Tue 08 Feb 2022
The Women and Equalities Select Committee has published a report on ethnicity pay gap reporting. The document follows on from a one-off evidence session held in January.
In the report, the Committee has concluded that ethnicity pay gap reporting should be mandatory and would be the first step to address pay disparities between employees of different ethnicities. In addition, the Committee has called on the government to introduce legislation that would require large companies to publish their ethnicity pay gap data.
As well as noting the moral case to report on ethnicity pay gap within organisations, the report sets out how there is an economic case to address disparities — addressing race inequality could boost the UK economy by some £24bn a year.
The Committee has recognised and acknowledged the challenges associated with putting ethnicity pay gap reporting into effect, and therefore has called for a clear explanation of how new rules would be enforced and has also said that government would need to provide employers with data protection guidelines.
Caroline Nokes, chair of the Women and Equalities Committee, commented: "The government's failure to move forwards on ethnicity pay gap reporting is perplexing. We already have the systems and structures in place to start reporting on the ethnicity pay gap, as well as a clear impetus- tackling inequality benefits not only marginalised groups but the whole economy. The government has no excuse. All that is lacking, it seems, is the will and attention of the current administration.
"Last week, the government made bold promises to 'Level Up' geographically. Time and again it proves itself to be blind to the importance of levelling up within our communities and addressing long-standing disparities along the lines of protected characteristics. By taking this small step, the government would demonstrate its commitment to working with business to reduce inequality."
While gender pay gap reporting – a metric designed to reflect gender inequality across the workforce – has been mandatory for companies with over 250 employees since 2017, no such condition exists to monitor pay disparity for workers of different ethnicities.
As companies that 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.
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 guidelines.
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 full report is available to download.
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