Mandatory Reporting of Ethnicity Pay Data, a Challenge Worth Taking

Last week marked the anniversary of the government’s first racial disparity audit, which looked at how people of all ethnic groups are treated across health, education, employment and the criminal justice system. Although there were some encouraging findings, there were areas for concern, particularly in regards to the career progression of people from ethnic minority backgrounds. Audits can unearth some uncomfortable truths, but they are extremely powerful in opening up public dialogue and pushing government to take action.

A year on from the audit and the government has indeed started to take action.  Several initiatives to push forward change in the recruitment and progression of ethnic minority employees were announced by the Prime Minister on 11 October.

The first was a new consultation on how best to introduce mandatory Ethnicity Pay reporting. Since the publication of the McGregor-Smith Review – which the REC fed into last year - pressure has been mounting to introduce mandatory reporting of ethnicity pay data. While some critics may see mandatory reporting as a naming and shaming exercise, the transparency it brings is often crucial in driving change.

The introduction of mandatory gender pay gap reporting showed the power of transparency. Businesses with large gender pay gaps were forced to review their recruitment and promotion practices to see if they were contributing to the pay gap. The feedback from REC members is that – on the back of this - recruiters have a real opportunity to gain competitive advantage by being ahead of the game on inclusive recruitment practices. 

Although mandatory gender pay gap reporting is helping to drive equality and inclusion, its roll out was not short of problems. Over 1,500 companies missed the reporting deadline and two-fifths (41%) of employer described the gender pay gap reporting regulations as complex.

Reporting on ethnicity pay data will be an even bigger challenge, but it is a challenge worth taking on.  Increasing the number of ethnic minorities in leadership positions will not only increase productivity but deliver £24 billion of benefits to the UK economy. Diversity and inclusion are not just moral necessities they are commercial necessities.

The REC’s aim is to continue positioning our voice at the forefront of this hugely topical agenda and to showcase examples of recruiters making change happen. We will be working with members on our response to the consultation; you want to take part in the consultation exercise please do get in touch Ornella.nsio@rec.uk.com.