Companies may be forced to reveal ethnicity pay gaps

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Interesting piece. The benefits of a diverse organisation are well documented and it's therefore relevant to address inequality in whatever form it exists whether that be gender, ethnicity, ...


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Prime minister Theresa May has launched a consultation around mandatory reporting as part of plans to help minorities in the workplace

UK companies may be forced to publish their ethnicity pay gaps under new government plans to uncover the extent of inequality that ethnic minorities face in the workplace.

In a new consultation, launched by prime minister Theresa May, the government seeks to find out whether mandatory reporting of ethnicity pay gaps will help address disparities in the pay and career prospects of people from different ethnic backgrounds. Running until January 2019, the consultation asks firms with more than 250 employees to share their views on what information should be published “to allow for decisive action to be taken” while avoiding “undue burdens” on businesses.

The announcement forms part of a number of measures to help minorities at work, with May saying that minorities often “feel like they’re hitting a brick wall”.

She is also due to unveil a Race at Work Charter that commits businesses to increasing the recruitment and career progression of ethnic minority employees. The charter, designed with Business in the Community, has already been signed by organisations including KPMG, NHS England, the Civil Service and Saatchi & Saatchi.

Announcing the plans, May said: "Every employee deserves the opportunity to progress and fulfil their potential in their chosen field, regardless of which background they are from, but too often ethnic minority employees feel they're hitting a brick wall when it comes to career progression."

The move follows the publication of the government’s Race Disparity Audit last year, which revealed significant disparities in pay and workplace opportunities between people of different ethnic backgrounds.

Despite the findings of the audit, research from the Equality and Human Rights Commission (EHRC) found that just 3% of organisations currently measure their ethnicity or disability pay gaps voluntarily.

David Isaac, chair of the EHRC, welcomed an extension to pay gap reporting.

“Extending mandatory reporting beyond gender will raise transparency about other inequalities in the workplace, and give employers the insight they need to identify and remove barriers to ethnic minority staff joining and progressing to the highest level in their organisations,” he said.

“We have previously called for mandatory reporting on ethnicity in recruitment, retention and progression for employers with more than 250 employees and welcome the prime minister’s commitment to consulting on this. Our upcoming state of the nation report on equality shows that racial inequalities are still deeply entrenched in society and this is a positive step towards creating truly inclusive workplaces that allow everyone to achieve their full potential.”

Wanda Wyporska, executive director of The Equality Trust said she was "delighted" the issue is now coming into focus.

"We believe that transparency on pay is essential for fighting the racism inherent in the labour market and for reducing income inequality. As with the gender pay gap, we shall be monitoring and analysing this as part of our corporate governance work," she told HR magazine.

The announcement also coincides with new EHRC research that found the gender pay gap has a significant impact on staff motivation and behaviour and that businesses are at risk of putting themselves at a competitive disadvantage if they fail to take action to reduce their gaps.

Comments

Interesting piece. The benefits of a diverse organisation are well documented and it's therefore relevant to address inequality in whatever form it exists whether that be gender, ethnicity, disability etc. As such, ethnicity pay gap reporting would undoubtedly be useful in terms of highlighting the current position and also focussing the mind around this as an issue. But we also need to make sure that our recruitment processes are fair to ensure diversity is considered before employees enter the workforce not just once they are in post. Our research in the banking industry, for example, shows that Situational Judgement Tests or SJTs present a fair, reliable selection method and candidates from lower socio-economic backgrounds were at no disadvantage compared to those from higher socio-economic backgrounds when we utilised this selection methodology as part of the research. So it is possible to enhance the fairness of recruitment processes by choosing appropriately designed selection methods. SJTs present candidates with realistic but hypothetical scenarios and ask them to identify the most appropriate response or rank the options in the order they feel is most appropriate.


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