There have been renewed calls for mandatory ethnicity pay gap reporting after a Labour study reveals that the gender pay gap is more acute amongst ethnic minority women

The current position

As things currently stand, ethnicity pay gap reporting is not a mandatory requirement for UK employers. The UK Government in March confirmed that it had no plans to change this, citing practical, administrative and statistical issues with mandating it, including not wanting to impose an additional burden on employers whilst they recover from the Covid-19 pandemic.

Ethnicity pay gap reporting therefore remains voluntary, but research by the Chartered Institute of Personnel and Development (CIPD) in September 2021 revealed that only 13 FTSE 100 companies voluntarily publish this information. This is set against a backdrop of a growing movement in favour of ethnicity pay gap reporting, including calls from the Women and Equalities Select Committee for the Government to mandate this by April 2023.

Although the Office of National Statistics’ (ONS) annual review in 2019 revealed that ‘most of the minority ethnic groups analysed continue to earn less than White British employees’, the scale of the issue was largely unknown until now.

New analysis by the Labour party

Fresh opposition to the Government’s stance has recently emerged following analysis of ONS data by the Labour Party, in which median hourly pay data was studied to calculate the percentage difference in hourly earnings between employees by gender. This analysis revealed that the ethnicity pay gap is wider for ethnic minority women, in some cases by 31% (for Pakistani women).

The Fawcett Society introduced the concept of ‘Equal Pay Day’: every year it marks the day that the average female worker stops earning in comparison to her male counterparts, highlighting the extent of the gender pay gap. Last year this day fell on the 18th of November. Through analysis of ONS data, Labour have plotted where this day would have fallen for women of different ethnicities, giving an insight into the intersectionality of the issue.

For Black Caribbean women, Equal Pay Day fell on the 26th of October, for Black African women it fell on the 27th of September, for Bangladeshi women it fell on the 19th of September and for Pakistani women it fell on the 8th of September, more than two months earlier than Equal Pay Day for the average female worker.

In light of this, Labour have called on the Government to back its mandatory ethnicity pay gap reporting policy, arguing that this comes at a time where people are already struggling given the cost-of-living crisis, and that this exacerbates racial inequality in the UK. In addition, in a recent speech to the Trades Union Congress, the leader of The Labour Party, Keir Starmer, has stated that Labour would introduce mandatory reporting on ethnicity pay gaps, if the party was elected into power.

What can employers do

Voluntary ethnicity pay gap reporting is encouraged amongst employers – actively publishing this data will provide more transparency around the issue and in turn spur active efforts to level the playing field and foster a culture of diversity and inclusivity in the workplace.

The Government was due to publish guidance on how to comply with these requirements in Summer 2022, but this is yet to be seen. In the absence of any specific guidance or legislation, the CIPD has issued voluntary guidance.

For further information on existing requirements and useful considerations informing the decision to implement ethnicity pay gap reporting, see our previous post.

If further discussion of ethnicity pay gap reporting would be helpful, or you would like guidance on how to implement it, please do get in touch with your usual contact within our team or with Kathryn Dooks.

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