MPs call on the Government to introduce mandate for ethnicity pay gap reporting

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Reporting the ethnicity pay gap should be mandatory, and is the first step to addressing pay disparities between employees from different ethnic backgrounds, say a cross-party group of MPs.

In a new report, the House of Commons Women and Equalities Committee call on the Government to introduce legislation which 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, has been mandatory for companies with over 250 employees since 2017, no such condition exists to monitor pay disparity for workers of different ethnicities.

According to the MPs, there are clear incentives to do so, with research estimating that addressing race inequality in the UK labour market could boost the UK economy by £24 billion a year.

As companies who 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.

The Government has two months to respond to the report.

The full ‘Ethnicity pay gap reporting’-report is available on the UK Parliament website.