06 August 2019

Are you preparing for the anticipated ethnicity pay gap reporting legislation in the UK.  A consultation concluded in January 2019, and the Government is currently testing reporting options with employers. The hope is that legislation will be introduced so that the first snapshot reporting date will coincide with the 2020 snapshot dates for Gender Pay (31st March public sector and 5th April for all other companies).

In July the ONS published the first official statistics on the pay gap between different ethnic groups in England, Scotland and Wales, showing significant disparities between the averages paid to white British workers and those from other ethnic backgrounds. The findings were based on comparisons using the 10-category ethnicity breakdown were complex.

For the report the pay gap is calculated as the difference between the average hourly earnings of White British and other ethnic groups as a proportion of average hourly earnings of White British earnings. So a positive pay gap indicates an ethnic group is paid less than those employees categorized as White British, whilst conversely a negative pay gap indicates an ethnic group is paid higher. So there were three ethnic groups Chinese, Indian and Mixed/Multiple ethnic group which were paid higher on average than White British as shown below.

White Other  5%
Mixed or Multiple ethnic groups  -2.5%
Indian  -12%
Pakistani  16.9%
Bangladeshi  20.2%
Chinese  -30.9%
Any other Asian  4.0%
Black African, Caribbean or Black British  9.2%
Other ethnic group  9.2%

 

The ONS study also modelled different factors that may affect pay, for example, certain ethnic groups may be more inclined to settle in certain areas of the country and pay may differ between regions. One interesting observation in this was the difference in pay between UK born and non UK born employees. By comparing those who were born in the UK and those who were not, it may give us an idea of what sort of effect having a UK education and the higher likelihood of speaking English as a first language may have on those from an ethnic minority background.

Ethnic Pay Gaps

This study highlights the complexities of understanding pay differentials between ethnic groups which will present a challenge for employers. There is definitely some legwork to do for employers to prepare for this legislation. A  PWC report from March this year Taking the right approach to ethnicity pay gap reporting surveyed  significant employers in the UK and found 85% of employers have not undertaken any ethnicity pay gap reporting and 75% did not have sufficient data to undertake analysis.

So, in anticipation of the legislation what should you be doing now? 

  • Start your data preparation – understand what categories you store data on currently versus the 2011 census: 5 standardized ONS ethnic classifications.
  • Think about your communication strategy to employees – this will be hard to do if you have not shown a commitment to explaining your Gender Pay Gap for the last two year’s reporting.
  • Investigate what would you need to do to prepare for a Diversity Declaration Rate Campaign?
  • Run the numbers in advance of the legislation based on the current GPG statutory metrics to see where you stand. Looking at representation alongside this will help to contextualize the numbers.
  • Before reporting commences identify and address any Equal Pay issues based on ethnicity to avoid any own goals.
  • If you have started to analyze your talent pipeline for blockages and leakages based on gender do this and but now think about this from an ethnicity perspective.

To find out more about how Curo can help you with your preparations contact infor@curocomp.com

Posted by Ruth Thomas

Industry Principal, Curo.

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