Whilst many employers have long since got to grips with the complexities of assessing and reporting on their gender pay gap, we are yet to see ethnicity pay gap reporting made mandatory in the UK.
However, it is on the agenda and with the increased focus over the last year on racial inequality (sparked in part by the Black Lives Matter movement), ethnicity pay gap reporting is something that will likely become mandatory for employers of a certain size.
The government is currently analysing the results of its consultation and due to report on its findings. Meanwhile, ONS data showing a 23.8% ethnicity pay gap in London, for example, adds weight to cries from the CIPD and others to bring this legislation forward.
Our recent research among the UK’s top 100 retailers shows that this is an area where they face increasing pressure to do more – whether from their employee base or customer base.
As with many diversity agendas, the impetus for change comes not from legislative obligations, but from social nudging and the expectation from society that businesses – particularly public facing brands – will “do the right thing”.
According to our research, 42% of retailers say the position regarding their ethnicity pay gap is unclear, while 28% say they are not planning to report this voluntarily in 2021. Others are starting to look at this, with the majority of these retailers not expecting to see any change on last year’s data.
One of the perceived challenges with ethnicity pay gap reporting is the categorisation of ethnicity and the quality of data that is, or can be, collected from staff. With gender, the identification is, largely, more binary and whilst some employees may identify as gender fluid or non-binary, the vast majority will identify themselves as one of two genders, and be comfortable in sharing that identification with their employer.
Ethnicity is of course much broader than that, with an almost infinite number of possible categories or options for identification. Employees may also take a different view of what their ethnicity is even if they have the same background as another colleague.
So, the data may be challenging to collect, and that may then impact on the value of any pay gap reporting. Time will tell how the lines will be drawn in any regulations that make this mandatory.
What is important for retailers, and we have seen this with gender pay issues, is that this agenda is led from the top. The board must be fully behind both the reporting and any resulting action plans for addressing issues highlighted by the data, which we all know will be there.
Any cultural change, including increasing diversity at all levels of a business and addressing inequality of pay and opportunity, will only succeed if led and endorsed by the senior leaders in the business, and the overall retail brand.
This publication is intended for general guidance and represents our understanding of the relevant law and practice as at January 2021. Specific advice should be sought for specific cases. For more information see our terms and conditions.