Ethnicity pay gap in the UK: statistics, impact, and action

Black woman working in coffee shop

Victoria Dale is a highly accomplished diversity and inclusion consultant with extensive experience working across the public, private and voluntary sectors.

In 2019, Office of National Statistics (ONS) figures showed the ethnicity pay gap in England and Wales – the difference in pay between white British and minority ethnic employees – had narrowed to its smallest level since 2012 – 2.3%, down from its recent high of 8.4% in 2014.

This is good news, but much like the gender pay gap, it masks the significant amount of work that still needs to be done if workers’ pay levels are not to be influenced by their race.

Beyond this headline statistic, what is the scale of the UK’s ethnicity pay gap problem? How does it differ between groups, and how does it affect representation within leadership? Furthermore, what is its intersectional nature? And what can organisations do to tackle it quickly and effectively?

The ethnicity pay gap: what do the statistics say?

First, let us look at how the pay gap differs between ethnicities. According to the ONS’s median hourly pay figures1:

The gap is worst in London (23.8%), smallest in Wales (1.4%), and is much larger for workers over 30 than it is for 16 to 29-year-olds; a glimmer of hope for future ethnicity pay gap reduction.

The differing gaps are caused by a range of factors.

First, employment rates vary. 75% of people in the UK of working age were employed in 2018, according to the ONS. Within this, 77% of white people were employed, compared to 65% of people from all other ethnic groups. Pakistani and Bangladeshi people were least likely to be employed, at 57%.

Education levels between ethnicities could also be a factor – 75% of Chinese employees have a degree versus 30.9% of white and Black Caribbean employees, for example.

However, only 34.2% of white British people have a degree and 60.1% of Arab people have one, showing that, on average, white British people benefit from higher pay regardless of educational attainment.

These factors mean minority ethnic people are much less likely to be employed in senior or highly paid positions. According to the Green Park’s 2019 Leadership 10,000 review, since 2014, the number of Black, Asian and minority ethnic Chairs and CEOs is declining (Chair, 3% to 2%, CEO, 5% to 4%).

Furthermore, Business in the Community’s 2020 Race at Work Black Voices Report shows that while 14% of the UK’s population is non-white (and 3.3% are Black):

  • 30 out of the UK’s 2,796 judges are Black
  • 224 headteachers out of 16,800 are Black
  • 10% of MPs are from a BAME background
  • Less than 1% of academics and journalists are Black
  • Just 1.4% of FTSE 100 CEOs, Chairs or CFOs are Black

All these factors result in differing levels of wealth between ethnicities. ONS statistics show that, for the period April 2016 to March 2018, median white British wealth was £313,900, compared to £65,600 for Bangladeshi people, and £34,300 for Black African people – less than 10p for every £1 of white British wealth.

How does the ethnicity pay gap intersect with gender?

The ethnicity pay gap must be looked at through an intersectional lens – one that considers how multiple forms of discrimination create new, compounded experiences of discrimination as opposed to simply being the sum of individual forms of prejudice.

In terms of gender, ethnicity, and pay gaps, the level of pay inequality is lower between women of different ethnicities than men, but when considered in terms of gender and ethnicity, women’s experiences differ greatly.

As the graph shows, men earned more than women in all but three ethnic groups (Arab, Black Caribbean, and Bangladeshi) in 2019 – though these three were some of the worst-affected groups in terms of total gender pay gap.

Chinese and Indian women earned significantly less than their male counterparts, as well as multi-ethnic and Black Caribbean women, underscoring the distinct challenges faced by groups of women of different ethnicities.

The problem is just as bad up the career ladder. Green Park’s 2019 Leadership 10,000 found that while the number of White female FTSE 100 board members and executives had grown since 2018 from 88.1% of all female leaders to 90.3%, the number of BAME female leaders fell from 11.9% to 9.7%.

This was as the proportion of White female leaders grew from 23.2% to 26%, which means while gender imbalance is (slowly) being addressed, it is primarily benefiting white women.

How employers can eliminate the ethnicity pay gap

These stark figures must be considered when developing any response to the ethnicity pay gap. Organisations and their leaders must act now as part of their approach to equality, diversity, and inclusion.

By ensuring staff are paid fairly and there is equal representation of ethnicities within the business, companies can experience a range of benefits, including increased staff retention and wellbeing, as well as a better understanding of the diverse needs of their customers.

Report the ethnicity pay gap

An increasing number of businesses are collecting workforce ethnicity data in 2020 according to PwC (67% compared to 53% in 2018), and 23% are calculating their ethnicity pay gap, up from just 5% in 2018. This is positive, but more action is needed.

Businesses must start collecting data on the scale of the problem and not be afraid of asking questions about race internally. Only by being thorough and transparent can the problem be addressed.

Create ethnicity pay gap performance objectives

Only 50% of businesses had board and senior team objectives tied to improving racial diversity, 41% of employers aimed to increase diversity in boards and executive teams (27% in the private sector), and just 21% of managers had a diversity performance objective, according to Business in the Community’s (BITC) Race at Work Charter 2019.

Performance objectives ensure that a business is taking meaningful strides towards ethnicity pay equality. They form strategy and action, guaranteeing that pay equality concerns are embedded within decision making.

Champion race within the organisation

84% of companies have a senior race champion, 80% of executives and board members are involved in two-way mentoring, and 53% of board members and senior team members sponsor talented ethnic minority employees, according to BITC’s Race at Work Charter 2019.

These figures are positive, but organisations need to keep working towards championing race within their mentoring, sponsorship, and coaching efforts.

Address bullying and harassment

BITC found 97% of organisations have a zero-tolerance policy on racial bullying and harassment, yet only 47% have conducted a review into workplace bullying and harassment.

Bullying on grounds of ethnicity and how it is handled impacts worker motivation and the willingness of minority ethnic staff to stay in their posts or apply for senior roles, so training and zero-tolerance processes are key.

Improve recruitment practices

Businesses need to do more to hire and progress minority ethnic candidates. According to the Runnymede Trust’s 2020 Colour of Money report, people with African or Asian-sounding names need to send out twice as many CVs to get an interview than White people.

Recruitment processes must be adapted so unconscious biases are minimised. Inclusive job descriptions, applications, shortlisting and interviews are just some of the ways HR teams can remove impediments to diverse talent – learn more in our guide to inclusive recruitment.

If you want your organisation to act on the ethnicity pay gap, EW Group can help. Learn more about our approach to racism and allyship, or contact our team today to learn how we can work alongside you to form a creative, holistic approach tailored to your business priorities and realities.

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