Black and ethnic minority employees are losing out on £3.2bn a year in wages compared to white colleagues doing the same work, according to a study that adds to pressure on the government to introduce mandatory reporting of race pay gaps.
Ministers have been urged to press ahead with proposals to force large firms to report their ethnicity pay gap, after the research showed the extent of the salary disparity for Britain’s 1.9 million black, Indian, Pakistani and Bangladeshi workers.
After taking account of differences in average qualifications and job types, the analysis by the Resolution Foundation found the gap rose to as much as 17%, or £3.90 an hour, for black male graduates’ pay.
The thinktank called on the government to repeat the legislation requiring companies to publish gender pay gaps – but this time for ethnic minorities. Laws that came into force in April exposed the different treatment of male and female employees, finding that eight in 10 firms paid men more than women.
Theresa May launched a consultation in October seeking views on whether there should be mandatory reporting of ethnicity pay gaps at work.
The Resolution Foundation said its research showed that the ethnicity pay gap represented “a huge blow to the living standards of those affected”. It found Pakistani and Bangladeshi male graduates earned an average £2.67 an hour (12%) less, while among female graduates, black women faced the biggest pay penalty, of £1.62 an hour (9%).
In general the differentials were lower among non-graduates, although Pakistani and Bangladeshi men earned 14% less than their white peers. Female non-graduates earned 44p-61p per hour less on average.
The thinktank noted that while ethnic minority workers have long earned less overall, on average, than white male workers, its pay penalty calculation was controlled for factors such as occupation, contract type, industry and qualifications.
Kathleen Henehan, research and policy analyst at the Resolution Foundation, said: “Black, Asian and minority ethnic workers have made important gains in the labour market in recent years. A record number of young BAME workers have degrees, and a record number are in work.
“However, despite this welcome progress, many of Britain’s 1.6 million black, Asian and ethnic minority workers face significant disadvantages in the workplace.
“After the successful steps taken to expose and tackle the gender pay gap in 2018, we now need greater accountability on the ethnic pay gap in 2019.”
A government spokesperson said: “Diversity is good for businesses and this government is committed to ensuring the workplace works for everyone. We’ve introduced new laws to help companies ensure the make-up of their boards and senior management is representative of their workforces and we’re currently consulting on proposals for mandatory ethnicity pay reporting as part of a series of measures to help employers tackle ethnic disparities in the workplace.”
Gender pay gap legislation, which came into effect in April this year, requires employers with 250 or more staff to publish annual calculations of the disparity between male and female pay.
Only about 3% of large employers have so far voluntarily reported their ethnic pay gaps. One of the few companies to do so, ITN, found that its BAME employees were paid 21% less per hour than white employees.
An audit of public-sector pay in London carried out for the mayor, Sadiq Khan, found that BAME staff were paid up to 37% less on average. There were particularly stark differences in the police force.