Ethnicity pay gap reporting should be mandatory, and is the first step to addressing pay disparities between employees from different ethnic backgrounds, a cross-party group of MPs have put to Government. In a new report, published on 8 February, the House of Commons Women and Equalities Committee called on the Government to introduce legislation that would require large companies to publish their ethnicity pay gap data.

While gender pay gap reporting - a metric designed to reflect gender inequality across the workforce, rather than the difference between different people doing the same job, and defined as the difference between the average earnings of men and women, expressed relative to men’s earnings - has been mandatory for companies with over 250 employees since 2017, no such condition exists to monitor pay disparity for workers of different ethnicities. There are, say the MPs, clear incentives to do so, with research estimating that addressing race inequality in the UK labour market could boost the UK economy by £24bn a year. As companies that currently report gender pay gap figures are 'already well resourced' to do so, the report recommends that the mandate for ethnicity pay gap reporting be in place by April 2023.

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 states that the Government must provide employers with data protection guidance.

The Committee also calls for the legislation to require businesses to publish an accompanying statement and action plan, allowing employers to account for pay gaps and outline steps to be taken to address them.

Chair of the Women and Equalities Committee, Rt Hon Caroline Nokes MP, said:

"The Government's failure to move forward 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. 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."

Key facts

• In 2018, the Department for Business, Energy and Industrial Strategy launched a consultation in which it recognised that “it is time to move to ethnicity pay gap reporting”. The consultation closed in January 2019 and the Government has yet to publish a response.
• On 10 January 2022, Paul Scully MP wrote to the Committee, stating that the Government will respond “in due course”.
• The Women and Equalities Committee held a one-off evidence session on Wednesday 12 January to examine the case for mandatory ethnicity pay gap reporting.