The pay gap: Government considers mandatory ethnicity reporting

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As of April last year, organisations with more than 250 employees have had to publish their gender pay gap. Now, the Government wants to take it further – and are looking into ethnicity pay gap reporting.

If it goes ahead, ethnicity pay gap reporting would follow a similar framework to gender, with only larger businesses needing to publish their data. But, there are several things that still need to be worked out.

Firstly, it’s not clear how this data would be collected. Firms are already confused about how to collect their gender pay gap data – and there are question marks over how much value the bare bones figures that they’re required to publish offer. So, bringing a range of ethnicities into the mix might only add to the confusion.

Secondly, the Government’s consultation suggests looking at just two categories: white and ethnic minority. But, this data is reductive, and might not be useful. On the other hand, producing separate statistics for each ethnicity would create a lot of work for the business involved.

There’s also the fact that there’s currently no legal obligation for employees to disclose their ethnicity – and some might find it intrusive, or refuse to disclose their data. But, voluntary reporting has been shown to result in only 11% of employees’ ethnicity data being collected– which doesn’t offer a full picture. The consultation suggests that explaining how the data will be used, and that it’ll be kept confidential under GDPR, might help to alleviate this, but there’s no guarantee. At the moment, employees who don’t disclose their gender simply aren’t included in gender reporting figures – but many have questioned whether this is the right approach.

Pay gap reporting and a diverse workforce is beneficial for many reasons. It increases creativity and innovation, and, as the Equality and Human Rights Commission states, highlights the importance of enabling minorities to participate more fully in the work place. Flexible working opportunities could improve this even further – allowing for a new voice in the workforce – as well as improved recruitment and retention rates.

If mandatory ethnicity reporting is introduced, businesses will have to step back and consider the diversity and disparities within their organisations. As with gender pay gap reporting, they’d be encouraged to include a narrative and action plan along with their figures so that they can evaluate their workforce – and then diversify and update their way of working. For high-profile employers, the publicity that comes with mandatory reporting may force their hand.

But, as gender pay gap reporting has shown, the regulations only require very basic statistics. It needs to evolve with the expansion of those that are being reported about, or the question will remain: does pay gap reporting really achieve what it’s set out to do?