Minority ethnic workers could be paid £255,000 less in lifetime than white counterparts, study says

Workers from black, Asian, mixed race and minority ethnic backgrounds earn 16 per cent less compared to their white peers, with a quarter saying the disparity in pay was up to £5,000 a year, a new study has found.

Researchers say that people from racially diverse backgrounds are paid 84 per cent of what their white counterparts earn and could be losing out on £255,000 of earnings in a working lifetime due to the pay gap.

The study, which surveyed 1,167 UK adults, also revealed that people from these backgrounds are passed over for a pay rise the more senior they become.

Almost three in five (59 per cent) believe they are being held back from progressing up the career ladder due to the colour of their skin, resulting in over a quarter (26 per cent) having left their industry because they weren’t given a pay rise they felt they deserved.

Half (50 per cent) of people from these backgrounds revealed that not getting a raise or a promotion had a negative impact on their mental health, causing them to suffer with anxiety or depression.

The study by networking group People Like Us and Censuswide also found that more than half of respondents said their previous or current workplace has revealed that an ethnic pay gap does exist, but only 39 per cent have actually revealed the true extent of the problem.

Some employers also appeared to prefer paying lip service to the problem without actually working to change things. A third of workers from racially diverse backgrounds said that although their employer spoke publicly about the ethnicity pay gap, no changes were made to rectify it.

People Like Us said its research suggest the main problems faced by people of colour when asking for a pay rise include too much competition (26 per cent), an unapproachable boss or manager (17 per cent), and feeling like their boss did not like them (19 per cent).

Commenting on the findings, Sheeraz Gulsher, co-founder of People Like Us, said: “It’s simple. Nobody should earn less because of the colour of their skin, their sexual preference, gender or anything that isn’t related to their performance.

“Salary and job progression should be based on merit, but the data here makes it patently clear that currently, they aren’t.

“Organisations need to get better at identifying pay gaps and progression bias within their companies, because without understanding the issue, you can’t fix it.”

Gulsher added that the organisation is calling on “every HR professional, payroll professional, CEO and business leader” to become aware of the problem.

Leaders in the workplace should also focus not just on race or gender, but “look at all cross sections in your company including race, sexuality, disability and gender”.

There is no legal requirement for companies to publish their ethnicity pay gap, unlike the gender pay gap, but a coalition of workers’ groups last year called for it to become a mandatory practice so that employers can better address pay disparities.

The joint coalition of the Trades Union Congress, the Confederation of British Industry and the Equality and Human Rights Commission said in a letter to the government in June 2021: “Together we’re asking the Government to make it mandatory for employers to report on their ethnicity pay gaps, building on the successful framework already in place for gender.

“Reporting, done well, can provide a real foundation to better understand and address the factors contributing to pay disparities. To further enable this, we also support the Commission’s recommendation that pay gap data should be supported by a narrative – comprised of key data, relevant findings and actions plans to address race inequalities.”