Race pay gap reporting ‘an obvious first step’

A parliamentary debate on mandatory ethnicity pay gap reporting was due to be held last month after 130,567 people signed a petition started by campaigner Dianne Greyson.

This called on the government to require employers to report their pay gaps in order to “shine a light on race/ethnicity-based inequality in the workplace so that they can be addressed”.

While employers with 250 or more employees must publish their gender pay gap, they are under no such obligation when it comes to reporting their ethnicity pay gap.

As a result, the petition makes clear, there is a lack of data available to gauge the gap (see box).

Introducing the measures, it says, will allow employers “to be held accountable in closing the gap where there is disparity” and help “to achieve a fairer workplace”.

In June this year, the TUC, CBI employers’ organisation and the EHRC equality watchdog sent a joint letter to the Chancellor of the Duchy of Lancaster, Michael Gove, urging him to introduce mandatory pay reporting on ethnicity.

They said this would “transform our understanding of race inequality at work and most importantly, drive action to tackle it where we find it”.

They urged ministers to set out a clear time frame for its introduction to help “ethnic minorities reach their full potential in the workplace”.

TUC general secretary Frances O’Grady added that “the sad reality is that even today race still plays a significant role in determining people’s pay and career progression.

“Mandatory ethnicity pay gap reporting is an obvious first step in helping to improve transparency and bring about change.”

Under the Theresa May administration, the BEIS business department launched a consultation on the issue in 2018. It contained proposals that unions broadly welcomed (see Labour Research, February 2019, pages 16-18).

But Boris Johnson’s government has yet to respond to this. It says it is analysing consultation responses, as well as looking at the recommendations of the controversial Commission on Race and Ethnic Disparities (CRED). The commission rejected the concept of institutional or structural racism (see Labour Research, June 2021, pages 13-15).

The consultation set out the intention to legislate for mandatory ethnic pay gap reporting for employers with 250 employees or more — although the 2017 McGregor-Smith review, Race in the workplace, commissioned by the government, recommended a threshold of 50 employees.

The CRED report recommended only voluntary reporting. It said that “all employers that choose to publish their ethnicity pay figures should also publish a diagnosis and action plan to lay out the reasons for and the strategy to improve any disparities”.

TUC senior policy officer Sue Coe told Labour Research: “We have been waiting years for the consultation response from government. There is unusual unanimity between organisations and general agreement that it needs to happen.

“We don’t know anyone outside government — among organisations that are seriously engaged in labour market issues — speaking up against it.”

Coe added that Ruby McGregor-Smith’s government-commissioned, authoritative, evidence-based report said in 2017 that the time for action is now, and one of her key recommendations was mandatory ethnicity pay gap reporting. This is just as urgent now as it was then.

Figures published by the ONS national statistics body in October 2020 show that in 2019, the ethnicity pay gap between White and ethnic minority employees had narrowed to its smallest level since 2012 in England and Wales. It stood at 2.3%, compared to 8.4% in 2014, when it was at its largest.

But Coe says there is not enough of a regional focus when the figures are published nationally. In London, where there is a significant concentration of black and minority ethnic (BME) workers, and average wages are higher for both groups, the pay gap is nudging 25%.

Systematic workforce ethnicity monitoring

A key argument for mandatory ethnicity pay gap reporting is that it would result in systematic workforce ethnicity monitoring, which “doesn’t occur significantly at the moment”, she added.

Employers would be able to identify particular issues in recruitment, progression, access to training “and actually deal with them in a targeted way”. This is not possible at present because there is no workforce ethnic monitoring in most sectors.

“We know there is a really significant issue for black staff in the NHS because there has been a systematic approach to collecting race equality data,” said Coe. “In other sectors, there simply isn’t transparent data to the extent to which there is in the NHS.”

From 2015, the Workplace Race Equality Standards (WRES) have required all NHS organisations in England to demonstrate their progress against a number of workforce equality indicators.

The WRES programme has now been collecting data on race inequality for five years. Specifically, on pay, the 2020 Workforce Race Equality report provides details of the percentage of staff by national terms and conditions agreement Agenda for Change (AfC) pay band and ethnicity in 2020. It does this for all NHS trusts and Clinical Commissioning Groups (CCGs). The target is 19% representation at every pay band.

The data shows that around 9% of staff (1,621) at (the higher) AfC pay bands 8c and above are from a BME background, significantly lower than the 21% of all BME staff in NHS trusts and CCGs.

It says: “NHS trusts and CCG organisations must do more to build the talent pipeline if they are to deliver the model employer ambitions”.

Methodology

In its response to Greyson’s petition, the government says it “ran a voluntary methodology testing exercise with a broad range of businesses to better understand the complexities outlined in the consultation using real payroll data”.

This work “highlighted the genuine difficulties in designing a methodology that produces accurate figures that allows for interpretation and action from employers, employees and the wider public”.

It refers to a survey by the PwC consultancy that identified concerns around the legality of collecting ethnicity data, poor response rates from employees, and ensuring employee anonymity.

It says reporting on a binary basis — combining all individuals from an ethnic minority background into a single group for reporting purposes — “masks significant variations in labour market outcomes between groups”.

And it says that employers said reporting at a more granular level risk results being skewed by particularly large or small pay values because of low numbers within certain ethnic groups.

But Coe rejects these excuses. “Binary reporting is a practical approach,” she emphasised. “Employers should gather data using the Census categories, so they have a granular understanding of the issues that might affect particular groups, and report on a binary basis.

“It’s good practice not to report figures lower than 10 because it can identify individuals, but employers should collect the data in a far more granular way in order to shape their understanding and action plans.”

If there are genuine difficulties, she added, the government should publish the results of the trials it ran which it hasn’t done so far.

“If they exist, we can look at how to address them,” she added.

Union action and guidance

In the absence of government action, the TUC anti-racism taskforce is pulling together information and examples of good practice from affiliates to develop a toolkit for reps to promote collective bargaining for the introduction of ethnicity pay gap monitoring.

The Unite general union’s health reps’ toolkit, Race ahead in health — tackling race discrimination in the workplace, includes a step-by-step guide for reps to tackle the pay of Black, Asian and Ethnic Minority (BAEM) colleagues.

It also describes how they can push for better recruitment and selection processes; improve equality in progression and promotion and learning and development opportunities; effective measures to deal with racial harassment, discrimination and bullying; and promoting fairness for BAEM women at work.

The NEU teachers’ union says that a pay gap reporting requirement is important in pressing for change throughout society. But the problems in the teaching profession are “closely linked to access to training and access to promotion within a uniform pay structure with prescribed scales”.

“We have too many people leaving the profession, so clearly much more needs to be done to value and encourage those who may feel held back from showing their full potential as tomorrow’s school and college leaders,” it adds.

The union’s latest pay and progression survey shows that White British teachers were less likely to be denied progression (7%) than teachers reporting other ethnic origins (11%).

Particularly high rates of progression denial were recorded by teachers describing themselves as of Indian (15%) or African (14%) origin.

Its reps’ guide, Pay progression — bargaining for equality, highlights pay progression issues for black teachers. It has a checklist to help reps find out how many black teachers are eligible for pay progression in their workplace, and to ask senior management for evidence that pay progression decisions will not negatively impact on black teachers.

A template form for branch officers and multi-academy trust negotiators includes asking the employer to provide a breakdown of pay progression decisions by ethnicity. Its anti-racism charter includes a question to help schools think about pay for black teachers: is there a race equality impact assessment of the pay policy and pay progression decisions? Has it been useful?

The union has also been working with the Department for Education and with members who have trained overseas to ensure non-EU overseas-trained teachers with appropriate qualifications receive automatic Qualified Teacher Status.

Local authorities

In August 2021, West Yorkshire mayor Tracy Brabin announced that West Yorkshire Combined Authority would report on its ethnicity pay gap from now on. It will follow the example of other local authorities, including Bristol and Nottingham City Councils.

Leadership from people like Brabin is “a really positive step”, said Coe, but unions remain frustrated by the government’s approach while there is such agreement that mandatory ethnicity pay gap monitoring needs to happen.

Government inaction

An August 2020 survey of 100 employers by PwC found that just one in 10 companies surveyed had reported their ethnicity pay gap.

“During the pandemic, there has been a clear illustration of what racial inequality at work means in the most stark terms possible — higher levels of death among Black workers,” said Coe. “It’s just baffling that we have the inaction we have at the moment, particularly when we have the Employment Bill as the vehicle to deliver it expected next year.”