. 

“There is a growing representation of people from ethnic minority backgrounds coming into the workforce, so we need to tackle these disparities, and data is the first place to start. We must understand the challenges in order to action plan, address the causes, and ensure talent progression.” 

BITC will also scrutinise what actions employers are taking to tackle cultures of bullying and harassment towards BAME people in the workplace. 

Findings will outline the progress employers have made, and establish whether any further action is needed to ensure workplaces are inclusive.

“People are still not really comfortable talking about race – it’s not something they want to discuss,” Kerr said. 

“Our 2015 Race at Work Survey asked people from all ethnicities whether their organisation was comfortable talking about race - and people were more likely to answer ‘no’. 

But if you can’t talk openly about it, look at those challenges around pay gaps, and ask why there are no BAME people at the top of your organisation, it will be very hard to find solutions,” said Kerr.  

The announcement follows a December 2017 report from the CIPD which found 20 per cent of BAME employees reported that discrimination had been a factor in the progress of their career, compared to one in 10 white British employees. 

The survey of over 1,200 UK employees suggested many employers still fail to collect basic workforce data on their employees, and do not take into account the complex and interconnected nature of issues that affecting the career progression of BAME workers. Almost half of black employees and 42 per cent of mixed-race employees said their career to date had failed to meet their expectations. 

The CIPD urged employers to be conscious of the structural and cultural barriers that maintained and enabled workplace inequalities in their organisation, and echoed McGregor-Smith’s recommendation that workforce data be broken down by race and pay band. 

It urged the government to offer clear guidance for employer-led action on racial inequality - with practical solutions and case studies to help employers understand how to ‘lead from the front’. 

“The drive for lasting change must come from the business community,” a BEIS spokesperson told People Management. “We will carefully examine the research findings of this report, which will help us assess the actions needed from the government.”

Patrick White, innovation manager at Freshminds, said that while some consider the moral case for diversity enough, “the mounting evidence of diversity’s commercial impact has seen it move from the passion project of a few individuals to a boardroom and investor level business concern.”

“But the challenge organisations seek to overcome is the element of unconscious bias in the recruitment process”, he said. Unconscious bias has been identified as a driver in racial inequality in recruitment and within the workplace.