MPs say there is no excuse for the lack of ethnicity pay gap statistics and want the government to mandate that large companies must report on ethnicity pay gaps. 

In a report published today, the  House of Commons Women and Equalities Committee is calling on the Government to introduce legislation which would mean large companies would have to publish their ethnicity pay gap data. 

Mandating ethnicity pay gap should be enshrined in law

The cross-party group of MPs says reporting on the ethnicity pay gap should be mandatory. 

It believes this is the first step to addressing pay disparities between employees from different ethnic backgrounds.

Chair of the Women and Equalities Committee, Rt Hon Caroline Nokes MP, said: “The Government’s failure to move forwards on ethnicity pay gap reporting is perplexing. We already have the systems and structures in place to start reporting on the ethnicity pay gap, as well as a clear impetus- tackling inequality benefits not only marginalised groups, but the whole economy. The Government has no excuse. All that is lacking, it seems, is the will and attention of the current administration. 

According to the report, gender pay gap reporting has been mandatory for companies with more than 250 employees since 2017, yet there is no condition to monitor pay disparity for workers of different ethnicities. 

Ethnicity pay gap reporting would boost economy

But the MPs say there are clear incentives to do so. Research estimates that addressing race inequality in the UK labour market could boost the UK economy by £24 billion a year.

The report recommends that the mandate for ethnicity pay gap reporting should be in place by April next year (2023), since companies who currently report gender pay gap figures are ‘already well resourced’ to do so.

Rt Hon Caroline Noakes said: “Last week, the Government made bold promises to ‘Level Up’ geographically. Time and again it proves itself to be blind to the importance of levelling up within our communities and address long-standing disparities along the lines of protected characteristics. By taking this small step, the Government would demonstrate its commitment to working with business to reduce inequality.” 

In evidence taken from business and employment experts, the Committee acknowledges the challenges presented by the mandate- notably, the smaller sample size of ethnic minority groups as opposed to the rough 50:50 gender split of the workforce, which raises anonymity issues in smaller organisations. 

Addressing concerns heard regarding the enforcement of publication, the report calls for a clear explanation of how new rules will be enforced, and says the Government must provide employers with data protection guidance. 

 The Committee also calls for laws where businesses are required to publish an accompanying statement and action plan, which will allow employers to account for pay gaps and outline steps that will be taken to address them.