Reflections on Ethnicity Pay Reporting (EPR): Why, what and how
21 Sep 2021
IES HR Network members are well ahead of the government and BEIS in progressing ethnicity pay reporting, if our well-attended webinar last week on ethnicity pay reporting presented by associate Duncan Brown is anything to go by. While BEIS minister Paul Sculley MP struggled in the parliamentary debate on mandatory ethnicity pay reporting on Monday afternoon (occasioned by a petition last summer in support that was signed by over 130,000 people) to address criticisms from a very well-informed group of MPs for the government’s delay in progressing EPR, after consulting on the issue more than two years ago, IES network members were clearly very much focused on the ‘how’ of reporting, rather than the ‘why’.
MPs and network members were very clear about the benefits of such reporting, which they felt should replicate the impact of compulsory gender pay gap reporting. Duncan recently updated the CIPD’s guide to gender pay reporting to take account of the disruption occasioned by Covid, and this event was organised to coincide with the publication of the CIPD’s new guide to ethnicity pay reporting which he also authored, and which was referred to regularly in the parliamentary debate and supporting material.
The national gender pay gap has fallen by almost 5% to 15.5% since the requirement was introduced in 2017. The transparency created has undoubtedly focused boards and leaders much more strongly on the actions they need to take to remove these gaps, and all the indications are that doing the same on ethnicity pay gaps should have a similar positive impact. The moral case for pay fairness across all ethnic groups, all agreed with Duncan, should be as self-evident to any professional people as equal pay regardless of gender, and Duncan also presented stats on the estimated business and economic benefits of greater ethnic equality. Yet while unequal pay for men and women has been illegal in the UK since 1975, that is not the case for people from ethnic minority backgrounds and it is not even a legal requirement to hold data on the ethnicity of your workforce, as it is on gender.
Despite the Office for National Statistics’ 2019 annual review finding that ‘most of the minority ethnic groups analysed continue to earn less than White British employees in 2019’, many employers are unaware of the scale of the pay gaps and too few employers are acting to address them. Our guest delegate Professor Carol Woodhams from Surrey University explained how the current study she is carrying out in the medical profession has found major differences in job opportunities, appointments and earnings purely on the basis of people’s ethnicity.
A 2019 CIPD survey of 243 members found the overwhelming majority supported the Government’s ethnicity pay reporting proposal. The ‘top five’ benefits identified were:
• to develop a reputation as a fair and progressive employer (66%)
• to address workplace inequalities (61%)
• to develop greater transparency and accountability (58%)
• to offer ethnic minority employees equal access to development and progression opportunities (55%)
• to create more inclusive workplaces (55%)
The new ethnicity pay reporting guide is designed to help encourage and facilitate publication and to support employers who wish to take advantage of these opportunities reporting presents. As Duncan explained, in the continuing absence of legislative compulsion, IES and the CIPD are strongly encouraging employers to voluntarily compile ethnicity pay reports as part of their organisation’s approach to improve inclusion and tackle inequality in the workplace. The guide aims to:
• encourage more employers to publish their ethnicity pay data voluntarily.
• facilitate this process by recommending the most appropriate and effective approach to categorising and reporting their data.
• encourage internal and comparative analysis and use of the resulting information to produce effective action plans to address the ethnicity pay gaps revealed.
Duncan explained the six principles the guide and IES recommends employers follow in their reporting practice:
- Align ethnicity pay reporting with gender pay reporting, but recognise the differences.
- Remember ethnicity representation is as important as, and strongly linked to, ethnicity pay gaps.
- Recognise the value of simplicity and clarity.
- Focus on action.
- Start and improve.
- Combine comparability in data with tailoring of analysis and actions.
He then went on to describe and illustrate the recommended formats and methods contained in the guide, including the eight statistics all employers should publish every year, and to give an overview of the tools and case examples it contains to help employers and our members as they progress.
But as Duncan acknowledged, this is generally not as easy data to gather, analyse, report and act on as gender pay reporting. Additional challenges include the appropriate categorisations of ethnic groups and the large variations in the ethnic make up of the UK population in different locations, as well as the poor state of data on ethnicity in many organisations. And this was where members’ questions, excellently fielded by our new director of research and consulting Claire Campbell who chaired the event, were concentrated: how do we improve disclosure rates, what ethnicity categories do we use and how do we deal with small numbers of employees in some categories?
As Duncan explained, the guide contains many examples of how employers have already overcome similar challenges. On reporting, being open about the reasons for gathering the data and reassuring staff as to data confidentiality seems to improve disclosure rates rapidly. And on categories, Duncan recommended the graded classifications provided by the ONS for the population census: reporting externally using the simple dual categories of all white employees compared to all other ethnic groups; but analysing internally using the five or more detailed 17 category classifications so as to really highlight where any large gaps are located and to indicate causation and how they might be addressed.
Ethnicity pay reporting, as has been the case with gender, is not a ‘magic bullet’ which will remove some of the awful pay and representation gaps which certain ethnic minority groups experience in the UK labour market. But it should provide a much better platform for, and support greater prioritisation of, actions to close these gaps.
And all the indications are that IES members are keen to get on with addressing the challenges and taking the opportunities for ethnicity pay reporting in their organisation. BEIS ministers and officials might have benefitted from listening in!