Thu 21 Jan 2021

Ethnicity Pay Gap Reporting - Where are we now?

Ethnicity Pay Gap reporting has had increased attention over the past few years. In her

This included a recommendation that the government legislate to introduce mandatory reporting of ethnicity data by pay bands of £20,000. A year later in 2018, it was reported that only 11% of employers collect data on ethnicity pay. The government therefore decided to consult employers on the introduction of mandatory ethnicity pay gap reporting.

The government launched the consultation on 11 October 2018. It sought the opinion of employers on various questions such as what ethnicity pay information should be reported, which employers should report and if employers identify disparities, should they be required to publish an action plan. This consultation closed on 11 January 2019 and the government's response to the consultation is yet to be published.

In December 2020, the BBC reported on employer responses to the consultation after seeing a leaked report. This showed that there were a total of 321 responses to the consultation. Of these responses, 93 came from private sector employers, 42 from public sector employers and 67 from business organisations. 73% were in favour of mandatory reporting for organisations with more than 250 staff. However, there was no general consensus among employers on how this ethnicity pay gap reporting should be broken down, with some favouring reporting the pay gap between white and all BAME staff, and others in favour of a breakdown of ethnic groups. 

Given the lack of response from the government, a petition for the introduction of mandatory ethnicity pay gap reporting was launched in March 2020. This passed the 100,000 signature threshold required to be considered by parliament in June 2020. The government responded by stating that it was currently analysing the consultation responses and would respond by the end of the year. However at present, no response has been received and the petition is still waiting to be debated.

The pressure for change however, continues.  A new campaign was launched by the CBI, alongside a number of high profile employers, to increase racial and ethnic participation in businesses on 1 October 2020.  The campaign - Change the Race Ratio - identifies four "Commitments to Change" that businesses will be asked to make.  These are to increase racial diversity among Board members, to increase diversity in senior leadership, to be transparent on their actions and to create an inclusive culture in which talent from all diversities can thrive. This campaign also calls for the disclosure of ethnicity pay gaps by 2022.

Whilst the Government's response to the consultation is awaited, some large employers have started to report on their own figures. Professional services firm Deloitte, has been publishing its ethnicity pay gap figures since 2017 with its latest figures showing a 14.6% mean gap. Lloyds Banking Group has become the first major UK bank to disclose its black pay gap which showed that its black staff are being paid almost 20% less than their colleagues.  The bonus pay gap was even greater, standing at 37.6%. Lloyds assert that this is due to the fact that only a very small number of black staff hold senior positions (0.6%) and the bank has pledged to increase this number to 3% by 2024.

It remains to be seen what impact the pandemic will have on the ethnicity pay gap but it is clear that the current situation has meant that the already delayed government response to the proposals for mandatory reporting has been even further delayed.  With racial equality more in focus than ever through the Black Lives Matter movement, we should expect to see the pressure for change in this area to continue.

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