Closing race employment gap ‘could add £36bn to economy’

Exclusive: Analysis by Labour Party says closing gap would mean 539,000 extra employees contributing an additional £35.6bn to the UK economy

Closing the employment gap between Black, Asian and minority ethnic people and the wider population could provide a £36bn boost to the UK economy, new analysis suggests.

Analysis of Office for National Statistics Labour Market data found that the current employment rate of these groups was 69.4 per cent, eight percentage points below that of the white population (77.2 per cent).

The Labour Party, which carried out the analysis, estimates closing that gap would mean 539,000 extra employees contributing an additional £35.6bn to the UK economy, based on average productivity levels.

It said bringing parity between different groups of the population would help to tackle inequality while driving economic growth.

Anneliese Dodds, the Labour Party chair and shadow women and equalities secretary, said “the time is now” to expand wealth and opportunity as she accused the government of “13 years of failure”.

“Inequality has soared during the Conservatives’ 13 years of failure, with Black, Asian and minority ethnic people often paying the price,” Ms Dodds said.

“We believe that everyone should have a fair shot at life, whatever your background.”

The intervention comes on the third anniversary of Black man George Floyd’s murder by white police officers in Minneapolis, US.

Mr Floyd’s killing sparked protests throughout the US and across much of the West, with campaigners and activists issuing fresh calls for racial equality.

Responding to those concerns in the UK, Labour pledged to introduce a Race Equality Act to tackle structural inequality.

The plans are being developed by the Labour front bench, working with Baroness Lawrence, policy and legal experts and community groups.

The party has also promised to introduce mandatory ethnicity pay gap reporting for firms with more than 250 staff to begin to close the glaring pay gaps between Black, Asian and minority ethnic employees and the wider population.

Anneliese Dodds has accused the Conservatives of ‘13 years of failure’ on equality (PA Archive)

“Through our Race Equality Act we are committed to eradicating the structural inequality that is holding too many people back,” Ms Dodds added.

“This means expanding opportunities for all, and the time to do that is now. Doing so will be good for those individuals, good for business and good for our economy as a whole.”

The cost-of-living crisis has disproportionately impacted on low-income households which spend a larger share of their income on fuel and food.

The Runnymede Trust found last year that Black and minority ethnic people are disproportionately falling faster and further below the poverty line amidst the cost-of-living crisis.

Black and minority ethnic people are 2.5 times more likely to be in relative poverty, and 2.2 times more likely to be in deep poverty (having an income that falls more than 50 per cent below the relative poverty line), than their white counterparts.

Labour analysis earlier this year found that Black African adults had an average of £80,000 (£78,929) less wealth than White British adults, even after controlling for factors such as economic activity, status or education level.

It also found that over two thirds of Black adults (69 per cent) were finding it difficult to afford their energy bills, compared with under half of all adults (45 per cent) and one in five Black adults (21 per cent) saying they were behind on payments, compared with 5 of all adults.

In April the government published new guidance for employers which sets out how to voluntarily measure, report on and address any unfair ethnicity pay gaps within their workforce.

Ministers said the new guidance would help those employers who want to use ethnicity pay reporting to improve transparency, adding it would provide a consistent approach that should provide robust and meaningful data.

A government spokesperson said: “This government remains committed to tackling all areas of disparities in this country, including in employment.

“It is crucial that everyone is treated fairly in the workplace, so that they can thrive and reach their full potential and we want to ensure that everyone has access to the same employment opportunities.”