Race pay gap: Firms could be forced to reveal figures

Race pay gap: Firms could be forced to reveal figures

Employers may be obliged to release their ethnic pay gap figures under plans to be unveiled by the UK Prime Minister, Theresa May, to increase minority representation in the workplace.

This comes after an audit last year showed significant disparities in promotion and pay opportunities for different ethnic groups. 

London’s Mayor, Sadiq Khan, launched the audit and found that the city’s minority ethnic public employees were paid up to 37% less than their white counterparts on average.

Simonetta Longhi notes in her IZA World of Labor article that “racial wage differentials can be apparent even in the absence of wage discrimination, since minority groups segregate in poorly paid occupations and lack career progression.”

This correlates with Theresa May’s words when announcing a consultation on mandatory pay reporting: “Every employee deserves the opportunity to progress and fulfil their potential in their chosen field, regardless of which background they are from, but too often ethnic minority employees feel they’re hitting a brick wall when it comes to career progression.”

The consultation will run until January, allowing businesses input into what information should be published. 

Public services, including the NHS, schools and police force, will be asked to create plans for increasing their proportion of ethnic minority leaders.

Theresa May also unveiled plans for a Race at Work Charter, aimed at increasing recruitment and career progression of ethnic minorities. 

MediaCom boss, Karen Blackett, has been appointed the government’s Race at Work champion, and the charter has been signed by high-profile public bodies and businesses including Lloyds Banking Group, KPMG, NHS England, the civil service, and Saatchi & Saatchi. 

The reporting of race pay gaps is intended to mirror elements of the gender pay gap regulations, with the mandatory reporting being applied to all firms with 250 employees or more.  

Matthew Fell, chief UK policy director at the CBI, welcomed today’s consultation, saying: “Transparency can be a catalyst for action in tackling the ethnicity pay gap, in the same way that is has been so successful for gender.”

A government review by Baroness Ruby McGregor-Smith, found in 2017 that greater workplace diversity could boost Britain’s economy by £24 billion a year. 

This is supported by a comment from Simonetta Longhi in her IZA World of Labor article: “The skills and talents of racial minorities may be under-utilized if they are prevented from reaching their potential and contributing fully to society. Ultimately, reducing racial wage inequalities is likely to lead to a more cohesive, productive, and egalitarian society."

Read more articles on diversity in the workplace here