House of Commons Committee calls for mandatory ethnicity pay gap reporting

Reporting the ethnicity pay gap is a step in the right direction for equality, say the MPs

A new report released by the House of Commons Women and Equalities Committee asks the Government to introduce legislation that would require large companies to publish their ethnicity pay gap data.

Reporting the ethnicity pay gap should be mandatory, and is the first step to addressing pay disparities between employees from different ethnic backgrounds, said the cross-party group of MPs.

They believe there are clear incentives to make ethnicity pay gap reporting mandatory. Research estimates that addressing race inequality in the UK labour market could boost the UK economy by £24 billion a year.

While gender pay gap reporting has been mandatory for companies with over 250 employees since 2017, no such condition exists to monitor pay disparity for workers of different ethnicities.

The report recommends mandatory ethnicity pay gap reporting be in place by April 2023; it also asks the Government to provide firms with data protection guidance and an explanation of how the rules will be enforced. The report also calls for legislation to require businesses to publish an accompanying statement and action plan, encouraging employers to take accountability for pay gaps and steps to address them.

However, the Committee acknowledged the challenges, including the smaller sample size of ethnic minority groups instead of the rough 50:50 gender split of the workforce, raising anonymity issues in smaller firms.

The report is a strong response to the Government’s delays on the ethnicity pay gap reporting issue; in 2018, the Department for Business, Energy and Industrial Strategy launched a consultation that recognised it was time to take it seriously. While this closed in January 2019, the Government has yet to publish a response. They have two months to respond to the House of Commons Committee report.

Chair of the Women and Equalities Committee, Rt Hon Caroline Nokes MP, said: “The Government’s failure to move forwards on ethnicity pay gap reporting is perplexing. We already have the systems and structures in place to start reporting on the ethnicity pay gap, as well as a clear impetus- tackling inequality benefits not only marginalised groups but the whole economy. The Government has no excuse. It seems that all that is lacking is the will and attention of the current administration.

“Last week, the Government made bold promises to ‘Level Up’ geographically. Time and again, it proves itself to be blind to the importance of levelling up within our communities and addressing long-standing disparities along the lines of protected characteristics. By taking this small step, the Government would demonstrate its commitment to working with business to reduce inequality.”

Darren Hockley, Managing Director at E-learning firm DeltaNet International, said: “It’s great to see the new report from the House of Commons Women and Equalities Committee calling on the Government to introduce legislation for ethnicity pay gap data. Since the gender pay gap reporting legislation became mandatory, it has forced organisations to consider their actions and now the same needs to be done to support ethnic minorities.

“This call for action is a step in the right direction to improving racial equality in the workplace. It will give organisations the push they need to review their pay structures and question themselves if they are doing enough to address the pay gap.

 “Organisations must understand the benefits of diversity and inclusion, and this means everyone, regardless of ethnicity, are getting paid their worth. For organisations to retain their best talent and ensure their business continues to prosper, business leaders must address all pay gap issues, including gender and ethnicity. Business leaders ought to undertake unconscious bias and diversity and inclusion training to ensure everyone within their business are not under-represented and paid below their worth.”

To read the report in full, click here.

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