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If You Can’t Measure It, You Can’t Improve It – Ethnicity Pay Gap Reporting

If You Can’t Measure It, You Can’t Improve It – Ethnicity Pay Gap Reporting 

National figures from the Office of National Statistics for 2019 reported an ethnicity pay gap of 2.3% across England and Wales. This figure however differs considerably across regions, for instance, there is a 23.8% Ethnicity Pay Gap in London (the largest), 12.7% in Yorkshire & Humberside, 10.3% in Scotland and 1.4% in Wales (the smallest). This means that on average, workers from systematically excluded and institutionally oppressed ethnic groups earn less than their white colleagues in these regions.

Ethnicity Pay Gap Day (8th January) was launched in 2021 by Dianne Greyson as an opportunity to raise awareness of the differentials in pay for Black, Asian and Minority ethnic groups and to encourage employers and employees alike to pause and reflect on the unfair disparities in pay and to further encourage dialogue that’ll push the government to take action on mandatory reporting of it.

Consequently, a lot of workplace debates have and are taking place about this topic and the much-awaited debate was held in the House of Commons to introduce mandatory ethnicity pay gap reporting. Read the transcript of the debate here. This debate captured some of the arguments against or key challenges for ethnicity pay gap reporting and concluded disappointingly that measuring ethnic minority pay gaps is complex compared with gender pay reporting.

Some of the challenges included complexities with ethnicity data collection – Organisations fear low disclosure rates as reporting ethnicity data is entirely voluntary and anonymous, regional differences in distribution of ethnic groups across the UK as well as may affect reported figures.

According to this PwC survey, 67% of 100 large UK businesses surveyed representing approximately 1 million employees now collect ethnicity data and 23% of respondents are also calculating their ethnicity pay gap. This is a good step, however, a number of organisations still do not collect ethnicity data or are collecting it wrongly.

cup with a computer It is important to remember that the ethnicity pay gap remains a key indicator of DEI progress and collecting and measuring meaningful data provides an opportunity for businesses to understand their workforce better, and, to analyse the specific underlying causes of inequality for employees of minoritized ethnicities.  Simply put, what is not measured cannot be improved.

Last year we shared a number of actions businesses can take to make a start on voluntary reporting which largely revolves around collecting and understanding diversity or demographic data.

Addressing data collection challenges to ethnicity pay-gap reporting:

  • Identify the business areas with low response rates.
  • Create an aligned internal communications plan: – How and why data is being collected – Where it will be held – How it will be used
  • Make data collection ‘business-as-usual’ via: – Moments in standard processes (e.g. recruitment) – Special communication issues to add reminders.
  • Collaborate with employee networks where they exist.
  • Role-modelling by senior executives is an important engagement tool

Guidelines to ethnicity pay gap reporting:

In absence of legislative backing and clear government guidelines, The CIPD has recommended organisations voluntarily compile and publish annual ethnicity pay reports based on the following key components:

  • a uniform set of eight commonly defined statistics to profile pay by ethnicity
  • a supporting narrative to explain the nature and causation of any pay differentials and gaps by ethnic group evident in their statistics
  • an action plan of initiatives defined to reduce and remove any such gaps over time.

In conclusion, ethnicity pay reporting is much needed to tackle discrimination in the workplace and a lot of work needs to be done to address this. This will involve senior leaders and businesses supporting the campaign and holding their organisations to account.  While there is no mandatory requirement yet to publish information on ethnicity pay gap, #ethnicitypaygap day reminds us of the reasons to keep the momentum and urge all businesses to start taking the right steps to towards this including reporting now instead of waiting for it to be legislated.

Susan Abumere, Race Equality Consultant, the Clear Company

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