The government could revive an idea to make it mandatory for large companies to report their pay gaps by ethnicity.
Nearly two years ago, the British government seemed to be on the verge of doing something truly novel about racial and ethnic inequality. Theresa May, the prime minister at the time, had adopted a plan to root out one of the causes of differences in incomes that would “create a fairer and more diverse work force,” she said.
It was October 2018, during Britain’s Black History Month. Ms. May suggested the government require companies and other large employers to report the disparities in pay among their employees based on ethnicity, as they had recently been made to do for gender. She announced a three-month public comment period, or consultation, toward the goal of introducing a new regulation.
“Too often ethnic minority employees feel they’re hitting a brick wall when it comes to career progression,” Ms. May said. Collecting and analyzing this data, which no other country seems to require, could enable companies to see disparities in pay and identify reasons, such as a lack of Black managers in senior positions, and do something about it.
But after the comment period closed in January 2019, little was heard about it.
Little, that is, until a surge of anti-racism protests this summer, provoked by the killing of George Floyd, revived the idea. In June, a petition to make ethnicity pay gap reporting mandatory amassed more than 100,000 signatures. In response, the government said that it would publish an update by the end of the year, having received more than 300 comments from businesses and other organizations.
“Too often ethnic minority employees feel they’re hitting a brick wall when it comes to career progression,” former Prime Minister Theresa May said. Kamran Jebreili/Associated Press
The failure to demonstrate progress for a year a half was not lost on David Isaac, the departing chairman of the government’s Equality and Human Rights Commission. Last month, he said establishing the pay gap rule would be a quick win for the government, as he accused it of “dragging its feet” on action to address racial and ethnic inequality.
Since Mr. Isaac’s chairmanship of the commission began four years ago there have been three prime ministers from the same political party, two general elections, Brexit and a pandemic. There have also been four government-sponsored reviews focused on issues of ethnic inequality that have produced nearly 100 recommendations.
Mr. Isaac said that when he took over at the human rights commission, he believed he could achieve a lot, and he says he has since succeeded in helping more people fight legal battles for equal rights. But as he left his post, he still questioned why the government hadn’t taken advantage of a growing desire by businesses to do more to address inequality, and urged for more action instead of reviews.
“The time for more recommendations, in my view, is over,” he told the BBC. “We know what needs to be done, let’s get on with it.”
Kemi Badenoch, the equalities minister in Prime Minister Boris Johnson’s government, said it was “just simply not true” that the government had dragged its heels on the issue. For example, she said, policymakers were working toward adopting most of the recommendations from a 2017 review of how “Black, Asian and minority ethnic individuals” were treated in the criminal justice system. Among the proposals was collecting more complete ethnicity data across the system and recruiting a more diverse prison staff.
In response to Black Lives Matter demonstrations, Mr. Johnson has also created a new commission focused on race and ethnic disparities that will make recommendations for government action by the end of the year. This new board will be a fresh start, Ms. Badenoch told the BBC.
“We’ve picked commissioners who haven’t really done this sort of review before so they wouldn’t be bringing in prejudged recommendations,” she said. “There must be no jumping to conclusions.” She added that the commission would also look into why there was a public perception that the government hadn’t done enough to improve equality.
A Black Lives Matter protest in London in June. The demonstrations spurred interest in publicizing disparities in pay between whites and people of other ethnic groups. Henry Nicholls/Reuters
Amid mounting outrage about inequalities, ethnicity pay gap reporting is something that could be done quickly, Mr. Isaac said in an interview with The New York Times in early August, in part because of the work already done by Ms. May’s government to collect data about ethnic disparities across society.
Mr. Isaac is a lawyer who was once chairman of the L.G.B.T. charity Stonewall. The Equality and Human Rights Commission he led is responsible for enforcing the 2017 legislation that makes it mandatory for companies, charities and public sector organizations with more than 250 employees to publicly report the median and average pay difference between men and women on their payrolls each year. (Organizations were given a break this year, as the reporting deadline fell during the first weeks of lockdown to curb the pandemic.)
Since Mr. Johnson became prime minister, six months after the ethnicity consultation ended, the idea lost its urgency, possibly because leaving the European Union and tackling coronavirus has consumed more of the government’s energy, Mr. Isaac said. But, he added, “this is a leadership issue and a real opportunity to move quickly should the government really wish to do that.”
That said, there are additional challenges to reporting on ethnicity that are distinct from gender reporting. The thorniest issue is privacy. Employers have to get their staff to voluntarily disclose their ethnicity. There will also be companies that lack enough diversity to publish a nuanced breakdown of the data, or publish any data at all, without jeopardizing staff anonymity. (The government offers 18 different classifications of ethnic groups for census data in England and Wales.) And the severity of inequality and underrepresentation can really vary by region. Ethnic minorities make up just 14 percent of Britain’s total population but in London, 40 percent of people identify as having an Asian, Black, Arab, or multiple ethnic backgrounds.
In response to the online petition on ethnicity pay gap reporting, the government said it had done voluntary testing of the methodology in 2019 with a range of businesses, which highlighted “the genuine difficulties” in designing a policy that provides accurate information and protects anonymity.
One way to get around some of these difficulties has been demonstrated by Deloitte, the auditing and financial advisory firm that is one of a handful of companies in Britain that have voluntarily published their own data.
Deloitte offers a single pay gap, showing the difference in pay between whites and all others. The latest report found that the median pay for the group it identified as Black, Asian and minority ethnic people in 2018 was 7.9 percent less than whites, compared with a 6.9 percent gap the year before. The gap for bonuses narrowed, to 25 percent from 30 percent in 2017. This report was made public, but internally more granular data was studied to help make decisions, said Clare Rowe, Deloitte U.K.’s head of inclusion.
A more detailed analysis is needed because a binary pay gap figure, modeled on how gender pay gap reporting is done, can conceal disparities between different ethnic groups. For example, according to a government survey, average hourly pay in Britain in 2018 was 11.82 pounds ($15.53). For white British people it was £11.90 and higher than that for people who are Indian. But Black, Pakistani and Bangladeshi people received pay that was below the national average.
Business in the Community, a charity focused on responsible business practices, has been pushing for the government to require ethnicity pay gap reporting since 2018, when a study it did found that just 11 percent of people in Britain said their employer was collecting ethnicity pay data, and only half of those were then making it public.
Reporting this data “alone can’t fix everything, but it does ensure that this conversation remains at the top table and that there are actions to follow through on that,” said Sandra Kerr, the charity’s race equality director. “Because looking at the data you can’t just sit back and say, ‘Oh, that’s really terrible.’ You then have to act and say what you are going to do.”
Last month, the government said it would announce by the end of the year how it planned to proceed. Some are not waiting: In the past two months, more than 150 companies have signed on to Business in the Community’s Race at Work Charter, according to Ms. Kerr. The charter encourages, but does not require, the firms to capture ethnicity data as a step toward publishing information on pay gaps.
Mr. Isaac is clear, however, that the requirement needs to be enforced.
“If it’s discretionary, the exemplars will do it and are already doing it,” he said. But others won’t, given all the other pressures created by the pandemic, he said.
“There’s a general appetite now that has never existed in the same way before,” Mr. Isaac said. “Covid and the murder of George Floyd create that kind of tipping point when everybody has been shocked and everybody is keen to be an ally and do things. So why not take advantage of that?”
FEATURED IMAGE: Joey Yu
By Eshe Nelson/The New York Times
