Force Big Firms to Report Ethnicity Pay Gaps, Urge MPs

UK MPs have urged the government to force big businesses to report their ethnicity pay gaps in a bid to tackle glaring inequality.

Large firms should be legally required to publish data on their employees’ salaries by April 2023, stated Chair of the Women and Equalities Committee, Rt Hon Caroline Nokes MP, in a report published yesterday. Although legislation was introduced in 2017 making it compulsory for firms with 250 or more employees to report their gender pay gap, there is currently no legal requirement to disclose data for different ethnicities.

“The Government has no excuse for not tackling it. All that is lacking, it seems, is the will and attention of the current administration,” added Stokes. “By taking this small step, the Government would demonstrate its commitment to working with business to reduce inequality.” 

In fact, the latest data from HR DataHub reveals that only 64 companies across the UK actually reported their ethnicity pay gap in 2021; down from 129 in 2020. “That’s a 50% drop in just a year. Perhaps even more surprising is that only a mere four companies have reported year on year since 2018,” highlighted David Whitfield, CEO and Founder of HR DataHub.

CLEAR INCENTIVES TO TACKLE INEQUALITY

There are clear incentives for introducing ethnicity pay gap reporting, with research estimating that addressing race inequality in the UK labour market could boost the UK economy by £24 billion a year. As companies who currently report gender pay gap figures are ‘already well resourced’ to do so, the report from the Women and Equalities Committee recommends that the mandate for ethnicity pay gap reporting be in place by April 2023.  

The report also calls for a clear explanation of how new rules will be enforced; and states that the Government must provide employers with data protection guidance. The Committee also calls for the legislation to require businesses to publish an accompanying statement and action plan; allowing employers to account for pay gaps and outline steps to be taken to address them. 

LEGISLATION & GUIDELINES NEEDED

A Department for Business, Energy and Industrial Strategy consultation on introducing mandatory pay gap reporting ended in January 2019; but the government has yet to publish any proposals. A petition with 130,000 signatories was eventually debated in parliament last year, but no government response followed. Additionally, a joint letter from the TUC, CBI and Equality and Human Rights Commission urging the government to introduce mandatory ethnicity pay gap reporting, as reported, has been ignored.

Commenting on the latest report, a government spokesperson said: “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.”

TIME TO DO THE RIGHT THING

“Without legislation companies will just not report to the point where we can actually shift the dial. Our own research, over the last four years has demonstrated that ethnicity pay gap reporting is not only inconsistent but has actually dropped substantially over the last year. Hospitality and leisure and manufacturing firms came out the worst; with education, finance and public sector reporting the most. But even that was at a low level,” highlighted Whitfield. “At a time when companies are making some big ESG commitments, this is simply not good enough.”

Ethnicity Pay Gap Campaigner Dianne Greyson and  Director of Equilibrium Mediation Consulting, is advising companies “not to wait for Government legislation to do the right thing”. Greyson launched the #EthnicityPayGap campaign three years ago to push the government to take action on mandatory pay gap reporting, and launched the first Ethnicity Pay Gap Day (on 8th January 2021), last year in a bid to make Ethnicity Pay Gap a thing of the past, as reported. Read more about Greyson’s longstanding initiatives here.