Report: Opportunities Knocked? Exploring pay penalties among the UK’s ethnic minorities

The Resolution Foundation has investigated the pay gap between white and ethnic minority employees. To do this, it has presented the results of a series of regression models that test whether inflation adjusted hourly pay differs between ethnic groups after holding constant key personal and work-related factors, including age, region, qualification, occupation, industry, employment mode and contract type, tenure and whether a person was born in the UK.

Key findings

• In most instances, accounting for compositional factors serves to substantially reduce raw pay gaps experienced in the labour market; however for most groups penalties in excess of 5 per cent remain.
• Penalties are largest for black male graduates (17 per cent) and for Pakistani/Bangladeshi non-graduate men (14 per cent).
• There is less variation in the size of penalties that exist between graduates and non-graduates than there is between different ethnic groups themselves.
• Penalties tend to be smaller among women than among men.
• Penalties have remained stubborn for graduates but moved in different directions for non-graduates.

The report authors highlight that there are two potential conclusions to draw from the penalties outlined here. First, they may be the result of instrumental factors excluded from their analysis. Second, they may be driven by discrimination and disadvantage. Their working hypothesis is that both issues are likely to be important.