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Time to step up on Ethnicity Pay Gap reporting

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Posted by Asha Charles on 23 April 2019

Time to step up on Ethnicity Pay Gap reporting

HR Reward | Pay Transparency | Reward Consultancy | Pay Fairness | Measuring pay | Employee communications | Analytics | BAME reporting

Recent research suggests that Black, Asian and ethnic minority employees are losing out on £3.2bn a year in wages compared to white colleagues doing the same work (Source: The Resolution Foundation).

This wage gap is alarming and speaks to the uncomfortable truth that non-white employees still face inequity at every stage of the employee lifecycle. Research from the EHRC suggests people ‘from an ethnic minority background are more likely to experience discrimination in recruitment, promotion and pay reward decisions. They are also more likely to be in part-time, lower-skilled, and/or lower-paid work, and in jobs with shorter contracts.’  

As with the Gender Pay Gap, the government hopes that requiring organisations to publicly report their wage differentials will shine a light on the issue and make progress towards closing the gap. They’re currently considering different options on how best to frame Ethnicity Pay Gap (EPG) reporting requirements, given that:

1. As a rule, UK employers do not routinely collect ethnicity data, and,
2. Categorising ethnic identity is a highly complex and subjective question. 

These difficulties mean that collating and analysing these data sets will be a lot harder than the binary categories involved in Gender Pay Gap reporting.  So today I’m going to focus on what we as HR professionals can do now to prepare for EPG. 

First, creating a baseline on your current ethnicity pay situation means you can understand the problem as it stands now, and measure the impact of positive action. With a consistent approach to reporting, you can benchmark and measure progress by comparing yourself to other employers and learning from them.

But how do you go about collecting the right data in the first place? 

There is no legal obligation for individuals to disclose which ethnic group they identify with. It’s much more common in the US, but UK employers have traditionally shied away, possibly because it feels like too much of a personal question.

Many employees also express concerns about how the data will be used, and some feel, quite rightly, that a multi-faceted ethnic identity doesn’t always fit into a tick-box. 

Therefore, organisations need to put significant effort into understanding what works and encouraging employees to share information on ethnicity for positive reasons.

Examples of how this can be done are: 

  • Explaining to employees clearly why you are collecting the data and that all declarations are confidential
  • Build the collection of information into the recruitment process, so that new joiners are asked to provide the required information
  • Making the data easy to collect e.g. through online forms
  • Providing a ‘prefer not to say’ option to help avoid people giving false/incorrect declarations

The government recognises that some businesses will need to do a lot of groundwork to be able to publish ethnicity data. However, we are becoming increasingly ethnically diverse. The British labour market is thriving, with more people in work than ever before and organisations should reflect the face of modern Britain. 

We need to step up on inclusion and diversity and the introduction of Ethnicity Pay Gap reporting is a strong way forward. 

If you’d like to discuss BAME reporting, please get in touch with me at asha.charles@innecto.com or call 020 3457 0894.

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