31 May 2022

Where to start with ethnicity pay gap reporting

The demand for mandatory ethnicity pay gap reporting is growing, but this pay transparency can only be achieved once HR and senior leadership understand data


Maryam Munir

Maryam Munir

Maryam Munir worked as a content marketing writer at Ciphr from 2019 to 2021.


Diversity and inclusion Employee engagement


The demand for mandatory ethnicity pay gap reporting is growing, but this pay transparency can only be achieved once HR and senior leadership understand data

In June 2020, a petition calling for mandatory ethnicity pay gap reporting for UK firms with 250 or more staff reached more than 100,000 signatures. The Black Lives Matter movement has increased public demands for organisations to be transparent about how much they pay people from black, Asian, or ethnic minority backgrounds (BAME), but what greater impact can this reporting have, and why aren’t more organisations already reporting this pay gap data alongside their gender pay gap?

In today’s day and age, people want more to be done to improve diversity, inclusion, and unfair pay. Between 2012 and 2018, employees in the black African, Caribbean, or black British, other, and white other ethnic groups on average earned 5-10% less than their white British counterparts. But, while 63% of employers monitor ethnicity pay gaps, only 31% of employers currently publish this data, according to the Bank of England, which has itself been reporting its ethnicity pay gap since 2018.

To increase these numbers, organisations first need to tackle any barriers that might be preventing them from reporting this data – including a lack of data training.

In 2019, a PwC survey of 80 organisations found that three-quarters lacked the data needed to analyse their ethnicity pay gap. Many small businesses are also putting off ethnicity pay gap reporting because they don’t know how to collect this data in the first place.

As a result, training on how to extract, analyse, and use data is crucial for those in HR and senior leadership. By taking part in online training courses or learning from colleagues or peers are data-driven, all employers can begin to understand the value of data, and start using this to report their ethnicity pay gap.

The impact of greater transparency

By voluntarily deciding to report the ethnicity pay gap, organisations can show that they are willing to be transparent over their pay, and committed to making a positive change where needed.

A 2015 study found that organisational transparency over pay can help reduce racial inequality in the workplace, and it can also create an open culture where employees fell reassured that their organisation is focused on making a difference.

Important conversations can start to take place, employees from ethnic minorities can start to feel seen and heard, and organisations can show others that they are willing to step up, be proactive, and do the right thing.

Insurance organisation Zurich UK recently reported a mean ethnicity pay gap of 9.8% for average hourly pay, showing a 2% increase in average hourly pay for ethnic minorities within the organisation since it reported a gap of 11.8% in 2019. Its report was followed by activities such as introducing a programme to tackle inequality in pay, and encouraging career progression for ethnic minority employees.

If organisations want to start bringing about long-term change, they first need to look at themselves, their actions, and then tackle their inequalities based on their findings. Only then can they create positive, equal, and fair workplaces for everyone.