Most employers face barriers in collecting data to calculate ethnicity pay gap

Businesses feel gathering information would be ‘too intrusive’ 

More than half (51 per cent) of employers feel they face barriers when it comes to collecting ethnicity data, which means they could face problems calculating their pay gap should it become a legal requirement. 

According to an Equality and Human Rights Commission (EHRC) report, which was published yesterday, a third (32 per cent) of businesses felt collecting ethnicity data was “too intrusive”, while a quarter (27 per cent) thought “employees did not want to share the information”. 

But Caroline Waters, EHRC’s deputy chair, said employers are putting the careers of their ethnic minority staff “at a disadvantage” by not using this data to identify and take action against unfairness in recruitment, retention and progression. 

"Collecting meaningful data will give employers the insight they need to tackle the underlying causes of inequality and ensure that disabled people and those from ethnic minorities enjoy a working environment that allows them to reach their full potential,” Waters said. 

The EHRC report – Measuring and reporting on disability and ethnicity pay gaps – also revealed that just 3 per cent of UK employers currently analyse pay data to explore any differences by ethnic group. 

While three-quarters (77 per cent) of employers said workforce diversity was a priority, only 36 per cent said they kept data on ethnicity. Of those who collected data on staff pay, less than a quarter (23 per cent) of employers said it could easily be broken down by ethnicity. 

Frank Douglas, CEO of Caerus Executive and a guest on People Management’s new podcast on race pay, said employers who ignore ethnic diversity and pay gap reporting in their businesses are “leaving money on the table”. 

“Ethnic pay gap reporting is about ‘what gets measured gets done’,” Douglas said. “In this case, it allows a board or senior executives to shine a light on how [the organisation] can increase profits, taxes collected by the government, innovation and, ultimately, staff that represent the communities and customers they serve.”

Denise Keating, CEO at the Employers Network for Equality & Inclusion, said “building an atmosphere of trust” is essential for employers who want to collect ethnicity pay data. 

“Data protection issues have recently been in the spotlight with the implementation of the GDPR, and it is crucial that employers allay employee concerns about why and how personal data collected for monitoring purposes is used,” Keating said. “Employers should be transparent and use monitoring to check how well their equality policy is working; analyse the effect of their policies and practices on different groups; and highlight possible inequalities and investigate their underlying causes.”

In February, the government asked Business in the Community (BITC) to carry out a review into employers’ approaches to the barriers faced by ethnic minority groups in workplace progression. In particular, the review will consider whether companies should be asked to report on their ethnicity pay gap, similar to the way large companies have been required to report on their gender pay gap

Commenting on the EHRC research, Sandra Kerr, BITC’s race equality director, said: “Mandatory reporting would remove the barriers to progression and help make the step change that is needed for BAME people and those with disabilities to thrive at work.”

The EHRC report also investigated disability pay gaps, revealing that 52 per cent of employers reported barriers when collecting data on disability and, like ethnicity pay gaps, only 3 per cent of all UK employers collected and analysed disability pay gap data.