Government to look at mandatory ethnicity pay gap reporting

KPMG is one of the first signatories of a new race at work charter launched by the Prime Minister as part of the government’s push to drive forward a step-change in the recruitment and progression of ethnic minority employees, which also includes proposals for mandatory pay gap reporting

Developed jointly by the government and Business in the Community (BITC), the charter will commit businesses to a set of principles and actions designed to increase the representation of ethnic minority employees at senior levels.

Other inaugural signatories to the charter include Lloyds Banking Group, Standard Life Aberdeen, RBS, Norton Rose Fulbright, Saatchi & Saatchi, WPP, the Civil Service and NHS England.

In addition, the Department for Business, Enterprise and Industrial Strategy (BEIS) is consulting on ethnicity pay reporting in response to the government’s race disparity audit of a year ago, which revealed significant disparities in the pay and progression of ethnic minority employees compared to their white counterparts.

In the first consultation of its kind, the government will invite employers to share their views on a mandatory approach to ethnicity pay reporting, since the number of organisations publishing information on the pay gap for people from different ethnic backgrounds voluntarily remains low.

A review of progress since the 2017 audit has shown just 11% of employees reported that their organisations collect data on ethnicity pay. In particular those in small organisations are much less likely (8%) to report that their organisation collects data on ethnicity pay.

The consultation details what information employers should publish to allow for decisive action to be taken while also asking employers how ethnicity data can be collected without placing undue burdens on businesses.

it asks for views on which companies should be required to report, stating that the government believes that employers of fewer than 250 people should not be expected to publish ethnicity pay data. It says the earlier recommendation of a threshold of 50 employees risks imposing too great a burden on business, while one of over 250 employees would mirror the gender pay gap reporting methodology and would include around 10,000 employers in Great Britain.

Prime minister Theresa 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.

‘That’s why I’m delighted to launch the race at work charter, which gives businesses a clear set of actions to work towards in helping to create greater opportunities for ethnic minority employees at work.’

Sandra Kerr, BITC race equality director said: ‘The race at work survey of over 24,000 employees showed that all too often ethnic minority staff are still encountering significant disparities at work. The race at work charter will support leaders and line managers to take practical steps to tackle the barriers, with five clear actions. By signing up, we can ensure the workplace is representative of British society today.’

The BEIS consultation closes on 11 January 2019.

Report by Pat Sweet

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