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05 Oct 2023
by Ruth Thomas

Four steps for helping employers close ethnicity pay gaps

Data shows significant disparities between the averages paid to White British workers and those from other ethnic backgrounds

Four steps for helping employers close ethnicity pay gaps.jpg 1


October in the UK is Black History Month, which aims to promote and celebrate the contributions of those with African and Caribbean heritage to British society and to foster an understanding of Black history in general.

As we foster that understanding it is important to learn how we can improve the workplace experience for employees with African and Caribbean heritage.

Pay gaps – a simple metric

One simple metric that can be used to understand that experience are average pay gaps. We are used to seeing these reported here in the UK for gender but currently there is no mandatory reporting or data collection required for ethnic groups. Earlier this year the UK government published new guidance on ethnicity pay gap reporting and action in the workplace.   

While calculating the average pay gap is simple the factors that drive them are anything but. These often have less to do with pay itself than a consequence of structural or systemic issues in the workplace and society that create barriers to entry or career progression for certain groups.

Average pay gaps are less about equal pay (being paid the same for like work or work rated as equivalent and equal value) but pay equality, which is more concerned with creating an environment where all employees have the opportunity to earn the same.

Data on UK ethnicity pay gaps

ONS Ethnicity Pay Gap data, last available data set being from 2019, examines the different ethnic groups in England, Scotland and Wales. It calculates the pay gap as the difference between the average hourly earnings of White British and other ethnic groups as a proportion of average hourly earnings of White British earnings.

So, a positive pay gap indicates an ethnic group is paid less than those employees categorised as White British, while a negative pay gap indicates an ethnic group is paid higher.

The data shows significant disparities between the averages paid to White British workers and those from other ethnic backgrounds. The findings were based on comparisons using the 10-category ethnicity breakdown with three ethnic groups: Chinese, Indian and Mixed/Multiple ethnic group which were paid higher on average than White British.

What can employers do about ethnicity pay gaps?

1. Collect employee data, including race

Data-driven ethnicity pay gap reporting is essential to understanding the different experiences of individual ethnic groups. Only by analysing employee data can we move beyond anecdotal evidence and subjectivity to truly measure inequality. From there, we can start to understand where disadvantage and barriers occur to take corrective action.

2. Make leaders accountable

Driving accountability from the top is critical to success. Agreeing which diversity and inclusion objectives are most important and which shortcomings are most in need of addressing in your organisation is just the beginning. Objectives and shortcomings need to then be translated into an actionable plan that sets measurable goals aligned to your accountability framework.

More generally, opening up conversations on race across organisations and giving all employees a comfortable space and voice to share thoughts and ideas is paramount. Many choose to do this through staff networks, encouraging discussions on different experiences to provide insight into unseen barriers and devise practical and creative solutions. It’s all about fostering an inclusive culture.

3. Consider barriers and tackling bias

As with gender, considering barriers to entry for ethnic minorities can have a short-term impact on representation. So challenging educational selection or work experience bias during recruitment can help alongside creating work experience opportunities for everyone – rather than just through existing networks and referrals.

Then it comes down to incorporating other approaches such as: drafting job specifications in a more inclusive way, requiring diverse shortlists and introducing diversity to interview panels to tackle any unconscious bias.

Just as important as barriers to entry, consider barriers to progression. Company-wide transparency is crucial so communicating openly around topics including: career ladders, pay and reward guidelines, and how and why people are promoted, helps ensure employees do not deselect themselves based on perceived hurdles.

As with recruitment, diversity in selection panels and appropriate manager training can also help tackle unconscious bias issues.

4. Offer mentor opportunities

When reviewing progression, the UK’s Business in the Community’s Race at Work charter highlighted the importance of mentoring for ethnic minorities who value mentors more, with a greater desire to expand their personal networks than other groups.

Senior leaders can operate as sponsors and use their influence to highlight and recommend employees when progression opportunities arise. These opportunities can also take the form of reverse mentoring, where junior employees are paired with senior leader mentees to provide a safe channel to learn and share insights and experiences, while providing a fresh perspective on the firm’s business, strategy, and culture.

The ultimate aim of analysing ethnicity pay gaps should be to make employers reflect on why there are discrepancies in pay within their organisation and prompt them to raise awareness of these issues. With diversity, equity and inclusion metrics becoming part of broader environmental, social and governance concerns, and companies seeking to redefine their purpose to generate a positive impact on society, taking action now is fast becoming a business priority.

Start your journey toward pay equity today with Payscale.

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