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UK firms to reveal ethnicity pay gap

UK firms may be forced to publish data covering their ethnicity pay gap following a consultation launched on Thursday by Prime Minister Theresa May.

The prime minister will also publish a consultation on mandatory ethnicity pay reporting, marking a year since the government published the findings of its Race Disparity Audit on how people of different ethnic backgrounds are treated across society.

It comes six months after all UK companies with at least 250 employees published their gender pay gap data after the introduction of a mandatory reporting program.

Public services including the NHS, armed forces, schools and the police force will be told to set out plans on how they will increase the proportion of leaders from ethnic minority background.

“Too often ethnic minority employees feel they’re hitting a brick wall when it comes to career progression,” said May in the statement. “Our focus is now on making sure the UK’s organisations, boardrooms and senior management teams are truly reflective of the workplaces they manage.”

The consultation was launched alongside a “Race at Work Charter,” which is intended to increase the recruitment and improve the progression of ethnic minority employees.

UK think tank the Resolution Foundation, which published a study in July showing striking pay disparities between some ethnic minorities and their white counterparts, described the proposals as “important.”

The foundation’s research revealed that while some progress has been made in educational attainment and employment rates among many ethnic minorities, some significant pay gaps remain.

Black male university graduates earn on average 24% less than their white counterparts, while the pay gap between black and white female graduates is 9%, according to the study.

Pakistani or Bangladeshi men and women face even bigger disparities, with a gap of 27% for male graduates and 15% for female graduates.

“Pay auditing has changed the conversation on the gender pay gap, we need to do the same with the ethnicity pay gap,” the Resolution Foundation said on Twitter Wednesday.

Omar Khan, director of race equality at think tank Runnymede, also welcomed the initiatives, but said that “greater ambition and investment” would be necessary to fully address racial inequalities in the UK and called for a “fully funded race equality strategy.”

“A more explicit u-turn on the hostile environment, and a clearer commitment to ending austerity, as well as re-establishing the child poverty target would probably do more to tackle racial inequality than the proposed actions,” Khan said.

As part of the consultation on the race pay gap, employees will be asked to share their views on mandatory pay reporting. The government has admitted that the number of organisations publishing the information voluntarily remains low.

The prime minister’s new commitments on ethnic equality will also see a so-called race at work charter, signed by high-profile public bodies and businesses including NHS England, Lloyds Banking Group, Saatchi & Saatchi, KPMG, RBS, the civil service and advertising agency WPP.