MPs criticise government for refusing to introduce mandatory ethnicity pay gap reporting

Experts advise that firms should take a wider approach to workplace inclusion because reporting without action will have ‘no meaningful impact’

Credit: Thomas Barwick/Getty Images

A group of MPs has criticised the government’s decision not to introduce mandatory ethnicity pay gap reporting as being “nonsensical”.

In a statement, the cross party Women and Equalities Committee (WEC) said the decision to forgo mandatory reporting requirements indicated a lack of “will” on the part of the government, rather than a lack of resources.

“The government's nonsensical response – which claims that gathering the necessary data would be too difficult, and then promptly outlines how this could easily be addressed – is disappointing,” said Caroline Nokes, Conservative MP and chair of the WEC.

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“It makes clear that what is lacking in this administration is not resource or know-how, but the will or care to foster a fairer and more equal society,” she said.

The government had already made clear earlier this year that it did not intend to introduce mandatory pay gap reporting, saying in its response to the Sewell report into race and ethnic disparities in the UK that it favoured a voluntary approach to reporting.

This renewed criticism follows the publication of the government’s response the WEC recent report on ethnicity pay reporting, in which it called for the current rules on gender pay gap reporting to be used as a model for mandatory ethnicity pay gap reporting.

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In its response, the government cited concerns first raised in the Sewell report that using the current gender pay gap reporting rules as a template created “significant statistical and data issues”.

It said this was because while gender was a “binary” characteristic for the purposes of pay gap reporting, ethnicity pay gap reporting would need to take into account numerous categories.

The government also reiterated that it believed mandatory reporting “may not be the most appropriate tool for every type of employer”, and that it would instead support organisations that wanted to voluntarily report by providing guidance.

However, Sandra Kerr, race director at Business in the Community (BITC), said firms “cannot afford to wait any longer” for mandatory ethnicity pay gap reporting to be introduced. 

“Without government legislation, BITC research found we could be waiting until the year 2075 for employers to publish their ethnicity pay gaps,” she said, adding that most employers see reporting requirements as a tool not a burden.

“With the cost of living crisis affecting the lowest-paid workers, including many from Black, Asian, mixed race and other ethnically diverse people, introducing mandatory reporting is more important now than ever,” Kerr said.

Kate Palmer, HR advice and consultancy director at Peninsula, also said diversity and inclusion initiatives were “imperative”. But, she cautioned, reporting without action would have no meaningful impact on individuals, and businesses needed to consider their wider approaches to workplace inclusion including reviewing recruitment strategies and providing unconscious bias training for managers. 

Ian Moore, managing director of Lodge Court, also advised there was “nothing to stop forward-thinking businesses from reviewing and sharing details of their pay distribution against many elements including ethnicity, age and geography.”

Providing insights into pay distribution should be something that businesses “embrace as part of their normal business rhythm”, he said, adding that to not report could “imply there is an issue that is being overlooked or swept under the carpet”.