New Data Shows 50% Drop in Firms Reporting Ethnicity Pay Gaps

The number of UK organisations reporting on their ethnicity pay gap has fallen by 50% in just a year, according to a new report.

Statistics from HR DataHub’s Outlook 2022 report has revealed that 64 organisations reported their ethnicity pay gap in 2021, down from 129 in 2020; and down from 98 in 2019 (pre-pandemic). Since 2018, 170 companies have disclosed their ethnicity pay gap. However, of this total, only four companies reported their ethnicity pay gap consecutively over four years (from 2018 to 2021).

Sector analysis by HR DataHub shows that since 2018, hospitality and leisure (0.41%), manufacturing (0.41%) and energy and utilities (1.23%) have the lowest rate of ethnicity pay gap reporting. Unlike the gender pay gap, there is no legal requirement for companies to publish their ethnicity pay gap. However, unions and business lobbies have urged the government to introduce mandatory reporting, especially for large firms.

TIME TO TACKLE PAY INEQUALITY

 “These figures paint a clear, but worrying picture of ethnicity pay gap reporting in the UK. D&I data is critical for organisations to understand where the problem is – and, if there is a problem, how they are going to tackle it,” stated David Whitfield, CEO and Founder of HR DataHub. “However, only a third of companies are taking a data-led approach to putting in place actions and monitoring progress. Plus, the lack of comparable data available to companies has led to confusion and slow progress. This is why we created the D&I Index – to enable organisations to collect and measure their D&I data, set meaningful targets and implement changes that genuinely move the needle on workplace inclusivity.”

Not only are “ethnicity pay gap reporting figures are incredibly low but they are also hugely inconsistent”, added Whitfield. “As with all D&I matters, we would expect to see the rate of reporting increase year-on-year. However, the volatility of our data would suggest organisations in the UK are, with minor exceptions, not committed to delivering meaningful change. Once a business reports on their ethnicity pay gap the first time, they have the systems and structure in place to continue doing so. It begs the question, why has that commitment disappeared when the need for change is so great?”

LACK OF LEGISLATION

HR DataHub’s Outlook 2022 report also found that 40% of companies have no intention to report on their ethnicity pay gap. “The lack of any legislation around ethnicity pay gap reporting doesn’t just allow organisations to escape responsibility, but the lack of formal guidance also makes it tricky for companies to know exactly what to do,” concluded Whitfield. “To reduce inequality, the government cannot allow for ethnicity pay gap reporting to be a choice.”

UK MPs have recently urged the government to force big businesses to report their ethnicity pay gaps in a bid to tackle glaring inequality. Click here to read more.