Ethnicity Pay Gap Reporting

Baroness Falkner of Margravine Excerpts

Monday 25th October 2021 Lords Chamber

[Baroness Falkner of Margravine (CB)]

My Lords, I am grateful to the noble Lord, Lord Boateng, for initiating this debate and for making such a powerful argument for what is potentially a game-changing enabler for ethnic minority participation in the economic reward system of this country.

I should begin by declaring an interest as chair of the Equality and Human Rights Commission, one of the signatories of the call for the Government to bring in mandatory ethnicity pay gap reporting in the workplace.

The House will know that the EHRC enforces the gender pay gap regulations and may well be the body charged with enforcement of the putative EPG regulations. Our experience of GPG is that the transparency that this collation of data has brought to employers is, they tell us, incredibly valuable. In the few short years that we have been doing this—we only started in 2017—we have seen the pay gap narrowed from 17.4% in 2019 to 15.5% by 2020. Alas, I fear that, as a result of the pandemic, it will increase for a short period; nevertheless, we are on that case.

Our research into ethnic pay inequality shows that there are multiple and complex factors at work, including occupational segregation, for women and carers particularly, the lack of flexible working and a serious lack of senior level representation. Additionally, we also found, after looking at the markers you would expect to see, that there were large gaps in the ethnicity pay data which were inexplicable to us. This suggests that there is still a level of discrimination in the economy and in workplaces in this country.

We recognise that measuring ethnic minority pay gaps is much more complex than for gender. We know that they vary by ethnic group, sex, age and whether individuals are UK or foreign-born. It is not simply the case that white British people earn more. The most recent statistics available show that while the majority of ethnic minorities earn less than their white British counterparts, Chinese, white Irish, Indian and Asian ethnic groups all had higher hourly pay, so it is not going to be a simple white versus others equation.

There are also stark regional variations, reflecting in part the different levels of diversity in parts of Britain. The ethnicity pay gap, which is the difference between ethnic minority and white British workers was 2.3% overall in 2019-20 but 23.8% in London, as the noble Lord, Lord Boateng, said, and only 1.5% in Wales. If we are the monitoring body for this, if it comes about, I can reassure Cumbrian hill farmers that we will not be coming for them.

Moreover, we appreciate that a binary reporting requirement similar to that for gender would potentially tell us relatively little about the particular barriers facing individuals or certain ethnic minorities or, indeed, suggest what responses are needed from employers. I very much support the call of the noble Lord, Lord Boateng, for a narrative alongside the reporting because that is the explanatory part, the analysis that gets us to where we need to go.

We welcome the Government’s consultation on extending the mandatory ethnicity pay gap reporting in line with existing gender pay gap reporting and await the outcome, but we feel that it is important to have a nuanced approach to this, and that tracking outcomes at key stages in the employment journey—recruitment, retention and progression—offers much greater insight into the specific barriers facing groups. It is also essential to ensure that any future reporting mechanism has large enough employee sizes to ensure the right to anonymity is preserved.

In conclusion, if the Government and large businesses are serious about ending race discrimination, this is the most effective way to make a real difference to the lives of ethnic minorities in this country. I look forward to the Minister’s response.