Ethnicity pay gap reporting: firms urged not to wait for legislation

Employers should not be waiting for ethnicity pay gap reporting to become mandatory to look at how they can improve equality across their organisations, the CBI and law firm Eversheds Sutherland have urged.

With ethnicity pay gap reporting likely to become law within the next couple of years, their Bridge the Gap report suggests employers still have a number of challenges to overcome before they will be prepared to publish their data.

Many employers do not hold staff ethnicity data, so they first need to encourage employees to disclose this information.

Last year, a PwC survey of 80 organisations found that three-quarters lacked the data needed to analyse their ethnicity pay gap.

Secondly, access to BAME talent differs regionally. While cities like London and Birmingham have a large BAME talent pool, companies in other areas will have fewer BAME candidates to choose from and need to look at how they can develop a talent pipeline.

Finally, organisations need to consider how small a sample size can become before reporting on it compromises the anonymity of BAME staff.

“Firms already know that embracing a wide range of talent represents a real competitive advantage.  Which is why they should not be waiting to act until legislation is introduced by government,” said Matthew Fell, CBI chief UK policy director.

“Companies who are already reporting their ethnicity pay gap understand what long-term, meaningful action they need to take to tackle race inequality at work. They are leading from the front – improving how they attract, hire and promote employees from ethnic minority backgrounds.

“But many companies have so much more they can and should be doing. Firms have to get better at speaking about race at work; developing campaigns to encourage employees to share their ethnicity; and creating strategies to improve BAME representation all the way up to the boardroom.”

The report gives employers three action points to prepare for ethnicity pay gap reporting:

• building inclusive company cultures where all employees feel confident to disclose their ethnicity
• champion race equality from the top of organisations and improving how they attract, hire and promote BAME employees
• encouraging open, inclusive conversations about race at work.

PwC, for example, launched a company-wide communications campaign called “who do we think you are?” to encourage employees to share their personal data, explaining why they were being asked to provide this information and how the data would be used. Currently, 92% of PwC employees have shared their ethnicity with the company, which has enabled it to look at recruitment and promotions practices, progress against diversity targets and consider development opportunities.

Eversheds Sutherland and logistics firm Wincanton developed an internship programme for eight BAME law students, offering them a week-long paid placement experiencing both client-facing and in-house work, which has given Eversheds a “small but strong” pipeline of BAME candidates to approach in future.

Naeema Choudry, a partner and equality expert at Eversheds Sutherland, said: “It is imperative for businesses to create the right environment for career advancement and development for all their employees – whatever their ethnicity. Ethnicity pay gap reporting is a key step in ensuring such progression, as it enables businesses to understand any ethnicity pay gaps that may exist and then to carefully consider what practical steps need to be taken to close them.

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