{"id":1709,"date":"2021-05-27T12:08:04","date_gmt":"2021-05-27T11:08:04","guid":{"rendered":"https:\/\/blogs.bath.ac.uk\/iprblog\/?p=1709"},"modified":"2021-05-27T12:08:04","modified_gmt":"2021-05-27T11:08:04","slug":"ethnicity-pay-gap-why-the-uk-needs-mandatory-reporting","status":"publish","type":"post","link":"https:\/\/blogs.bath.ac.uk\/iprblog\/2021\/05\/27\/ethnicity-pay-gap-why-the-uk-needs-mandatory-reporting\/","title":{"rendered":"Ethnicity pay gap: Why the UK needs mandatory reporting"},"content":{"rendered":"

Susan Milner<\/a> is Professor of European Politics and Society in the Department of Politics, Languages and International Studies at the University of Bath.<\/em><\/p>\n

In the summer of 2020, the Black Lives Matter movement intensified calls for racial equality across all aspects of society. Though efforts to eradicate police brutality were chief concerns following\u00a0the murder of George Floyd<\/a>\u00a0by police in the US, other structural racial issues were highlighted as urgent problems too.<\/p>\n

One of those demands included encouraging companies to do more to support black and ethnic minority employees. As the movement gained traction, a\u00a0petition to introduce mandatory ethnicity pay gap reporting<\/a>\u00a0was delivered to the UK government last July.<\/p>\n

At that stage, a number of\u00a0business<\/a>\u00a0and equality campaign organisations had already called for such a measure to be enacted, and the\u00a0government was widely expected<\/a>\u00a0to respond positively to these demands. But a year after the protests, campaigners are still waiting for action.<\/p>\n

An agenda for change had already been set out in 2018 by the independent\u00a0McGregor-Smith review<\/a>\u00a0on race in the workplace. Among a number of revelations, the report showed a lack of access to training and promotion opportunities for black and ethnic minority employees. It also showed low numbers of top-paid black and minority ethnic employees and high proportions of black and minority ethnic people in poorly paid jobs.<\/p>\n

Based on these alarming findings, the report argued that measuring data was a necessary first step. It concluded:<\/p>\n

Employers must publish their aspirational targets, be transparent about their progress and be accountable for delivering them. The government must also legislate to make larger businesses publish their ethnicity data by salary band to show progress.<\/em><\/p><\/blockquote>\n

Following the review, the government conducted a consultation in 2018-19 \u2013 the results of which have yet to be published \u2013 and responded by announcing it was \u201cexploring possibilities for employer-level ethnicity pay gap reporting.\u201d Its initial exercise found \u201cgenuine difficulties\u201d in producing robust data, caused not least by under-reporting of employees\u2019 ethnic origins. Yet despite these difficulties,\u00a011% of companies<\/a>\u00a0managed to produce and publish data by 2020.<\/p>\n

The pitfalls of voluntary reporting<\/strong><\/p>\n

Since then, the government has largely demoted ethnicity pay reporting from its agenda. Without a more comprehensive picture of the issue at hand, grasping the extent of any widespread disparities is proving difficult. Even so, previous endeavours into similar areas can tell us a lot about the merits of mandatory reporting.<\/p>\n

The events leading up to the\u00a0introduction of mandatory gender pay gap reporting in 2016<\/a>\u00a0are perfect examples. Prior to the new regulations, a voluntary initiative had led to only six companies publishing their pay gap data. Yet a consultation showed that employers were generally supportive of mandatory reporting because it meant that all organisations would have to use consistent methods and be able to benchmark against each other.<\/p>\n

At the time, my colleagues at the GW4 Pay Equality Research Consortium conducted\u00a0a study of employers\u2019 readiness for new regulations<\/a>\u00a0and found that, while few companies felt prepared, they understood the business case for diversity and acknowledged that change would only happen on the basis of a level regulatory playing field.<\/p>\n

The current government doesn\u2019t seem to have learned from this exercise. Instead, it argues in favour of a voluntary approach, justifying its stance by citing its widely criticised\u00a0Commission on Race and Ethnic Disparities report<\/a>, which referred to the \u201cunreliability of sample sizes\u201d.<\/p>\n

The report gives a hypothetical example of a company with 250 employees, the threshold suggested in the 2018 consultation. This was also the threshold used for gender pay gap reporting. It states that while such a company would have an average of 125 male and 125 female employees, it would have only 25 ethnic minority employees to compare with 225 white employees: \u201cMany employers around the country simply do not have enough ethnic minorities (sic) for the recording sample to be valid\u201d, it suggests. But is it true?<\/p>\n

The distraction of statistical symmetry<\/strong><\/p>\n

The idea that there are too few ethnic minority employees to provide useful data is misleading at best. Although aggregate numbers of employed women are only slightly lower than those of men in the economy, they are distributed very differently across sectors and occupations.<\/p>\n