Complexity not a barrier to ethnicity pay gap reporting, say MPs

Government is "juggling" complex issues as it explores the viability of mandatory ethnicity pay gap reporting, MPs heard yesterday.

Speaking to HR magazine Dianne Greyson, founder of the Ethnicity Pay Gap Campaign, said that the government’s objections during the debate were unfounded and it needs to act.

“If you’ve got an ethnic pay gap in your organisation, then you have discrimination in that organisation and something needs to be done,” she said.

“The government seems to be somewhere else at the moment when it comes to equalities.”

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Paul Scully, the under-secretary for business, energy and industrial strategy (BEIS) appeared before the petitions committee as it debated the issue.

He cited several difficulties in establishing an ethnicity pay gap reporting framework including the refusal of employees to identify themselves as a particular ethnicity.

Drawing on the example of the civil service, Scully noted that 22% of employees did not identify themselves which caused the pay gap figures to become skewed.

“That is just one of the anomalies, or unintended consequences. It is not something that we cannot get around, but it is illustrative of how statistics can be misread and a problem misdiagnosed,” claimed the minister.

Greyson, who is also managing partner of D&I consultancy Synergised Solutions, said that HR is perfectly positioned to help overcome such obstacles.

“HR has an important role to play in those situations. An organisation needs to be clear and honest in its messaging.

“HR are able to have those conversations and hold workshops and explain why you are doing this and how it's going to help those employees,” she said.

Several MPs noted that there was widespread support for mandating ethnicity pay gap reporting including a joint call by the CBI, the TUC and the Equality and Human Rights Commission in June.

“Ethnicity pay gap reporting is one of the most transformative steps to address race inequality at work,” Matthew Fell, chief policy director at the CBI told HR magazine.

“Companies want to see the introduction of mandatory ethnicity pay gap reporting, in the same way as they do for gender, because closing the gap is not just the right thing to do – the business case is watertight.”

Abena Oppong-Asare, MP for Erith and Thamesmead, argued that current voluntary reporting was inadequate.

Earlier this week, analysis by the CIPD found that just 13 of the FTSE100 companies published their ethnicity pay gaps. Oppong-Asare likened this to voluntary gender pay gap reporting prior to 2017 when just six companies published it.

Felicia Willow, interim chief executive of the Fawcett Society, told HR magazine that it fully supports mandatory reporting, but there are lessons to be learned from reporting on gender. 

“Reporting alone is not enough – we see that now with gender pay gap reporting,” said Willow.

“Fawcett has long campaigned for gender pay gap reporting to be strengthened and made meaningful, including through introducing mandatory action plans to set out how employers will reduce their pay gaps and reducing the size of employers required to participate from 250 employees to 100.

“Ethnicity pay gap reporting will need similar action to be effective and taken seriously by employers."

The problems with gender pay gap reporting:

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The additional data burden put on workplaces in ethnicity pay gap reporting was also noted in the debate.

"This is far more than just extra admin,” responded Wanda Wyporska, CEO of the Equality Trust.

“These data will give employers a clearer idea of where the discrepancies lie and where there may be recruitment and retention issues. Many employers are already reporting on the ethnic minority pay gap, which is to be welcomed, but we also need action to tackle institutional inequalities and racism in the workplace."

Before publishing an official response, Scully said government would be considering the 2017 McGregor-Smith Review on Race in the Workplace, its own 2018 consultation on mandatory ethnicity pay gap reporting and the findings of the Commission on Race and Ethnic Disparities from earlier this year.