Why large companies should be required to reveal their ethnicity pay gap

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Wera Hobhouse MP, Liberal Democrat Spokesperson for Women & Equalities, argues that ethnicity pay gap reporting should be obligatory for large companies.

In 2015 the Liberal Democrats were central to ensuring the Government made gender pay gap reporting mandatory for all large companies.

This was a game-changer. 

It allowed both the public and employees to be fully informed about what a company was doing – or in many cases not doing – to address their gender pay gap. 

It forced companies who had a bad track record to act with urgency, and failure to follow through on action has been met with public outrage and in many cases negatively impacted a company’s brand.

Ethnicity pay gap

The next step must be compulsory reporting of the ethnicity pay gap for these same big companies. And it is vital that the Government urgently acts to make this happen.

Studies suggest that the economic impact of coronavirus (Covid-19) will be overwhelmingly concentred on those in lower-paid, insecure and gig economy work. Evidence also suggests that Black, Asian and minority ethnic (BAME) workers are much more likely to have such insecure and low paid jobs. 

Writing and speaking about these generalisations can be uncomfortable but without understanding the true extent of the problem and how it manifests itself in people’s lives we cannot hope to make things better. 

We already know that far too many people experience discrimination, inequality, and injustice. The ethnicity pay gap is an obvious part of this.

We also know the impact that growing up in poverty can have on children, impacting entire lives from an increased likelihood that they end up in our criminal justice system to a reduced life expectancy. The ethnicity pay gap is also a factor here.

Lessons from 2020

If 2020 has taught us anything, it is that British society is far from equal. Thousands of people are struggling in ways that many of us simply cannot relate to and Covid-19 has made these inequalities that much more painful.

The Black Lives Matter movement has started some important conversations in our communities – about our history, our present situations, and what we want our futures to look like.

The Government has had two years since closing its consultation on ethnicity pay reporting and has still not taken any action to resolve it – something I know AAT has commendably highlighted on several occasions. As with so much else, when it comes to tackling racial injustice, this Conservative Government is failing to show the urgency that such a situation demands. It has set up a new “Commission on Race and Ethnic Disparities” but we shouldn’t have to wait for yet another report to implement a change we all agree is needed.

Kicking the can down the road is no longer an option. What we know about the ethnicity pay gap – from large scale surveys such as those run by the Office for National Statistics – is that certain workers, such as those from a Bangladeshi or Pakistani background, could be paid up to 15% less than white people on average. 

This is extremely worrying. 

More Government action

We need more than gesture politics from this Government – we need a commitment to transparency so that the public, the media, and our communities can hold businesses to account.

At the recent Liberal Democrat Conference, our party made the commitment to actively work to make our workplaces more equal, beyond simply reporting the problem. We are asking the Government to invest in employment support services to enable job centres to improve the quality of advice. We are also asking them to establish community-led employment services in areas where there are especially vulnerable communities. And we are asking them to support employees to empower themselves within companies.

But first and foremost, we are saying to Ministers: stop dragging your feet and introduce mandatory ethnicity pay gap reporting for large companies, now.

In summary

As we emerge from the pandemic, let’s use this transparency and data to empower workers from ethnic minority backgrounds to get fairer pay. This is in the best interests not just of those from BAME backgrounds but all workers, businesses and the wider economy.

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

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