Number of UK companies reporting ethnicity pay gap halves in a year, data reveals

Legislation and guidance are ‘vital’ to addressing disparities, experts say, renewing calls for mandatory reporting rules

The number of organisations reporting on their ethnicity pay gap halved last year, research has revealed.

An analysis of company pay gap disclosures, compiled by HR DataHub, found just 64 UK organisations published their ethnicity pay gap in 2021. This was down from 129 in 2020, and even lower than 2019 when 98 organisations reported their data.

Since HR DataHub started collecting the data in 2018, just 170 organisations have at some point reported their ethnicity pay gap, and of these just one in four have reported their data every year.

The research looked for information on ethnicity pay reporting in company reports and on the websites and LinkedIn pages of hundreds of the UK’s largest companies.

Among the firms that did report their data last year, the median ethnicity pay gap fell to 10 per cent in 2021, down from 12 per cent the previous year.

David Whitfield, CEO and founder of HR DataHub, said reporting levels were “incredibly low” and called on the government to introduce mandatory ethnicity pay gap reporting.

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“The lack of any legislation around ethnicity pay gap reporting doesn’t just allow organisations to escape responsibility, but the lack of formal guidance also makes it tricky for companies to know exactly what to do,” he said.

“To reduce inequality, the government cannot allow for ethnicity pay gap reporting to be a choice,” said Whitfield.

Musab Hemsi, legal director and accredited specialist in employment law at Anderson Strathern, echoed that ethnicity pay gap reporting needed to be made mandatory, calling it an “important step to address pay disparities”.

“Pay gap reporting on ethnicity is not mandatory at present, and it is disheartening to see the number of businesses electing to report decreasing,” he said, adding that both legislation and guidance on how to report were “vital steps to addressing the issue and making a business an employer of choice in attracting and retaining diverse talent”.

The CIPD is among the organisations calling for the introduction of mandatory ethnicity pay gap reporting, and has recently produced guidance for organisations looking to voluntarily report their data.

Employers currently collect data on median and mean gender pay gap, median and mean bonus gap, bonus proportions and quartile pay bands, and the CIPD recommends that employers also publish these figures for their ethnicity pay gap, as well as the proportion of their total UK workforce from ethnic minorities and the proportion of employees who have disclosed their ethnicity.