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Black male graduates experience £7,000 ‘pay penalty’, report finds

18 Jul 2018 By Lauren Brown

Employers urged to treat tackling racial discrimination as a priority 

Black male graduates experience earning on average 17 per cent less than white men, the equivalent of £7,000 when working full-time, a report published today has found. 

Think tank the Resolution Foundation’s Opportunities Knocked? report also found black female graduates face a ‘pay penalty’ of 9 per cent – or roughly £3,000 on a full-time basis – compared to their white peers. 

Significant pay gaps between non-graduate white workers and non-graduate black and ethnic minority workers were also uncovered. For example, black men typically earn £2 less an hour than white men. For Pakistani and Bangladeshi men, the gap widens to £4. 

“While much of the debate around the disadvantages that ethnic minorities face rightly focuses on schools and universities, our research shows that we should focus just as much on what is happening in the workplace,” said Kathleen Henehan, research and policy analyst at the Resolution Foundation. “For that reason, tackling racial disadvantage and discrimination should be a priority for businesses as well as schools and universities.”

The pay disparities come despite significant improvements in educational attainment and employment over the past 20 years. The research discovered that between 1996-97 and 2016-17, the number of black men with degrees increased by 24 per cent and the number of black women with degrees increased by 28 per cent. 

But Denise Keating, chief executive of the Employers Network for Equality & Inclusion, told People Management she was concerned the “damaging” belief that improving diversity and inclusion takes a long time “encourages employers to be put off”. 

“There are actually a number of steps organisations can implement today that will make an instant difference,” she added. “Visible, authentic statements and commitments from senior leaders show that the organisation is serious about changing its culture. 

“Often the excuse that there simply isn’t any diverse talent is due to blinkered views of what talent looks like, which contributes to the pay penalties faced by BAME employees.”

Meanwhile, Debbie Epstein, senior inclusion & diversity consultant at Inclusive Employers, said pay discrimination could be avoided by benchmarking starting salaries to market indexes and refusing to let them be set outside of agreed boundaries. 

“Processes for agreeing bonuses, rewards and discretionary payments need to be designed so they are transparent and decisions are justified against agreed criteria, screening out bias wherever possible,” she added. “Having targets for reducing the gap can help to focus the minds of managers when they are involved in pay negotiations.” 

Sandra Kerr, race equality director for Business in the Community, suggested employers should make sure they were not unintentionally favouring white candidates for fast track and high potential programmes, which would ultimately result in higher paying jobs. 

Kerr also recommended regular pay audits, adding: “[They] help employers to hone in on issues such as under-representation of BAME employees at manager level and take actions to change this, such as increasing access to high-level projects and stretch assignments, which also help career progression.”

The think tank’s report converted pay gaps into ‘pay penalties’ to account for differences in the characteristics of workers, such as age, qualifications, region of work, hours worked and type of contract. 

In its 2017 general election manifesto, the Conservative Party pledged to extend gender pay gap reporting, which is required annually for employers with 250 or more employees, to cover ethnicity. However, such measures have not yet been implemented. 

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