Pressure mounts on Government to implement ethnicity pay reporting

Pressure is growing on the UK Government to take more effective action to address racial inequality. There have been a number of reports and enquiries on this subject in recent years, but in most cases little progress on implementation. Of these the consultation on ethnicity pay reporting, which closed in January last year, has probably attracted the least public attention, but might be one of the easiest – and quickest to implement.

In this context two intersecting developments have been particularly significant. The appalling facts of George Floyd’s death in Minnesota have resonated deeply across the UK and prompted numerous protests about racial injustice on this side of the Atlantic. At the same time uncomfortable evidence has been emerging of the disproportionate impact of the coronavirus on Britain’s Black and minority ethnic communities.

If this wasn’t enough, a petition to implement ethnicity pay reporting (started before Mr Floyd’s death) has recently reached 100,000 signatures, triggering a debate in Parliament in the near future, and a response from the Government on 26 June. It cited the “genuine difficulties in designing a methodology that produces accurate figures that allows for interpretation and action from employers, employees and the wider public”. It also said that it was “important that any reporting protects employee anonymity and avoids undue burdens on business.”

At its simplest, the proposal is to mirror the requirements of gender pay reporting, which requires employers with at least 250 workers to publish median and mean pay gap figures, as well as giving details of the distribution of men and women across pay quartiles. The main complicating factor is how exactly to report on race. What classification should be adopted and how granular should the ethnicity breakdown be?

It seems clear that to be effective some breakdown between different ethnicities will be required, since average hourly pay varies significantly not only across the five main ethnic categories identified in the 2011 census, but also within the 18 constituent sub-groups. However these difficulties do not appear insuperable, particular for the largest employers.

Clearly the mere publication of figures will not by themselves change the broader inequalities identified by the Government’s race disparity audit in 2017. But this is an action that could be taken relatively easily. If the experience of gender pay reporting is anything to go by, it would at the very least help shine a spotlight on the significantly lower rates of average pay that many ethnic groups experience, one of the issues identified in the audit.

Employers can therefore expect some action on this soon, and may want to consider further improvements to their pay transparency on a voluntary basis as part of their response to these recent developments. This year’s pausing of the gender pay reporting requirements in response to the coronavirus crisis does not mean that extending pay reporting to cover other protected characteristics is off the agenda.

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