A group of MPs have stated that there is “no excuse” for the government not to mandate ethnicity pay gap reporting for businesses.
On February 9, the House of Commons Women and Equalities Committee (WEC) published their report. The report calls for the government to implement a legal requirement for all large employers to publish the pay disparity for workers of different ethnicities by April 2023
The government’s lack of movement on this topic was labelled “perplexing” by the chair of the committee and Conservative MP, Caroline Nokes. “The government has no excuse. All that is lacking, it seems, is the will and attention of the current administration”
The committee has proposed a system that will seemingly mirror that of the rules for gender pay gap reporting, a requirement for businesses with 250 employees or more, since 2015. The ethnicity pay report will also include a supporting narrative and action plan discussing how the business intends to improve moving forward – something many campaigners have called to be added to the current gender pay gap reporting requirements.
Under the proposal pitched by the committee, there would also be guidance for businesses on data protection and methods for capturing, analysing and reporting data, as well as a body responsible for enforcement and what powers that body will have.
The number of employers voluntarily publishing their ethnicity pay gaps has increased to 19 per cent in 2021, up from 11 per cent in 2018 the report stated, adding that ethnically and culturally diverse businesses can be up to a third (36 per cent) more profitability than other firms.
The WEC report is the latest in a long line of publications calling for an ethnicity pay gap reporting mandate to be introduced. It follows a government-commissioned review into the progression of ethnic minority groups in the UK labour market published in 2017 and a consultation launched in 2018 by the Department for Business, Energy and Industrial Strategy (BEIS), both of which have recommended a reporting requirement.
The legal analyst at Lewis Silkin, Tom Heys, has welcomed this latest call for legislation mandating the reporting. Heys added that employers have been “kept in the dark” about the government’s intentions for three years.
“Many employers want to calculate and report their gaps, but without legislation – or even official guidance – on how to deal with the issues, it can be hard for employers to know how to approach the issue,” he said.
Support has also been voiced for the WEC’s call for a supporting narrative to be made part of the ethnicity pay gap reporting process.
Charles Cotton, senior performance and reward adviser at the CIPD, said that reporting is “not enough” to drive change. “Organisations need to interrogate the figures in order to understand the causes of racial inequality and come up with the most appropriate solutions,” he explained
Sandra Kerr, race equality director at Business in the Community (BITC), also voiced her support of the supporting narrative when reporting, “Data isn’t the sole answer to solving the inequalities that have been plaguing the UK’s workforce for far too long.”
Kerr also warned that many employers will struggle to implement reporting overnight, with many requiring internal campaigning to encourage employees to disclose their ethnicity whilst being transparent and reassuring employees where and how this data will be used and stored. “Building trust with employees on how the data will be used will be vital to making reporting ethnicity pay gaps a success”
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