Business group urges PM to introduce mandatory ethnicity pay gap reporting

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A business organisation backed by the King has urged the Prime Minister to “not waste any more time” in making it mandatory for big companies to report their ethnicity pay gaps.

Business In The Community (BITC) wrote letters to Rishi Sunak and Labour leader Sir Keir Starmer asking them to work together to introduce new legislation for employers with more than 250 staff.

The group, of which Charles was a royal founding patron when it formed in 1982, said it is a “matter of urgency” for the Government.

Yet predictions using census data show that by 2051 nearly a third of working-age adults in England and Wales will be from ethnic minority backgrounds.

Furthermore, if this diverse ethnic workforce is utilised, it could boost the economy by £36 billion by 2051, BITC predicted using data from the McGregor-Smith Review in 2017 on race in the workplace.

Sandra Kerr, BITC’s race director, said: “The Government needs to bring forward mandatory ethnicity pay gap reporting as a matter of urgency.

“Employers back it, evidence shows that reporting works, so I’m not sure what Government is waiting for.

Investiture at Windsor Castle
Sandra Kerr has called for action from the Government (Steve Parsons/PA)

“By continuing to ignore the inevitable, the Government is just wasting time when we could all be working together to address the problem.”

BITC found that, without Government action, it will take until 2075 for companies currently capturing ethnicity data to publish it.

Reports in recent years have exposed divergences between ethnic minorities and white British workers.

The TUC found last year that the unemployment rate for black and minority ethnic employees was more than double that of their white counterparts, a gap which widened following the pandemic.

A separate report from race equality think tank Runneymede Trust in 2020 found that black and minority ethnic young adults were 47% more likely to be employed on a zero-hour contract than white young adults.

ShareAction, a charity which works with investors to drive social change, has been targeting financial services companies in the FTSE 100 since July last year.

It has questioned 17 big firms at their annual general meetings and secured commitments from the likes of NatWest, Standard Chartered and Abrdn to publish data, or break it down in order to compare data across different ethnic groups.

British banking giants like Barclays and HSBC said they want to improve representation of ethnic minority employees in more senior roles, after reporting significant pay gaps between black and white staff.

Baroness McGregor-Smith, a British businesswoman and politician, said: “It has been six years since I published my review into race in UK workplaces and since then, there has been no tangible action taken by the Government to address pay disparities for diverse ethnic groups.

“It’s clear that mandatory reporting is the only way to address the ethnicity pay gap, it’s too late for voluntary guidance.”

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