Ethnicity pay gap as high as 20 per cent for some groups

Official figures suggest overall BAME pay gap has been unchanged for six years, as experts urge data gathering ahead of mandatory reporting

Almost all categories of black and minority ethnic (BAME) workers are paid less on average than their white British counterparts, official data has revealed. 

The Office for National Statistics (ONS) figures, published yesterday, showed that white British workers earned on average 3.8 per cent more than workers of other minority ethnicities, a figure broadly unchanged since 2013.

This rose to 20 per cent for some groups, including workers of Bangladeshi or Pakistani origin.

The report marks the first time the agency has analysed ethnicity pay gaps across the UK using earnings data from its Annual Population Survey.

The figures provide a stark backdrop as businesses prepare for the forthcoming introduction of ethnicity pay reporting, expected to be broadly similar to the gender pay reporting rules introduced in 2017.

A government consultation on the potential structure of ethnicity pay reporting closed earlier this year and, while the results have not yet been released, any system is expected to be based on the same pay quartiles that were used for gender pay.

It had been expected that the first reporting would take place in 2020, though this has not been officially confirmed.

Dr Jill Miller, diversity and inclusion adviser at the CIPD, said the first challenge for HR departments in ethnicity pay reporting was to gather the data, which required people to feel comfortable disclosing their ethnicity.

As with the gender pay gap, the next step would be to examine the causes of any pay gaps in the organisation, Miller said. “For example, what does an organisation’s recruitment data reveal about who is applying for different roles, who is hired, the rates at which people of different ethnicities progress up the organisation and why people are leaving?” 

Experts also highlighted the need for organisations to publish an accompanying narrative and action plan to provide context for the data, including outlining the steps their organisation was taking to address any pay gaps. 

Sandra Kerr, race equality director at Business in the Community, said businesses would not  be able to close their ethnicity pay gaps “without thoughtful, consistent plans”. 

“Ethnicity pay reporting gaps are important indicators which show how much work there is to do to make workplaces fair and equitable, and we want to hold businesses to account on this issue,” Kerr said.

“However, these figures have to be looked at in the context of the action plans and targets which set out how they intend to address the problems often linked to bias in recruitment and a need for increased access to progression opportunities.”

Yesterday’s ONS report found the UK workforce was 80 per cent white British, followed by “white other” (8 per cent) and black African, Caribbean or black British (3 per cent).

Bangladeshi and Chinese ethnic groups made up the smallest proportion of the UK workforce, at 0.7 and 0.5 per cent respectively. 

According to the data, Chinese and Indian ethnic groups were the only ones to be paid more on average than white British workers. Chinese employees earned the highest wages of any ethnic group in 2018 with an average hourly wage of £15.75, followed by Indian workers on £13.47 per hour. White British workers earned on average £12.03. 

The ethnic group with the lowest median hourly pay in 2018 was those of Bangladeshi origin, at £9.60 (20 per cent less than white Britsh workers), followed by workers of Pakistani origin at £10.

Kathleen Henehan, policy analyst of the Resolution Foundation, said BAME workers had made huge strides in closing gaps in education and employment in recent decades, but those accomplishments were marred by the barriers they still faced in terms of pay and progression at work. 

“Almost all BAME groups continue to face significant pay gaps compared to white workers. What’s more, these pay penalties hold even after accounting for workers’ qualifications, experience and the types of jobs they do,” Henehan said. 

“Having made significant progress on shining a light on gender pay gaps within firms through equal pay audits, the government should now extend this to look at pay gaps for BAME workers too.”

In 2017, the government published its Race in the Workplace report, setting out a range of actions for businesses and government to help improve employment and career prospects for BAME workers. According to the report, equal participation and progression across all ethnicities could add £24 billion annually to the UK’s economy.