Companies could soon be forced to publish their ethnicity pay gap under measures to be considered by a new commission into racial inequality.

Boris Johnson, this week confirmed the Commission on Race and Ethnic Disparities would reconsider current legislation which only requires organisations to publish a disparity in gender pay.

It comes as a petition calling for mandatory ethnicity pay gap reporting for UK firms with 250 or more staff has reached more than 100,000 signatures, meaning it will be considered for debate in parliament. The review from the Government will be ‘data-driven’ rather than ‘ideology-driven’.

Ethnicity pay

A consultation on Ethnicity Pay Reporting (EPR) carried out by the Department for Business, Energy & Industrial Strategy (BEIS), law firm Eversheds and the Equality and Human Rights Commission (EHRC) ended in January 2019, and there has since been little progress.

Only 11% of employers are currently capturing ethnicity and pay data – unsurprising given there are so few executive directors of colour in UK businesses able to champion the cause.

Currently, just 9.8% of FTSE 100 board members are black, Asian or minority ethnicity (BAME). There are only 19 BAME executive directors across the entire FTSE 100, all of whom are male. This represents just 5.8% of the total number in the UK’s elite boardrooms, reveals the DiversityQ FTSE Board Diversity Report 2020.

Benefits of diverse talent

Nicole Sahin, Founder and CEO at Globalization Partners: “Research shows that ethnic minority groups continue to be underrepresented on UK business boards. However, the findings reinforce that those organisations that have a high percentage of diversity financially outperform their competitors. I’ve seen first-hand the powerful results that occur when people with different perspectives work together to create business solutions.”

“When team members of different ethnicities or gender are part of a team where they can share their viewpoints, businesses quickly realise what a diverse talent base can do for the company. It has been proven time and again that companies with employees who are diverse in both inherent and acquired traits (gained from life and work experiences) are more likely to achieve market growth. It’s a little harder for executives to find people outside of their network, but doing the hard work upfront has a multiplicative impact on the bottom line of the business.

“Companies we work with generally see the benefits of diverse teams because we make it fast and easy for them to expand globally. By hiring local people on the ground in various countries, our clients can sell more easily into overseas markets or truly understand their third-party vendors better. At first, they’re overwhelmed by the idea of hiring in a new country, but fairly quickly, they realise that taking the leap to hire local talent in-market, is by far the best way to do business across borders.”

Practical steps

Companies need to create a level playing field for career advancement and development for all employees – whatever their ethnicity. Ethnicity pay gap reporting is a crucial step in driving career progression – helping business to assess any ethnicity pay gaps and put in place necessary steps to close them.

It is no longer ok to say, “it’s too difficult to collect ethnicity data because people aren’t willing to disclose”. Businesses must get better at speaking about race at work; developing campaigns to encourage employees to share their ethnicity, and creating strategies to improve BAME representation from entry-level to the boardroom.

There are practical steps businesses can take to close their ethnicity pay gap, including

• Lead from the top to champion race equality across the organisation and improve how they attract, hire and promote BAME employees
• Create inclusive company cultures where all employees feel confident to disclose their ethnicity        
• Encourage open, inclusive conversations about race at work
• Widen education on inclusion which recognises an individual’ whole identity
• Recognise that the individual demographics within the BAME cohort have different lived experiences

Stand up for change

Agata Nowakowska, AVP EMEA at Skillsoft: “While progress is underway for pay equality, it’s by no way complete. Now the focus has turned to organisations to publish their ethnic pay gaps, which is a move in the right direction. The scrutiny faced by organisations such as the BBC for having such a huge discrepancy in gender and BAME pay scales has brought a welcome light to this issue. In fact, 2020 has already seen headlines on how the BBC presenter Samira Ahmed successfully won a case against the BBC over unequal pay. We need to see more of this.

“What can we do to speed up change? Organisations need to stand up and address this issue head-on. It shouldn’t take an organisation to be ordered by Government legislation to address the ethnic pay gap issue finally. Those with BAME backgrounds should not have to question if they are being paid the same amount as a white colleague with the same role and responsibilities. If companies really care about equal pay – they should know that offering equal pay is a benefit to everyone, regardless of gender or ethnic background.”