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Finally, companies could be forced to reveal their ethnicity pay gap

Theresa May has announced a consultation that could force companies to reveal ethnicity pay gaps, as well as gender pay gaps. It’s about time, says Radhika Sanghani

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By Radhika Sanghani on

By now, most of us know about the gender pay gap. The government even has a web page entirely dedicated to explaining how it aims to reduce the gender pay gap – currently at 9.8% in the UK – detailing the legislation it launched last year.

But that’s not the only pay gap affecting people today – there’s also the ethnicity pay gap.

Last year, the government’s Race Disparity Audit found that Asian, black and other ethnic groups were disproportionately likely to be on a low income. In the police force, just 1% of non-white officers are in senior roles, while in NHS England, 18% of white job applicants shortlisted got the job compared with 11% of ethnic minorities.

Theresa May commissioned that audit and vowed to do more. A year later, she’s following up on that promise, and has announced a consultation looking into whether it will be beneficial to force companies to reveal their ethnicity pay gaps, in a similar way to how section 78 of the Equality Act 2010 works now. Under this newly implemented law, companies with more than 250 employees are required to publish the salaries of their male and female staff. The same could soon happen with ethnicities.

“Every employee deserves the opportunity to progress and fulfil their potential in their chosen field, regardless of which background they are from,” said May. “But too often, ethnic-minority employees feel they're hitting a brick wall when it comes to career progression."
She’s right. Legislation forcing companies to reveal what they pay ethnic-minority employees in comparison with white staff is exactly what we need to solve this issue. Ethnicity pay gaps have been going on for too long, and the lack of data or transparency around the area means it has been allowed to continue.

The real answer to eliminating the gap comes with transparency – in exactly the same way we’ve seen with the gender pay gap

There's also a “snowball effect” that comes into play when two or more protected characteristics are subject to discrimination – like being a woman who belongs to an ethnic minority. The intersectional issue is real and companies need to investigate whether their female staff of colour are suffering because of this double discrimination.

But, now, it looks like things are going to change, firstly with this consultation and, secondly, with a Race At Work Charter set up by May.

The charter has been created with Business In The Community and asks businesses to sign up – thereby promising to increasing recruitment and career progression of ethnic-minority employees. It’s a good first step – anything that holds companies to account when it comes to greater equality and representation is positive – and it’s already been signed by huge organisations like Saatchi & Saatchi, KPMG and the Civil Service.

But the real answer to eliminating the gap comes with transparency – in exactly the same way we’ve seen with the gender pay gap. The fact that companies like the BBC have been forced into revealing exactly what they’re paying male and female staff has been the catalyst behind change. In just one year, the BBC’s pay gap fell by a fifth to 8.4%, after it was publicly shamed for paying men higher salaries than their female counterparts.

In business, the threat of national scrutiny makes a difference. No company wants to be labelled as discriminatory and sexist – or constantly have their name associated with having the highest gender pay gap. It’s why there have been so many efforts, in recent years, for companies to lower their pay gap as much as possible, and why women now feel more entitled to demand their worth.

The same needs to happen with the ethnicity pay gap. David Isaac, chairman of the Equality And Human Rights Commission, explains: "Extending mandatory reporting beyond gender will... give employers the insight they need to identify and remove barriers to ethnic minority staff joining and progressing to the highest level in their organisations."

Only when the right data and information exists can companies actually start to make progress in terms of equal pay and representation – and the public can start to hold them accountable for the way they treat their female and ethnic-minority staff.


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