Sewell Report says age, location and sample sizes make ethnicity pay gap reporting unreliable

Despite a petition to make ethnicity pay gap reporting compulsory, the report said it should be optional

The controversial Sewell report, which has been hit with claims that it denies racism, also covered ethnicity pay gap reporting and said it must remain optional for organisations as factors like age, small sample sizes, and location makes compulsory reporting problematic.

The Minister for Equalities Kemi Badenoch MP recently gave a statement to the House of Commons in response to the Government’s publication of the report, also known as the Commission on Race and Ethnic Disparities.

Badenoch’s statement

Badenoch said the report had been misconstrued by those that thought it denied the existence of racism: “This report makes clear the UK is not a post-racial society and that racism is still a real force which has the power to deny opportunity and painfully disrupts lives.

“That is why the very first recommendation of the Commission is to challenge racist and discriminatory actions. The report calls on the Government to increase funding to the Equality and Human Rights Commission to make greater use of its compliance, enforcement, and litigation powers to challenge practices or policies that cause unjust racial disadvantage or arise from racial discrimination.”

She also referred to the abuse the Commissioners have received since the publication of the report: “It is wrong to accuse those who argue for a different approach as being ‘racism deniers’ or ‘race traitors’. It is even more irresponsible – dangerously so – to call ethnic minority people racial slurs like ‘Uncle Toms’, ‘Coconuts’, ‘House slaves or House Negroes’ for daring to think differently.

“Such deplorable tactics are designed to intimidate ethnic minority people from their right to express legitimate views. This House depends on robust debate and diversity of thought. Too many ethnic minority people have to put up with this shameful treatment every day, as some of my fellow MPs and I know too well. This House should condemn it and reprimand those who continue to do so.”

The Commission on Race and Ethnic Disparities – the report

The ‘Commission on Race and Ethnic Disparities’ was set up by the Government but is independent. The areas it covered included ethnic inequality in poverty, education, employment, health, and criminal justice.

Published on March 21, 2021, it claimed to “set out a new, positive agenda for change” via the use of “detailed quantitative data and qualitative evidence” to discover why inequalities exist.

Its recommendations, the Government hopes, “will improve the quality of data and evidence about the types of barriers faced by people from different backgrounds,” which “will help to inform actions and drive effective and lasting change.”

The report’s stance on ethnicity pay gap reporting

One of its recommendations was that employers that choose to publish their ethnicity pay figures should also publish an “action plan” to outline why disparities exist and their strategy to improve them.

They also said that “reported ethnicity pay data should be disaggregated by different ethnicities to provide the best information possible” and that account should be taken of “small sample sizes in particular regions and smaller organisations.”

Despite last year’s petition to make ethnicity pay gap reporting mandatory, a petition that reached 130,567 signatures meaning it can be debated in parliament, the report said they believed “that ethnicity pay gaps should continue to be reported on a voluntary basis and that the government should provide guidance to employers who choose to do so.”

The report recommended that that the Department for Business, Energy and Industrial Strategy (BEIS) help guide organisations and support them in ethnicity pay gap reporting.

Supporters of making ethnicity pay gap reporting mandatory point to gender pay gap reporting, which has been made compulsory for organisations to help reach pay parity for women.

They believe that mandatory reporting will help create the data which is currently lacking in the workplace, to show inequalities through the lens of race and ethnicity, where employers will be held accountable for bridging the gap and creating a fairer workplace, just as they’re being tasked to do with gender inequality.

However, the report said that ethnicity pay gap reporting can be problematic due to the unreliability of sample sizes: “If an employer with 250 employees (the threshold suggested in the 2018 BEIS consultation on ethnic pay gap reporting) reports a gender pay gap, on average they will be comparing 125 men with 125 women.

“If they report an ethnicity pay gap as well, on average they will be comparing 225 White employees with 25 ethnic minority employees. Any findings from such a comparison will be unreliable and make it impossible to look at the workforce stratified by the 18 ONS ethnicity classifications.”

The report also said that geographical location plays a factor: “So many employers around the country simply do not have enough ethnic minorities for the recording sample to be valid.

“For example, any employer in the Lake District can expect 98% of its candidate pool to be White. An employer there with 300 staff could then expect to have on average just 6 ethnic minority employees.”

Age, is also a barrier to effective ethnicity pay gap reporting it added: “Those from ethnic minority groups are more likely to be younger, meaning they have not yet had the opportunity to reach the peak of their careers. In order to account for this, firms would have to control for age, which makes sample sizes smaller.”

To read ‘The report of the Commission on Race and Ethnic Disparities’ click here. Or click here to read Badenoch’s full statement to the House of Commons.
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