Black and ethnic minority workers face an annual £3.2 billion pay gap

25th Jan 2019

Nadine Osman

Black and ethnic minority (BAME) workers in the UK earn significantly less than their white colleagues in the same jobs, according to a new report from the Resolution Foundation.

Using data by 100,000 people over 10 years, the survey, which was published on December 27, has calculated BAME employees are paid £3.2 billion less than white colleagues every year.

The think tank called on the Government to repeat the legislation requiring companies to publish gender pay gaps 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.

An audit of public-sector pay in London carried out for Mayor Sadiq Khan found that BAME staff were paid up to 37 per cent less on average. There were particularly stark differences in the police force.

The Foundation notes that with only 3 per cent of employers voluntarily reporting their ethnic pay gaps – ITN, one of the companies that did so, found that its BAME employees are paid 21 per cent less per hour than white employees.

The difference in pay largely represents differences in qualification levels. The calculation takes into account various factors including contract types, education level, degree attainment and industry sector.

The group most affected by the “pay penalty” are black male graduates. According to the report, this group of people are paid an average of £3.90 an hour (17 per cent) less compared to fellow white employees. Pakistani and Bangladeshi male graduates face a pay penalty of £2.67 an hour (12 per cent). Among female graduate workers, black women face the biggest pay penalty of £1.62 an hour (9 per cent).

When looking at non-graduates, Pakistani and Bangladeshi men face the biggest pay penalties at £1.91 an hour (14 per cent), while black male non-graduates face a pay penalty of £1.31 an hour (9 per cent). The pay penalties for female non-graduates, while lower, are still significant at 55p for Bangladeshi and Pakistani women (5 per cent), 61p for black women (6 per cent), and 44p for Indian women (4 per cent).

“A record number of young BAME workers have degrees, and a record number are in work,” said Kathleen Henehan, research and policy analyst at the Resolution Foundation. “However, despite this welcome progress, many…face significant disadvantages in the workplace.”

The report is calling on the government to act on the new initiative requiring companies with over 250 employees to publish gender pay gaps to publish data on ethnic groups.

A Government spokesperson said: “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.”

These statistics represent a large number of people potentially affected by the pay gaps in the UK. In 2017, there were 154,000 black male graduate employees, 202,000 black male non-graduate employees, 152,000 Pakistani/Bangladeshi male non-graduate employees and 124,000 Pakistani/Bangladeshi male graduate employees. The number of black female graduate employees (a group facing a pay penalty of 9 per cent) was 185,000.


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