The ethnicity pay gap has been shed light upon through new publications by the UK Government. On 17th April, the Government’s Race Disparity Unity, Equality Hub and the Department for Business and Trade put together and published new guidance for ethnicity pay reporting. The aim of the report is to aid employers who want to analyse and report any gaps in ethnicity pay. Not only will this allow employers to bridge the gap but also build transparency in the workplace.
Understanding Ethnicity Pay Gap
Reports by the Office of National Statistics show that there are certain ethnic groups with more gross earnings when compared to the rest. According to the guidance, many ethnic minorities earn less than an average white British employee. However, that does not mean there are no non-white ethnic groups that do not earn more.
To analyse and understand this gap, the government has published this ethnic pay gap report. Using this as a guide, employers will be able to see how much each ethnic group earns. As a result, this will also allow them to not just close pay gaps, but even justify the disparities if necessary.
This guidance is quite welcome at this stage since gender pay gaps have to be reported, considering it is a statutory requirement. Moreover, since gender pay gaps are primarily between two groups, analysing data on it is straightforward. Ethnic groups, on the other hand, are more diverse and varied, making it difficult for accurate reporting.
This is why guidance on the ethnicity pay gap has been published. It explains how to collect the data, gather necessary payroll information, make calculations, analyse the result and make necessary changes. And while ethnic pay gap reporting is not yet mandatory, this guidance is a great step towards it.
What Does the Guidance Say?
There can be a number of factors contributing to the ethnic pay gap such as having preconceived notions about the professional capabilities of a certain ethnic group. And while discrimination based on ethnicity is unlawful, research by multiple organisations as well as the UK government shows that the UK workforce is still struggling with inclusivity.
Hence in order to collect accurate data, the guidance urges employers to check within their organisation which ethnic groups are being recruited in lower paid roles, if people from certain ethnic groups are being unable to progress, if certain ethnic groups gravitate towards certain roles etc. Additionally, it informs employers of the reason for the internal and external exclusion of ethnic groups.
In terms of collecting data, the guidance advises employers to let the employees reveal their ethnicity but also give them the option to opt out of answering. Using a uniform standard is crucial so that the data collected is consistent and easier to understand. Moreover, complying with GDPR rules is also necessary; hence, it will be crucial to disclose exactly how the data will be used to maintain transparency.
Response and Possible Issues
The general response towards the report being published has been mixed. Diversity Adviser, Sandra Kerr, said that it is good that the government is acknowledging the pay disparity between different ethnic groups. However, she believes that this is just the start. In order to close the gap, businesses with more than 250 employees would have to mandatorily report ethnic pay gaps.
In addition, legal experts believe that reports around ethnicity could lead to a possible discrimination claim. Businesses may also not be keen on collecting ethnicity-related data as it could expose actual disparities within the organisation. Even if an organisation is not actively widening the pay gap, the reports can be used to compare different employers, and potentially paint the low-paying employers in bad light.
All in all, it is just a matter of time before this guidance comes into force and pushes employers to collect relevant data. Irrespective of the mixed opinions, it is a positive first step towards bridging a gap that has plagued the workforce for many years.