UK MPs debated on Monday whether the UK should make ethnicity pay gap reporting mandatory.
As CMI highlighted in Moving the Dial on Race in 2020, the overall pay gap between White and ‘ethnic minority’ groups is at its lowest level (2.3%) since 2012 (5.8%).
Whilst this might sound like great progress, there is a variation for specific ethnic groups. For example, the largest pay gap (+16%) is between the White British group and the Pakistani group. Whether an employee is born in the UK or not continues to be a key pay gap driver.
In a recent CMI survey, 80% of managers agreed that large organisations should be required to report their organisation's ethnicity pay gap.
CMI’s Delivering Diversity report highlighted the lack of ethnic representation at senior levels. In reference to a CMI survey, the report noted that 54% of respondents said fewer than 5% of their team were Black, Asian, Mixed or ‘minority ethnic’ and 83% said fewer than 5% of their board represented diverse ethnic groups.
The UK Government conducted a consultation on introducing mandatory employer-level ethnicity pay reporting in 2018-19. An official consultation response has not yet been published, but the Government has since indicated that it also ran an exercise to test voluntary reporting methodologies with a broad range of businesses to better understand the complexities outlined in the consultation using real payroll data.
The suggestion is that this exercise raised genuine difficulties in designing a methodology that produces accurate figures and allows for interpretation and action from employers.
Ann Francke, Chief Executive of the Chartered Management Institute, said:
“While there has been some progress on the ethnicity pay gap in recent years, companies across the UK are still not as representative as they should be. In particular, there continues to be a woeful lack of women of colour in positions of management and leadership. With gender pay gap reporting being compulsory for larger organisations, there simply isn’t a good enough excuse for not making ethnicity pay gap reporting a requirement too. At the CMI we’ve developed a practical blueprint for how this can be done, including providing clear and detailed guidance applicable for every business.
“As we emerge from the pandemic, leaders have a once-in-a-generation opportunity to build back more inclusively. And the evidence is clear - businesses that are truly inclusive and representative are more productive organisations. The Government should look to introduce mandatory ethnicity pay reporting in the Employment Bill as a matter of social justice, but also to ensure the UK retains its competitive advantage.”
