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Ethnicity pay gap persists regardless of high company pay levels

Male employees from ethnic minority backgrounds are earning on average 10% less than their white colleagues within the same workplace, according to Bayes Business School research.

For women the gap was 7% in favour of white women.

The gap was calculated on average after accounting for differences in educational qualifications, job type and the characteristics of the firms in which they work, which is usually seen as the explanation between the wage gap. 

It concluded that the wage gap between white and ethnic minority workers was much more prevalent than the gap between high and low wage firms. 

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The wage gap was smaller in companies which have introduced a job evaluation scheme and those that have a recognised trade union.

It also noted the positive effect reporting has had on the gender pay gap in the UK, which has seen a reduction of 15-20% since it became mandatory for companies to publish the data.

Rejecting recommendations from the Commission on Race and Ethnic Disparities, government decided against making ethnicity pay gap mandatory in March 2022.

Sandra Kerr, race director at Business in the Community, said government should re-evaluate its stance on ethnicity pay gap reporting.

Speaking to HR magazine, she said: “It is extremely disappointing that men and women from minority ethnic backgrounds are earning less than their white colleagues. This should be a wake-up call for government to mandate ethnicity pay gap reporting for businesses, as we have come too far in the push for progress not to see this become a regular business practice.

"Even if it is a less diverse picture than anticipated, the organisations who collect and report their ethnicity pay gap data today, will be the ones to attract the best diverse talent tomorrow."

The research also showed that male and female employees from ethnic minority backgrounds were more likely than white employees to feel over-skilled in their role, leading to them feeling less satisfied than white employees with their earnings.

Alex Bryson, professor of quantitative social science at UCL’s Social Research Institute, added: "Whereas the gender wage gap has been gradually closing in Britain for some time, ethnic wage gaps have not been closing.

"Ours is the first study to show that most of the earnings disparities across ethnic groups in Britain occur within workplaces, rather than across workplaces. This means employers need to do more to ensure employees from ethnic minority groups are treated fairly in the workplace."