Businesses should be made to publish their ethnicity pay gap, Labour says

Businesses should be made to publish data about how much they pay employees of different ethnicities, Labour has said, in order to help stamp out discrimination in the workplace.

Black, Asian and minority ethnic workers are paid less on average than their white counterparts, and the opposition argues that requiring companies to publish their ethnicity pay gaps would help “bring about real action to reduce racial pay inequality”.

Since 2017, companies with more than 250 employees have had to report their so-called “gender pay gap” – the difference between what they pay men and women.

In October 2018, the government launched a consultation on whether ethnicity pay-gap reporting should also be introduced, but there has been little movement on the policy side since then. In March this year, ministers suspended gender pay-gap reporting because of the coronavirus pandemic.

The latest call from the opposition comes on the 43rd anniversary of the passing of the Race Relations Act 1976, and nearly two years since the government launched its original consultation.

“Introducing mandatory ethnicity pay-gap reporting would make a significant difference to hundreds of thousands of people from black, Asian and minority ethnic communities, helping to bring about real action to reduce racial pay inequality. But this government seems unwilling to take action to make this a reality,” said Marsha de Cordova, the shadow secretary of state for women and equalities.

“Over the last few years, people have grown tired of consultation after consultation around racial inequalities that never come to any tangible change.

“It really is not hard to find support from bodies representing both employers and employees for this call today: the government has a golden opportunity to show us that it will take action to address the race pay gap in the UK, and that it really does want to support black, Asian and minority ethnic workers.

“This is why I am calling on the prime minister today to set a date for the introduction of mandatory ethnicity pay reporting of April 2021.”

Ms De Cordova wrote directly to Boris Johnson on Tuesday, urging him to push forward with the reform. In the letter, seen by The Independent, she said she could not “find anyone – whether in or outside of government – with a single good reason why the government has not moved immediately to deliver this small but significant intervention”.

In 2016, research by the Trades Union Congress found that black workers with degrees earn nearly a quarter less on average than their white counterparts. In 2019, a Bank of England study identified that minority ethnic workers earn 10 per cent less than white workers.

In June, the chair of the government’s Equality and Human Rights Commission, David Isaac, said the commission supported the introduction of mandatory reporting. He also suggested that the bar for companies to report could eventually be lowered from 250 employees to 50 for both gender and ethnicity pay-gap reporting.

A handful of businesses already voluntarily publish their ethnicity pay-gap data. Zurich Insurance, which was the first insurer to do so, says it “fully supports” calls for mandatory reporting. The organisation’s head of HR, Steve Collinson, said in a statement that the firm recognised that reporting was “unlikely to be enough on its own to force the change that is needed” and that firms needed to understand and address underlying prejudices.

Sandra Kerr, race director at Business in the Community, said: “The Labour Party has recognised that it’s the moment to act on ethnicity pay-gap reporting and now it’s time for the government to do the same.

“The issue of race inequality in our workplaces goes beyond party politics; it’s a fundamental rebalancing of our society which is long overdue.

“As the responsible business network, we know that businesses are ready for the government to step in – unless reporting is mandatory, it cannot reach the scale or consistency we need. Pay-gap reporting may not be a silver bullet, but making sure that conversations about ethnicity, progression and pay transparency take place in boardrooms across the UK is a pretty good place to start.”