Author of 2017 ethnic pay review urges UK government to act now

The author of a government review into racial disparities in the British workplace three years ago has urged Boris Johnson to at long last implement its recommendations.

Ruby McGregor-Smith, a Tory peer and former chief executive of outsourcing group Mitie, first made her recommendations, which included compelling companies to publish data on how ethnically diverse they are by pay band, in February 2017. However, three and a half years later the main points of the report have still to be implemented.

Baroness McGregor-Smith, who is now president of the British Chambers of Commerce, told the Financial Times the time had come to act. “The big gap is ethnicity pay reporting . . . and that needs to change,” she said.

Since 2018 all large companies and public sector organisations have had to publish gender pay gap figures.

The spotlight has turned to previous ethnicity reviews — and whether they have been implemented — after Boris Johnson, the prime minister, announced on Sunday a fresh inquiry into racial inequality in the UK.

Frances O’Grady, head of the Trades Union Congress — who was involved in the McGregor-Smith review — said action was needed from ministers now and that systemic discrimination would not be fixed by “kicking things into the long grass”.

“The government must place a legal requirement on employers to identify and tackle the barriers facing BME workers,” she said.

“We need much greater transparency and accountability. As Baroness McGregor-Smith rightly observed ‘daylight is the best disinfectant’.”

ONS figures last year suggested that white workers were paid 3.8 per cent more than all other ethnic groups, while workers of Pakistani or Bangladeshi origin earned 20 per cent less than white British workers. UK-born black workers were paid 7.7 per cent less than their UK-born white counterparts with equivalent educational and occupational attainments.

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Yet workers with Chinese and Indian heritage were earning significantly more than white employees.

One potential hurdle to introducing compulsory pay reporting on ethnic lines is that some workers prefer not to define themselves in such a way. But supporters of the reform argue that incomplete data is still better than none.

In October 2018 the business department, Beis, published a consultation into ethnicity pay reporting — but it has still not published the results.

The Beis consultation argued that employers were currently using different methodologies, “which limits comparability”.

Options put forward to resolve this included a single figure comparing average hourly earnings of ethnic minority staff as a percentage of white employees or ethnicity pay information by pay band or quartile.

More than a third of FTSE 100 boards still lack any ethnic minority representation, according to the most recent report in February from a separate review set up under Sir John Parker in 2017.

Campaigners now say it will be challenging for most companies to hit the “One By 21” target of having at least one board member from an ethnic minority background by next year.

In the three years since the Parker Review started, just 11 additional FTSE 100 companies have an ethnic minority director on their board. FTSE 250 boards were even less diverse with two-thirds of companies analysed with no ethnic diversity on their boards.

Arun Batra, EY partner and adviser to the 2020 Parker Review, said: “If UK companies are to meet the Parker Review target on ‘One by 21’ then FTSE boards need to transform intent into action.”

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He noted the need for data as a “vital part of achieving positive change”, adding: “These insights can help inform decision making and support additional steps they can take, such as publishing their ethnicity pay gap.”



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