CBI president says it’s time to close the ethnicity pay gap

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CBI President Lord Karan Bilimoria argues for a faster take up of ethnicity pay gap reporting.

Tools such as mandatory ethnicity pay gap reporting are vital in the fight against inequality in UK businesses.

Ethnicity data collection and reporting plays a critical role in closing disparities and highlighting inequalities. Just as with gender pay gap legislation, it will help shine a light on the barriers that people from ethnic minority backgrounds face and focus minds on actions to close the gap.

The CBI, like AAT, has continuously been calling for the introduction of mandatory ethnicity pay gap reporting. Business has been anticipating mandatory ethnicity pay gap reporting since the McGregor-Smith review of 2017 – yet in 2021, this has still not been adopted by the Government and too few companies are publishing their data. As we emerge from the pandemic, we must learn from the success gender pay gap reporting has had and accelerate ethnic minority representation in business.

Closing the ethnicity pay gap is about making society fairer and overcoming inequalities. It’s not just the right thing to do – the business case for it is watertight. Diverse companies are better companies, and building a more diverse workforce will open up everyone’s ability to contribute to the UK economy and increase productivity. The McGregor-Smith review finds that the potential benefit to the UK economy from race equality is estimated to be £24bn a year, which represents 1.3% of UK GDP.

Companies will have to get better at speaking about race at work – developing campaigns to encourage employees to declare their ethnicity, and improve racial and ethnic representation from entry level to boardroom. As CBI president, I am proud to say that we are playing our part. In October last year, the CBI, along with 14 founding business partners, launched Change the Race Ratio – a business-led campaign that champions the Parker Review targets. We want to accelerate racial and ethnic minority participation on leadership teams and boards of the UK’s largest businesses and call time on the all-white boardroom. Our campaign calls for four commitments:

  • improve racial and ethnic diversity on boards – in line with the Parker Review targets;
  • set and publish targets for Exco (the Executive Committee) and Exco minus (the level below the Executive Committee);
  • publish a clear race action plan and a commitment to publish ethnicity pay gaps by the end of 2022; and
  • create a culture for diversity to thrive and support your supply chain and wider stakeholders to take action on diversity. While the Government delays on committing to mandatory ethnicity pay gap reporting, businesses are seizing the initiative.

Our campaign will support signatories to make ethnicity pay gap reporting as straightforward as possible, while providing the rich insights needed to tackle disparities. Business can be a real force for good. But to build a fairer society and demonstrate the positive social impact of business, we need to get this right. Change the Race Ratio is committed to helping companies learn from peers and take action.

Further information

To find out more and sign up, visit: changetheraceratio.com.

About the author

Lord Karan Bilimoria CBE, DL is a crossbench peer in the House of Lords, Chair of the Confederation of British Industry (CBI), founder of Cobra Beer and Chairman of the Cobra Beer Partnership Limited.

AAT Comment offers news and opinion on the world of business and finance from the Association of Accounting Technicians.

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