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Ethnicity Pay Gap

Volume 837: debated on Thursday 25 April 2024


Asked by

To ask His Majesty’s Government what assessment they have made of the growing number of companies reporting their ethnicity pay gap and of the case for legislating for mandatory reporting.

My Lords, it is encouraging to see more employers choosing to report their ethnicity pay data. Rather than mandating reporting, which may not be appropriate for all employers, our guidance supports those who wish to report by providing a consistent approach and advice on achieving meaningful comparisons. The latest ONS statistics show that it is difficult to compare data across up to 19 different ethnic groups.

I thank the Minister for that Answer. It is good that a number of companies are now beginning to report voluntarily on this, but why are the Government reluctant to make it mandatory, given that in 2017 it was made mandatory for gender disparity?

I thank the noble Baroness for her Question. As she will understand, this is a much more complicated area to get meaningful data on. There are five broad categories of ethnicity that are used by the ONS, for example, and 19 specific ethnicities. The Government’s concern is that there is a real risk of misleading data, particularly among smaller firms that may have very few members of staff from a minority community, and therefore a change in one or two people could distort the figures.

My Lords, Labour has a long-term plan to tackle racial inequality after the longed-for general election, if we are elected, including through our racial equality Bill, which will require large companies to report on their ethnicity pay gaps, as they already do for gender pay gaps. I know that the Minister is absolutely committed to equalities. As a common-sense way to begin the process of tackling these glaring inequalities, we would not mind at all if she would commit to this policy and persuade her Government to support it.

I will give a couple of examples. First, there was the work the Government did in 2019, when we engaged with a broad range of businesses to understand the complexities of implementing mandatory reporting in this area. It genuinely showed just how complicated it was to do. That was echoed in the Inclusive Britain report chaired by my noble friend Lord Sewell, which brought out a number of points including, critically, the difference between the ethnicity pay gap of those born in this country and those who are not born here, with which I am sure the noble Baroness is familiar.

My Lords, I have some empathy with the point made by the noble Baroness, Lady Thornton. There are disparities in pay for ethnic minorities. There are also disparities in senior and board-level positions, where there are targets for women but fewer targets for people from ethnic minorities. If we looked at individual groups within ethnicity, we would never bring about the changes. It is an argument that my noble friend could ask the department to look at again, so that we can move forward and ensure that we can reduce the inequalities that currently exist.

I am more than happy to take this back to the department and share my noble friend’s reflections, but I remind the House that there is no ethnicity pay gap for people born in this country from roughly half the ethnic-minority groups. In fact, in a number of cases there is a pay gap in the other direction. The issue is much greater for those not born in the UK, and there we need to understand to what extent that reflects level of qualification, level of language, age and a number of other factors.

My Lords, when the TUC and the CBI are both in agreement that this is a policy that should be introduced and mandated—and the Government spend a great deal of time and effort recruiting workers from overseas to fill gaps in our own labour market—why do the Government not accept the wisdom of the TUC and the CBI? They surely know more about the operation of markets than any Government do.

As I said, the Government have done extensive work engaging with employers in this area. We have the important work of the Inclusive Britain report. An employer of, say, 250 employees would typically have 25 ethnic-minority employees, if it was in line with the national average. With 18 separate ethnicities, the noble Lord can do the maths on the sample size.

My Lords, I welcome the Minister’s agreement to take this matter back. As I have said before, what you do not measure you cannot manage. I appreciate that the ethnicity mix of one’s workforce is a bit more complex than with compulsory registration of gender pay gaps, but that policy works very well. I hope the Minister will agree that it would be a worthwhile requirement for any larger employer that sees the benefit of having a more diverse and inclusive workforce.

The Government agree that it is worth while but not that it should be mandatory. We have developed clear guidance for employers and are seeking case studies from employers monitoring ethnicity pay data—but also, crucially, their diagnosis of any gaps and their action plan to address those gaps—so that other employers can benefit from their experience.

My Lords, one of the ethnicity pay gaps is the difference in income that arises from art awards. Will the Minister join me in congratulating Delaine Le Bas, who has just been put on the Turner Prize shortlist for her art deriving from her Romani heritage, as well as the other distinguished members of the shortlist from minority-ethnic backgrounds?

My Lords, I am sure my noble friend is aware that some people from certain ethnic backgrounds, for example African-Caribbean, face a much larger ethnicity pay gap. Does she agree with me that this is unacceptable in 2024 and that therefore we need urgent targeted action to address this?

My noble friend is right: there are particular groups that have not only a larger ethnicity pay gap but a larger employment gap than other communities. The Government have worked with specific communities. My noble friend raised the Afro-Caribbean communities but there are also, for example, significant barriers to employment and pay differentials for Bangladeshi women. The Government have a number of programmes to address those.

While we are at it, can we congratulate PwC for taking people from prison? I think that is a great sign. We must remember that people from ethnic minorities are overrepresented in the prison population.

Of course. I welcome all employers, including PwC, working with those who have been in the criminal justice system and in prison.