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Ethnicity pay gap reports rise in 2020

The percentage of businesses calculating their ethnicity pay gap data has risen by 18% over the last two years according to a new study from PwC.

For 2020, almost one quarter (23%) of businesses are now calculating their ethnicity pay gap, compared to just 5% of companies in 2018.

A majority (67%) are now also collecting ethnicity data on their people, up from just over half (53%) in 2018.

This trend has been seen as an encouraging sign of businesses taking action against racial inequality in UK businesses by the firm.

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Katy Bennett, director in PwC’s HR consulting practice, said: “It’s very encouraging to see so many more companies taking action to collect, analyse and publish their ethnicity pay gap data.

“Doing this is a critical first step towards identifying the actions that will drive real and sustainable change.”

Of the businesses collecting the data, 40% have already voluntarily published ethnicity pay gap reports. In those that have not published the gap, nearly half said they are planning to disclose in the next three years.

A lack of ethnicity data was given as the main reason why some companies were not yet calculating their ethnicity pay gap – this was held back by GDPR restrictions, low response rates, capability of HR systems and unease about how to ask questions about race and ethnicity.

“Data is and will continue to be critical for addressing racial inequality in the workplace,” Arun Batra, EY Partner and CEO of the National Equality Standard, told HR magazine.

“Businesses need to forensically investigate the data they have available in their business to truly understand the makeup of their workforce. Ethnicity pay gap reporting can play an important part in this. While this step alone will not lead to racial equality, it would be a leap in the right direction.”

PwC has reported its ethnicity pay gap for the past four years.

Speaking to HR magazine, Laura Hinton, chief people officer at the firm, said that transparency and honesty is essential when asking employees to share ethnicity data.

“I’d say the key thing is to ensure you’re being clear on why you’re asking for this information, what you’ll do with it and how analysing it across your business will directly help drive improvements,” Hinton said.

Nearly seven in 10 companies said they are planning new initiatives to encourage more staff to voluntarily share their ethnicity data.

Other activities designed to address the ethnic inequalities planned for the future include providing specific career sponsorship and advice (39%), bias reduction tools used in recruitment (77%), and setting a clear ethnic diversity strategy (70%).

“Analysing and publicising ethnicity pay gap data is difficult due to the complex and sensitive information being handled, and smaller companies will face different issues to their larger counterparts,” added Hinton.

“That being said, based on our own experience of sharing our data publicly, I would recommend firms looking closely into doing so – it’s a strong way of driving accountability and therefore making progress.”