Businesses could be forced to reveal their ethnicity pay gap statistics after an audit last year showed significant disparities in pay and promotion opportunities of different ethnic groups.
The Race Disparity Audit found that unemployment among black, Asian and minority ethnic people was nearly double that of white Britons.
Announcing a consultation on mandatory pay reporting, Theresa 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.”
“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.”
The consultation will run until January to allow businesses to share views on what information should be published.
May also unveiled a Race at Work Charter aimed at increasing recruitment and career progression of ethnic minority employees.
The charter has already been signed by high-profile public bodies and businesses including NHS England, Lloyds Banking Group, Saatchi & Saatchi, KPMG, RBS, the Civil Service.
Public sector bodies including the armed forces, schools and the police force will be told to set out plans on how they will increase the proportion of leaders from ethnic minority backgrounds.
The race pay gap reporting is intended to mirror elements of the gender pay gap regulations, proposing the same threshold of 250 employees or above for mandatory reporting.
Commenting in response to the government consultation on ethnicity pay reporting, Peter Cheese, CEO of the CIPD, comments:
“The CIPD has consistently highlighted the need for organisations to be more transparent about how they report on the diversity of their workforce and how they reward, manage and develop their people as a catalyst for creating more diverse and inclusive workplaces.
“We fully support the principle behind ethnicity pay gap reporting and the need for meaningful action in this area that will drive genuine change. It is crucial that the insights and views of employers are fully taken into account during the consultation, for any new law in this area to truly create more inclusive workplaces.
“There are many challenges and complexities to consider when collecting, analysing and reporting data on ethnicity so there will be a need to provide in depth information, advice and guidance for employers. The CIPD will be leading the development of such support for the HR and people management community.
“It is also important to remember that ethnicity pay gap reporting will only have a positive effect if it leads to changes in how employees from a minority ethnic background are recruited, managed, developed and promoted. This is why there is a need for employers to report on their action plan in response to their ethnicity pay gap data if the proposed new legislation is to act as a game changer.
“We believe that work should work for everyone. There needs to be more people from different backgrounds in senior level positions in the public and private sector and role models for the next generation. That’s why we’re delighted to sign the new Race at Work Charter, which builds on our commitment to championing better work and working lives for people and society.”