Ethnicity pay gap lowest in almost a decade, official figures find

But experts warn overall progress in narrowing income disparity still masks significant differences between groups

The ethnicity pay gap has fallen to 2.3 per cent, down from 3.8 per cent in 2018 and the lowest since 2012, according to official data.

Figures from the Office for National Statistics (ONS) revealed that white British workers earned on average £12.40 per hour, compared to £12.11 for ethnic minority employees in England and Wales.

Abdul Wahab, diversity and inclusion adviser at the CIPD, said the figures showed organisations were making an effort to reduce pay gaps between ethnicities. “However, some groups still earn significantly less than white employees,” he said.

The data showed significant differences between ethnic minority groups, with most earning less than white British employees. Pakistani workers suffered the largest pay gap at 16 per cent, earning £10.55 an hour, while white Irish workers earned significantly more than their white British counterparts, at £17.55 an hour – a negative pay gap of 41 per cent.

Wahab said HR teams needed to collect data on the ethnicity of their employees, report ethnicity pay gaps, and review appraisal and promotion processes to ensure they were fair and transparent.

Suki Sandhu, founder and CEO of INvolve, said the data showed a step in the right direction. “[But] the overall figure masks a big disparity across the pay of different ethnic groups and also in terms of workplace experiences,” he said. “Even if pay is equal, which it isn’t, it doesn’t mean that ethnic minorities don’t have to overcome additional hurdles and prejudice in order to reach their pay level compared to white colleagues.”

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Sandra Kerr, race director at Business in the Community, added that celebrating these latest figures would be “premature at best”. She pointed out that people from black African, Caribbean, Pakistani and Bangladeshi backgrounds were more likely to be unemployed, and in some cases at rates three times higher, than people from white British backgrounds.

The ONS figures were drawn from the body’s Annual Population Survey data. The ethnicity gap is the difference between the average hourly earnings of ethnic minority employees and their white counterparts, and is not yet calculated on a company-by-company basis in the same way the gender pay gap is measured.

Differences in pay remained even after taking into account factors such as age, sex, marital status, children, qualifications, country of birth and location of employees, the ONS figures showed.

The gap was most pronounced, however, in London, at 23.8 per cent, and smallest in Wales, at 1.4 per cent. The data also showed ethnic minority employees aged 30 and over tended to earn less than their white counterparts, with a pay gap of 7.3 per cent, while those aged 16-29 tended to earn more, with a negative pay gap of 5.1 per cent. 

This disparity between the earnings gap of young and older workers showed “a lack of progression among the ethnic minority workforce”, said Wahab.

The latest figures came after research by PwC recently revealed that still fewer than one in four large companies (23 per cent) had calculated their ethnicity pay gap. Although this is a rise from one in 20 (5 per cent) in 2018, it showed that most large employers were still not measuring this.

The figures renewed calls for the introduction of mandatory ethnicity pay gap reporting, similar to that already in place for gender pay. A spokesperson for the Equality and Human Rights Commission said: “We have repeatedly said that mandatory reporting by ethnicity on staff recruitment, retention and promotion would… identify where there may be issues and help employers to tackle the barriers that ethnic minority workers face within the workplace.

“A diverse workforce benefits business. Better representation throughout an organisation means a wider range of views and experiences can be shared and built on, leading to better, more informed decision-making.” 

These calls were echoed by Kerr, who said: “We need the government to introduce a mandatory duty for companies to report on their own ethnicity pay gap and what they are doing to close it. Data can hide the truth or reveal it: the choice is up to us.”