Cost of living crisis disproportionately affecting ethnic minorities, research finds

Study reveals a higher number of racially diverse workers are struggling to pay their housing and energy costs compared to white counterparts

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Workers from ethnic minority backgrounds are being disproportionately affected by the cost of living crisis, with more than a third unable to cover their essential costs each month, research has shown.

A poll of 1,639 workers, conducted by People Like Us, found 34 per cent of professionals from racially diverse backgrounds said their salary was not enough to cover their mortgage or rent and energy bills, compared to 27 per cent of those from white backgrounds.

It also found a similar proportion of ethnic minority professionals were accumulating extra debt by borrowing money, compared to 30 per cent of white respondents.

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As a consequence of the rising cost of living, a third (34 per cent) of professionals from minority ethnic backgrounds were considering downsizing their properties to manage the costs, compared to just a quarter (24 per cent) of those from white backgrounds.

Similarly, nearly three in 10 (29 per cent) of professionals from ethnic minority backgrounds were also thinking about moving back in with family to save money, as opposed to 18 per cent of white counterparts. 

Sheeraz Gulsher, co-founder of People Like Us, emphasised the devastating effect the cost of living crisis was having on people from all over the UK, but especially on people from ethnic minorities.

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For this reason, he called on the government to reconsider making ethnicity pay gap reporting mandatory for companies, and called for employers to voluntarily measure their own ethnicity pay gap, arguing that reporting this data would “truly create huge strides in making a fairer and more equal society”.

“It’s a simple exercise that will genuinely help foster equality in companies of any size,” Gulsher added.

The research found nearly three-quarters (73 per cent) of all surveyed workers felt increasing costs were impacting their work life in some way, increasing to 85 per cent for workers from minority ethnic backgrounds.

More than a quarter (28 per cent) said it was affecting their performance at work, increasing to 36 per cent among people from a minority background.

When asked what would support them best to tackle the rising cost of living, the top three actions included lowering the energy price cap, mentioned by 41 per cent of respondents; reducing fuel tax (30 per cent); and imposing a windfall tax on energy companies (27 per cent). (The government has since announced several measures, including financial support for all energy bill payers, to help with the cost of living.)

Other suggested steps included raising salaries in line with inflation, mentioned by 27 per cent; and subsidising utility and internet bills for employees working from home (18 per cent).

A quarter of respondents said their employer has already increased salaries based on rising inflation (25 per cent). 

Khyati Sundaram, CEO of Applied, said the pandemic hit marginalised groups hardest of all, with ethnic minorities being disproportionately laid off, and that workers from an ethnic minority background were still twice as likely to be declined a pay rise,

She said employers needed to make job opportunities and pay equitable in order to improve people’s financial health.

“Salary transparency is essential to ensure all staff are paid and promoted fairly, regardless of their background," she said.

A separate People Like Us study from January revealed that employees from ethnic minority backgrounds were paid on average 84 per cent of what their white counterparts earn.

The same survey also found two thirds (67 per cent) of racially diverse working professionals said they have had reasons to believe that a white colleague doing the same job as them was on a higher salary, with 24 per cent saying they suspected the disparity in pay was up to £5,000.