Firms to be forced to reveal ethnic pay gap under government plans

Posted On: 
11th October 2018

Businesses could be forced to disclose the ethnic pay gap within its workforce as part of a government plan to tackle earnings disparities between white and ethnic minority employees.

Theresa May launched a consultation into driving down the pay gap between ethnic groups
Credit: 
PA Images

Theresa May has announced a consultation into mandatory pay reporting after a study revealed significant racial differences in the earnings and career progression of staff.

The Prime Minister said the probe, which will run until January, will lay out what information employers should make known under the proposal.

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However it will also consult businesses on how the statistics can be collected without putting "undue burdens" on companies.

Mrs May added that voluntarily publishing information on the pay gap between ethnic backgrounds voluntarily remains low.

The Prime Minister also unveiled plans for a new Race at Work Charter, which will prompt businesses to change recruitment processes where it needs to in order to boost the progression of ethnic minority employees.

Elsewhere she said services such as the NHS, Armed Forces, schools and police will set out plans to increase the proportion of public sector leaders from ethnic minority backgrounds.

Mrs May said: “Every employee deserves the opportunity to progress and fulfil their potential in their chosen field, regardless of which background they are from, but too often ethnic minority employees feel they’re hitting a brick wall when it comes to career progression..."

“One year on from publishing the Race Disparity Audit, the government is delivering on its promise to explain or change ethnic disparities in all areas of society, taking action to support young people into work with funding of £90 million from dormant bank accounts, and acting on the recommendations of the Lammy review including by increasing diversity within prison officer recruitment.

“Our focus is now on making sure the UK’s organisations, boardrooms and senior management teams are truly reflective of the workplaces they manage, and the measures we are taking today will help employers identify the actions needed to create a fairer and more diverse workforce.”

Matthew Fell, chief UK policy director at the Confederation of British Industry (CBI), said: "Transparency can be a catalyst for action in tackling the ethnicity pay gap, in the same way that it has been so successful for gender.

"Reporting must be done in a way that is supported by both businesses and employees, to recognise the wide range of ethnic groups and legitimate staff concerns about intrusiveness where sample sizes are small.

"Companies want to work with the Government to achieve their goal of becoming more inclusive employers."