Out-Law / Your Daily Need-To-Know

First GB ethnicity pay gap figures show significant disparities

Out-Law News | 11 Jul 2019 | 3:33 pm | 3 min. read

The first official statistics on the pay gap between different ethnic groups in England, Scotland and Wales have been published, showing significant disparities between the averages paid to white British workers and those from other ethnic backgrounds.

The figures, published by the Office for National Statistics (ONS), are based on newly reweighted 2018 earnings data from the ONS annual population survey. The ONS has also attempted to put the figures into context based on age, location, country of birth and likelihood of English language skills.

Senior ONS analyst Hugh Stickland said: "Overall, employees from certain ethnic groups such as Indian and Chinese have higher average earnings than their White British counterparts. However, all other ethnic groups have average wages lower than for White British employees, with employees from the Bangladeshi ethnic group having the largest pay gap."

"Once characteristics such as education and occupation are taken into account, the pay gap between White British and most other ethnic groups becomes narrower, though significant differences still remain," he said.

Corden Helen

Helen Corden

Partner

Ethnicity pay gap reporting will be more complicated and challenging for employers. This is primarily due to the fact that some employers do not yet gather the data that will be needed for the reporting requirements. 

On average, employees from the Chinese ethnic group earned 30.9% more than White British employees in 2018; while employees from the Bangladeshi ethnic group earned 20.2% less on average than White British employees. However, statistically, Chinese and Bangladeshi employees make up the smallest proportion of the British workforce, at 0.5% and 0.7% respectively, meaning that these pay gap estimates are likely to be more volatile or inaccurate.

White British median pay was £12.03 per hour in 2018, according to the figures. Three ethnic groups had a higher median hourly pay than this: Chinese, at £15.75; Indian, at £13.47; and Mixed/Multiple, at £12.33. A larger proportion of Indian employees than those from other ethnic groups tended to work in professional occupations. Bangladeshi workers received an average of £9.60; while Pakistani workers received £10.00/hour.

Chinese and Indian workers have consistently earned more than the average White British employee since 2012, according to the figures. The pay gap between White British workers and those from mixed or multiple ethnic groups has switched between positive and negative over this period, suggesting the average earnings for both groups are similar. However, employees in the remaining ethnic groups consistently earned less than White British employees over the same period, with those in the Black African, Caribbean or Black British, Other and White Other ethnic groups earning between 5% and 10% less on average than their White British counterparts.

Broadly, the earnings of employees from ethnic minority groups aged between 16 and 30 were closer to those of their White British counterparts of the same age than the earnings of employees aged 30 or over. The ONS said that this may be because second-generation migrants are performing better than their parents in terms of pay, or that earnings progression could differ between different ethnic groups.

The figures also showed smaller pay gaps for UK-born employees from almost all ethnic groups compared with employees born outside of the UK. The ONS said that factors such as having a UK education and a higher likelihood of speaking English as a first language could impact on the earnings of workers from ethnic minority backgrounds.

Equal participation and progression in the workplace among different ethnicities could be worth an additional £24 billion to the UK economy each year according to the Race in the Workplace report, commissioned by the government in 2017. The government consulted last year on the potential introduction of workplace ethnicity pay gap reporting following the introduction of similar requirements in relation to workplace gender pay gaps. However, it has not yet announced how it intends to take this forward.

"The publication of this data has increased calls on the government to introduce mandatory ethnicity pay gap reporting," said employment law expert Helen Corden of Pinsent Masons, the law firm behind Out-Law. "In particular, the TUC has pressed for ethnicity pay gap reporting to be brought into effect as soon as possible. The government's consultation in relation to ethnicity pay gap reporting closed on 11 January and we are awaiting its response to the consultation, together with draft regulations."

"Whilst it is likely that in many respects the new regulations will mirror the gender pay gap reporting regulations, ethnicity pay gap reporting will be more complicated and challenging for employers. This is primarily due to the fact that some employers do not yet gather the data that will be needed for the reporting requirements, or they do so but on an anonymous basis which will not assist, and it is not yet clear which classifications will be used for the calculations. Depending on the size of the workforce and the classifications used, the data could swing significantly from one year to the next," she said.