The MP who chairs the women and equalities committee has slammed the government’s decision not to proceed with mandatory ethnicity pay gap reporting as “nonsensical”.
Caroline Nokes’ committee had recommended that pay gap regulations be extended to ethnicity by April 2023, meaning that companies with 250 employees or more would need to publish an annual snapshot of differences between hourly salaries for workers of different ethnicities. This was a suggestion echoed by a number of business and employment bodies including the CIPD.
This was also something recommended by last year’s Commission on Race and Ethnic Disparities, chaired by Tony Sewell.
But in the government’s response to the commission’s report it said it would support organisations that voluntarily reported their ethnicity pay comparisons, yet stopped short of making it mandatory.
Ethnicity pay gap reporting
It concluded that publishing ethnicity pay gap figures “may not” be the “most appropriate tool for every type of employer seeking to ensure fairness in the workplace”.
In a report released in response to the government’s decision this weekend, the committee pointed to the findings of the McGregor-Smith Review of 2017, which showed that addressing racial inequality in the labour market could boost the UK’s economy by £24 billion a year.
It added that reporting would “set the ball rolling” in reducing inequalities between ethnic groups.
In a statement, Nokes said: “The government’s nonsensical response – which claims that gathering the necessary data would be too difficult, and then promptly outlines how this could easily be addressed – is disappointing.
“It makes clear that what is lacking in this administration is not resource or know-how, but the will or care to foster a fairer and more equal society.
“Introducing mandatory ethnicity pay gap reporting for larger businesses would set the ball rolling, reducing inequalities between different ethnic groups.”
It said the government was well placed to provide information and support to deal with potential problems with reporting, such as how to make distinctions between different ethnic groups and advice for employers in geographical areas where there are statistically low numbers of people from ethnic minorities.