Call to force large companies to make ethnicity pay gap public

The chairwoman of the Women and Equalities Committee says there is ‘no excuse’ for Government inaction.

MPs are calling for new legislation forcing large companies to publish data on their ethnicity pay gap (Dominic Lipinski/PA (PA Wire)

MPs are calling for new legislation to make large companies publish data on their ethnicity pay gap, to help crack down on inequality.

The chairwoman of the Women and Equalities Committee Caroline Nokes has said there is “no excuse” for Government inaction on the matter, as there is a “clear impetus” to report disparities.

Legislation was introduced in 2017 making it compulsory  for companies with 250 or more employees to report their gender pay gap.

However there is currently no legal requirement to disclose pay data for workers of different ethnicities.

The committee is now calling for ethnicity pay gap reporting to be made mandatory by April 2023.

This should apply to all organisations which currently report for gender, it says.

The committee also says legislation should be put in place to require companies to publish “an accompanying statement and action plan, allowing employers to account for pay gaps and outline steps to be taken to address them”.

In 2018, the Department for Business, Energy and Industrial Strategy (BEIS) launched a consultation in which it said “it is time to move to mandatory ethnicity pay reporting”.

However the Government is yet to set out its response. Business minister Paul Scully wrote to the Women and Equalities Committee in January 2022 to say this would be done “in due course”.

“The Government is committed to taking action on this matter but we need to ensure that we focus on the right issues which will genuinely help to move us forward,” he said.

“I very much hope that I shall be in a position to say more shortly. But for the time being, I am afraid that all I can do is repeat what I said during the debate in September – that we continue to assess next steps and will set out our response in due course.”

In a new report, published on Tuesday, the committee wrote: “The Government has acknowledged that ethnicity pay gap reporting should be mandatory.

“Businesses are ready for ministers to follow through on this commitment and bring forward legislation.

“We recognise that capturing and reporting ethnicity pay gap data is a more complex exercise than for gender, especially given disproportionate sample sizes of ethnicity across the UK. Solutions are available as long as employers are willing, and the purpose of the exercise is clear.

“Ethnicity pay gap reporting is not about producing a league table or punishing organisations who, due to geographic location, may not have access to the same talent pool.

“A pay gap is an indicator for employers to identify, understand and address trends in ethnic disparities across their own workforce.”

Ms Nokes, MP for Romsey and Southampton North, said the Government’s “failure to move forwards on ethnicity pay gap reporting” was “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,” she said.

“All that is lacking, it seems, is the will and attention of the current administration.”

All that is lacking, it seems, is the will and attention of the current administration

Caroline Nokes, Women and Equalities Committee chair

She added: “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 address 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.”

A Government spokesman said: “We want to ensure everyone, whatever their background, has equal opportunity to succeed and achieve on merit.

“We are considering the findings of the Commission on Race and Ethnic Disparities independent report, which included recommendations on ethnicity pay reporting, alongside feedback to our consultation on this issue.

“We will set out our response to this, as well as the Women and Equalities Committee report, in due course.”