Despite the progress that was made following the Black lives Matter protests of 2020 and the many pledges to improve diversity in workplaces, just a tiny fraction of FTSE 100 companies are currently reporting their ethnicity pay gap.
Only 13 of the 100 top UK firms publicly disclose the financial gap that exists between white and ethnic minority employees, according to new research by the CIPD.
Last year’s protests lead many organisations to condemn racism and discrimination in our societies and workplaces, but few have voluntarily reported the ethnicity pay gaps in their own companies, despite increasing expectation from the public, investors and other stakeholders.
With so few voluntary disclosures to date, the CIPD is calling for ethnicity pay reporting to become mandatory for all large employers from April 2023 – including the requirement to publish a clear narrative and action plan.
The professional body suggests organisations use the same snapshot dates that are currently in place for gender pay gap reporting, so data would be collected in March/April 2023 and would need to be reported within one year.
Gender pay gap reporting is mandatory for most employers in the UK, but that is not the case when it comes to racial inequalities in pay.
There have been many calls for this to change.
In fact, a recent petition received more than 129,000 signatures and called for the government to introduce the ethnicity pay gap reporting to ‘shine a light on race/ethnicity based inequality in the workplace so that they can be addressed.’
‘Currently there is a lack of data available in gauging the ethnicity pay gap in the workplace,’ reads the petition.
‘Introducing these measures will allow employers to be held accountable in closing the gap where there is disparity. In order to achieve a fairer workplace publishing this data is one of the next steps to knowing how extensive the issues are from a race and ethnicity perspective and not just through the lens of gender.’
The CIPD is now calling on the government to force organisations to provide a narrative, including action plans, alongside the data for gender pay gap reporting.
It says that simply providing numbers without a narrative is less likely to drive real change, and too many organisations are not providing this important additional commentary.
‘We know that gender pay gap reporting has driven greater transparency and accelerated progress, and we believe the same is needed for ethnicity pay reporting,’ says Peter Cheese, chief executive of the CIPD.
‘Mandatory reporting of data, and the associated narrative that shows understanding of the data and the actions being taken to improve, for both ethnicity and gender pay, will help create fairer workplaces and societies and kickstart real change.’
Baroness Ruby McGregor-Smith, author of the 2017 McGregor-Smith review on race in the workplace adds: ‘Every person, regardless of their ethnicity or background should be able to fulfill their potential at work.
‘It must be a collective goal that our organisations reflect the communities we live in and mandatory ethnicity pay data gives businesses, investors, and regulators the tools they need to see the current reality and where changes need to happen.
‘It’s only once we see organisations publicly start to report the diversity of their workforce that we will see real change start to happen.’
Previous CIPD research found that while most employers (77%) believe that ensuring workforce diversity is a priority, only 36% collect and analyse data to identify differences in pay and progression for employees from different ethnic groups, highlighting the need for mandatory reporting and clear guidance.
To support employers on their ethnicity pay reporting journey, the CIPD has launched guidance to help organisations start collecting and reporting their ethnicity pay data and importantly, create action plans to drive change:
CIPD recommendations for companies:
- A uniform set of eight commonly defined statistics to profile pay by ethnicity, including additional data points focused on encouraging the full representation of ethnic minority staff in the workforce.
- A supporting narrative to explain the nature and causation of any pay differentials and gaps by ethnic group evident in their stats.
- An action plan of initiatives defined to reduce and remove any such gaps over time.
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