Not the Right Time For Mandatory Ethnicity Pay Gap Reporting, Government Says

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Photo Credits: Mathieu Stern via Unsplash

Earlier this month, the government published a response to the ethnicity pay reporting consultation that concluded in 2019. The report stated that while ethnicity pay gap reporting is a valuable tool, it is not the appropriate mechanism for every employer. Hence, reporting will not be made mandatory and if employers wish to report voluntarily, they can use the guidance published in April 2023.

While the guidance to reporting has been welcomed, there is disappointment that reporting has not been made mandatory. To make it worse, this isn’t the first time the government has backtracked from their commitment to do the same.

The Need for Ethnicity Pay Gap Reporting

The ethnicity pay gap in the UK has been a persistent and concerning issue that highlights disparities in earnings and opportunities between different ethnic groups. And despite progress in addressing gender pay gaps, the ethnicity pay gap remains a significant challenge that demands urgent attention.

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Additionally, ethnicity pay gap reporting is not as straightforward as gender pay gap reporting. Tom Heys, a specialist in gender and ethnicity pay gap reporting, from Lewis Silkin says that. “[This is] partly because of the need to understand the different outcomes for different ethnic groups, the lack of information about employee ethnicity and the significant variations in the ethnic diversity of the local workforce.”

However, ethnicity pay gap reporting would enable policymakers and government bodies to develop more effective strategies and policies to tackle the issue. By analysing the data, they can identify sectors or regions with particularly significant gaps and tailor interventions accordingly. This may include promoting diversity and inclusion initiatives, providing training to reduce unconscious biases, and supporting programs that boost educational and employment opportunities for marginalized groups.

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Key Points for Employers

According to the report published by the government, around 9 out of 10 employers and organisations supported ethnicity pay reporting. So, if you are among the 91% that are supportive or are looking to change your mind, here are a few things to keep in mind:

  1. Don’t report with limited data: In order to have an accurate understanding of the ethnic pay disparities, it’s crucial for everyone to share data. Without everyone’s participation, the report will not be accurate as the results will be far from the truth. As an employer, step one would be to encourage the workforce to come forward.
  2. Familiarise yourself with the law: Revealing data such as race or ethnicity comes under personal data and is protected under UK GDPR. Hence, if employers want to report, they will need a proper document explaining the data collection procedure and reassuring employees that it follows UK GDPR rules. It would also help employers if they are transparent about the whole process with their employees.
  3. Provide adequate information within the report: The guidance published by the government mentions that offering a narrative along with the report will be helpful. Employers should look to include information such as an analysis of why a pay gap exists, how the study has been conducted and what efforts the company has taken so far.
  4. Start small if you have insufficient data: For a large number of employers, ethnicity pay gap reporting is an issue because of insufficient data. In such cases, it will help to report smaller disparities such as bonus gaps, or how different ethnicities are distributed in various parts of the company with varying pay.

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