Ethnicity Pay Gap Narrows

This month the Office for National Statistics (ONS) has published an analysis of ‘ethnicity pay gaps’ in Great Britain. The analysis looks at the difference between the median hourly earnings of White workers and other ethnic groups, using data from 2012 to 2019. This year’s analysis includes a greater number of ethnic groups, with a total of 17 (previously 10), and considers the factors which impact pay for different ethnic groups.

Gender pay gap reporting is mandatory for employers with 250 or more employees, but there is no such requirement to publicly report their ethnicity pay gap. According to a PwC study reported in September 2020, two thirds of businesses surveyed are now collecting ethnicity data on their employees and almost a quarter have calculated their ethnicity pay gap. There are rising calls for employers to deliver up this data voluntarily as a first step towards driving change and closing the ethnicity pay gap.

The ONS report shows that the hourly median pay gap between White and the ethnic minority groups has narrowed to the smallest since 2012. However, such a simple comparison between White and ethnic minority groups does mask a wide variety of experiences among different ethnic minorities. While the 17-category ethnicity breakdown provides greater detail, the sample sizes for some ethnic groups are small, resulting in the ONS warning that some data “should be treated with caution”.

Ethnicity

Most minority ethnic groups earned less on average than White British people in 2019, although interestingly some groups earned more than their White British counterparts.

• People from Bangladeshi, Pakistani and Arab ethnic groups consistently earned less than those of White British ethnicity. In 2019, the Bangladeshi and Pakistani ethnic groups had some of the widest pay gaps, respectively earning 15.3% and 15.5% less than White British employees.
• Conversely, people of Chinese, White Irish, White and Asian, and Indian ethnicities earn higher median hourly pay than those of White British ethnicity.

The analysis also explored other variables within ethnicity such as age, gender, occupation, country of birth, qualifications and disability status, amongst others.

Gender

• The ethnicity pay gap was larger for men than for women between 2012 to 2019.
• In 2019, men from ethnic minorities earned 6.1% less than White men.
• However, hourly pay of women from ethnic minorities was 2.1% more than White women.

Age

• Among those aged 30 years and over, those in ethnic minority tended to earn less than those of White ethnicities.
• In contrast, those in the ethnic minority group aged 16 to 29 years tended to earn more than those of White ethnicities of the same age.
• Various explanations were provided for the widening of the pay gap between younger and older employees, such as improved labour market outcomes for 2nd and 3rd generation migrants.

The ONS analysis shows some interesting trends, but also highlights the lack of data in this area. PwC’s September 2020 study reported that the main reason amongst employers not calculating their ethnicity pay gap was lack of data and some cited an “unease about how to ask questions around race and ethnicity”. PwC’s study shines a spotlight on employers addressing ethnic diversity and equality in their workforce and highlights that data is critical in addressing racial inequality in areas such as recruitment, progression and attrition.

Information is power, as they say, and actioning real change requires asking the hard questions.

Should you wish to discuss any discrimination issues or matters at work relating to equality and diversity, please do not hesitate to contact Neil Johnston in our Employment team.