Employment

MPs want large companies to report their ethnicity pay gap figures

Under the recommendations businesses would also have to publish an action plan on how they will tackle the disparity.

Employees from Black, Asian, mixed-race and minority ethnic backgrounds earn 16 per cent less compared to their white peers, according to a recent study. Image: Fauxels from Pexels

MPs want big firms to start producing ethnicity pay gap reports within the next year to address existing inequalities.

Large companies should be made to report their ethnicity pay gaps by April 2023, finds a new report published by a cross-party group of MPs. 

A report from the Women and Equalities Committee found ethnicity pay gap reporting would be the “first step” to addressing inequalities in pay between employees from different ethnic backgrounds. 

Chair of the committee Caroline Nokes questioned the government’s “failure to move forwards on ethnicity pay gap reporting,” calling the lack of action “perplexing”.

She said: “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.”

The government ran a consultation on the introduction of mandatory ethnicity pay reporting in 2018 but is yet to publish any proposals. A petition to introduce legislation was debated in parliament, but no government response followed.

The report finds that a pay gap is an “indicator for employers to identify, understand and address trends in ethnic disparities across their own workforce”. It also calls for the legislation to require businesses to publish an action plan on how they will tackle the pay gap.

It has been mandatory for employers with over 250 employees to publish their gender pay gap since 2017. The figures show that the gender pay gap has increased during the pandemic to 15.5 per cent.

MPs on the committee also acknowledged that reporting ethnicity pay gap data would be more complicated for employers to do than with gender, particularly in companies that had low percentages of ethnic minority employers. 

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Conservative MP Philip Davies was the only member of the committee to vote against the recommendations. 

Davies has previously dismissed any need for ethnicity pay gap figures, telling the committee: “They’re meaningless, aren’t they? Because they don’t actually tell you about all the very complicated differences there are within different ethnicities, it’s literally just a very basic, pointless, white versus non-white…”

Business in the Community’s race director Sandra Kerr gave evidence in the debate last month and was taken to task by Davies for not knowing the ethnicity pay gap at her own organisation. He told her that “white men at Business in the Community are paid 21 per cent more than Black men.”

After the meeting, Kerr told The Big Issue: “We’ve always been honest that ethnicity pay gap reporting is not a silver bullet, but it is a step in the right direction to ensure that employers are aware of the issues in their organisations.”

Responding to the report’s findings, Kerr said that it was great that the committee recommended the legislation and that “businesses are ready and waiting” for the government to make it law

However she cautioned that “reporting this data isn’t the sole answer to solving the inequalities that have been plaguing the UK’s workforce for far too long”. 

Kerr added: “embThe calls for employers to be legally required to publish narratives and action plans beside the data is just as important as the data itself. By employers being required to do this, it will ensure that they publicly outline how they plan to address any inequalities facing current and future employees in their work force.”

A government spokesperson said: “We want to ensure everyone, whatever their background, has equal opportunity to succeed and achieve on merit.

“We are considering the findings of the Commission on Race and Ethnic Disparities independent report, which included recommendations on ethnicity pay reporting, alongside feedback to our consultation on this issue. We will set out our response to this – as well as the Women and Equalities Committee report – in due course.”

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