Black and Minority Ethnic People: Workplace Issues

Baroness Warwick of Undercliffe Excerpts

Tuesday 3rd May 2016 Lords Chamber

[Baroness Warwick of Undercliffe (Lab)]

My Lords, I thank the Minister for providing us with an opportunity to consider such an important subject ahead of the forthcoming review by the noble Baroness, Lady McGregor-Smith. The announcement of the review into the progression of black and minority ethnic people in the labour market, and the noble Baroness’s leadership of it, has been widely welcomed, and I found her insights today both fascinating and challenging.

As the noble Baroness, Lady Neville-Rolfe, has highlighted, we have some idea of the scale of the problem facing those from black and minority ethnic backgrounds when looking for work. One in eight of our working age population is from a black, Asian and minority ethnic background, yet only one in 10 is in the workplace. While the ONS figures released in April show that more people from ethnic minority backgrounds are in work since records began 15 years ago, their annual employment rate of 62.7% is almost 13 percentage points lower than the white employment rate of 75.4%.

Analysis of the ONS figures by the TUC gives us a fuller picture. The TUC says that at every level of education, jobless rates are much higher for black, Asian and minority ethnic workers. BAME workers with degrees are two and a half times more likely to be unemployed than white graduates. Those with A-level equivalents, including trade apprenticeships and vocational work, are more than three times more likely to be unemployed than their white counterparts, while BAME workers with GCSE equivalents and basic-level qualifications are more than twice as likely to be out of work. This is the harsh reality we face. As the TUC’s General Secretary, Frances O’Grady, has said, this is not only wrong, it is a huge waste of talent. Companies that recruit from only a narrow base are missing out on the wide range of experiences on offer from Britain’s many different communities.

Once in the workplace, there are data showing that people with a BME background face systemic disadvantages including lack of promotion, lack of role models and lower levels of pay. The TUC’s figures show that black workers with degrees are paid nearly a quarter less than their white peers—the equivalent of £4.33 an hour. Those with A-levels earn 14.3% less on average than their white counterparts, and black people who leave school with GCSEs typically get paid 11.4% less than their white peers. The pay gap between white graduates and all black, Asian and minority ethnic workers with degrees is 10.3%, the equivalent of £1.93 an hour. The pay gap with white workers for all groups, regardless of their educational attainment, is 5.6% for BAME workers and 12.8% for black workers.

Then there is the lack of promotion and lack of role models. The thought-provoking Race for Opportunity report, Race at Work 2015, published last November, tells us that while one in 10 employed people comes from a BME background, only one in 13 management positions and one in 16 top management positions are held by an ethnic minority person. As the noble Baroness, Lady McGregor-Smith, said, the media interest in her appointment as a CEO of a FTSE 200 company spoke volumes about its novelty.

The same report showed that BAME employees are less satisfied with their experiences of management and progression than white employees. Interest in taking part in a fast-track programme was significantly higher among BAME groups, jumping from 18% of white employees who would take part to 40% of BAME employees. Yet only 8% of BAME employees have been on fast-track programmes. The survey also revealed that 30% of BAME employees feel they have been overlooked for promotion, compared with 23% of white employees, and that British people with a BAME background are less likely to be rated as top performers compared with their white counterparts.

In the Civil Service, barriers to the progression of talented BME staff are seen as: a demoralising lack of BME role models; a lack of diversity in leadership; and unconscious bias and discrimination, leading to a lack of equal access to projects, promotions and secondments. One outcome has been Permanent Secretaries having specific responsibility for delivering measurable diversity outcomes.

I know we can all agree that employers need to reach the widest possible talent pool, and that companies can only benefit from creating a diverse workforce who reflect the clients, customers and communities they serve. It is entirely obvious that we must capitalise on the skills and talents of every individual in the workplace, regardless of their background. The question is, of course, how best to do that. As other noble Lords have noted, the Government’s ambitious 2020 plan is aimed at improving labour market outcomes for those from BME backgrounds. Its targets include increasing apprenticeship take-ups and university student numbers by 20% by 2020, awarding 20,000 start-up loans by 2020 and increasing BME employment by 20% by 2020.

I support those aims and believe in the power of targets to focus minds and provide impetus. Where the pace of change is slow, target setting can increase its speed, but I cannot help but feel that this 2020 vision has a headline-grabbing neatness which invites charges of tokenism. Targets can only be milestones on a longer journey. When we come to tackling issues facing BME people in the workplace, I hope we will be able to consider the wide range of options offered so powerfully by speakers in this debate, including my noble friends Lady Howells, Lord Morris and Lord Parekh.

Data are a powerful agent for change. Will the Minister take on board the recommendations by the TUC, Race for Opportunity and others that the Government should encourage employers to monitor the progress of BME candidates in recruitment and progression processes and should work with employers to improve the transparency of career progression? Does the Minister agree that to help make this happen, what is needed are “diversity champions”—senior roles within companies responsible for all aspects of diversity and inclusion? There is a strong view that every chief executive officer should be a diversity champion, because real culture change comes from the top. Yet according to a Business in the Community survey, one-third of all employees say their organisation does not have a senior leader who actively promotes equality and diversity in their workplace.

Leadership is of course key to tackling unfairness and discrimination in the workplace. It is vital that the leadership pipeline has sufficient BME talent to ensure that the senior management of the future reflects an increasingly diverse working population. In this respect, I am encouraged by the success of Women on Boards, the business-led initiative steered by the noble Lord, Lord Davies of Abersoch, to tackle the issue of low representation of women on FTSE boards. As the noble Baroness, Lady Neville-Rolfe, mentioned, in five years the representation of women has more than doubled: it now stands at 26.1% on FTSE 100 boards and 19.6% on FTSE 200 boards. There are no longer any all-male boards among FTSE 100 companies. The noble Lord rightly called this a,

“profound culture change at the heart of British business”.

When the Women on Boards report was published last October, the vice-chairman of KPMG, Melanie Richards, said:

“In order to remain relevant to our clients and communities, we need leaders who come from a wide range of backgrounds, each bringing different skills and views to the table, creating boardrooms that truly mirror our society. Without these different outlooks and diversity of skills and experiences, our businesses will simply not thrive in this fast-paced changing competitive world”.

I agree with her. What is true for the boardroom in this respect is surely also true for the workplace. The noble Baroness, Lady McGregor-Smith, has taken on a formidable challenge that is hugely important to the social and economic success of our country. I wish her well and look forward to the outcomes of her review.