In a debate regarding the prospect of enforcing ethnicity pay gap reporting, MP Paul Scully admitted there were “genuine difficulties” in designing a methodology which provides accurate figures.

Discussing the issues which could arise when creating a framework for ethnicity pay gap reporting, a feat declared to be more difficult than setting up gender pay gap reporting, MP Paul Scully stated this would be complex.

The Minister for Small Businesses maintained that people from all backgrounds must have the opportunity to achieve their potential but noted the barriers currently faced by people from an ethnic minority background.

This included lower employment rates, less chances for progression and earning less money than their white counterparts.

However, complications were also noted in creating a unified system for companies to report their ethnicity pay gap.

Such problems included employees not willing to identify their ethnic background which could then cause data collected by firms to become significantly skewed, causing statistics to be “misread and misdiagnosed”.

Furthermore, MP Scully expressed that, contrary to gender pay gap reporting which largely operates on a binary basis, the outcomes for ethnicity pay gap reporting vary substantially between ethnicities and by gender in ethnic groups.

Other considerations included the need for minimum sample sizes from ethnic groups so fair and logical conclusions are able to be made, based off a sizeable data set.

In addition to this, the importance of anonymity in ethnicity pay gap reporting was stressed which reiterates the need for a minimum sample set, allowing employees’ identities to remain confidential in light of pay figures put forward.

Despite this, the Minister suggested progress is being made with more companies signing onto the Race at Work Charter which stipulates all ethnic minority employees are represented at all levels in an organisation. Between 2020 and 2021, the number of Charter members have doubled from 300 to 700.

This debate comes amid bodies such as the CIPD championing the idea that ethnicity pay gap reporting should become mandatory for large organisations by 2023.

Efe Ekhaese, Consultant at Russell Reynolds Associates, stated:

Yesterday’s parliamentary debate on mandatory ethnicity pay gap reporting only further highlighted the rapid progress required to address disparities in the workplace. Ethnicity pay gap reporting is essential. We cannot change the status quo if we do not understand the problem. The old adage of ‘what gets measured gets done’ is relevant here, and we have seen the impact of reporting data when we look to gender.

While there has been a lot of focus and some good steps forward around ethnic disparities in the workplace, pay is one of the most urgent issues to address.

Mr. Ekhaese continued to explain how businesses can act now:

Even without new pay gap legislation, the debate pushes these issues to the top of our news agenda. Employers should be pushing to address this and disclose data before they are forced to by legislation. Whilst having the legal requirement would be a great next step, we should not wait until that happens before we feel compelled to act.

In the meantime, I would encourage leaders to continue to be open to change. These are tricky moments but finding solutions and opportunities in these types of initiatives is crucial if organisations want to demonstrate they truly believe in making progress, rather than just paying lip service to it.