Ethnic minorities are still paid less than white colleagues – and pay parity is long, long overdue

If you are from an ethnically diverse background, the ethnicity pay gap may mean that you are more likely to be borrowing money, moving back in with your parents, or even spending less on meals than your white colleagues.

New research from non-profit People Like Us has revealed that people from ethnic minority groups are 38% more likely to experience underpayment than their white colleagues.

The ethnicity pay gap refers to a wage disparity between ethnic minorities and their white colleagues, and it is a prominent issue across various sectors in the UK.

Around 47% of professionals from ethnically diverse backgrounds believe they are being underpaid in comparison to their white colleagues, leading to an annual financial loss of almost £2,000 on average.

This has a direct impact on their lives. Around 35% of white professionals feel their work performance has suffered as a result of the cost of living – but if you are ethnically diverse, this figure rises to 40%.

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People from ethnically diverse backgrounds are also more likely to face difficulties in managing rent increases (37%) compared to their white colleagues (24%).

In light of the cost of living crisis, professionals from medicine to transport have been calling for pay increases that last longer and go further – and disparities between colleagues are becoming more obvious and less tolerable.

To tackle this, People Like Us is calling upon the government to introduce mandatory ethnicity pay gap reporting, similar to the required reporting on the gender pay gap.

According to the research, the current reluctance to disclose pay gap information is partly attributed to concerns about public perception (23%), but the primary reason professionals think that companies refrain from reporting data is the absence of legal requirements (40%).

Speaking to The Big Issue, People Like Us co-founder, Sheeraz Gulsher said reporting the data would “help identify the scale of the issue”.

“We’ve set out guidelines on how companies should report their pay gaps. What we’re finding is companies are closing gaps year on year, because I think there’s a lot to be said about being held publicly accountable. Not only do you provide your figures, you provide context about why the changes have happened,” he said.

“All the business owners that have entered our study, they’re all reporting big improvements on how they’ve adjusted their hiring, changed their workplace policies and are being more intentional about how they run their business. They are more supportive, more inclusive employers – including people from all walks of life and all backgrounds.”

Not only would a more equal workplace benefit morale, but according to research by the PWC in 2021, closing the ethnicity pay gap could generate up to £24bn a year for the UK.

“This is going to be massive for the economy. It’s got huge potential,” Gulsher said. “While it is morally the right thing to do, it is good for business. People are much happier in diverse teams, where you have different perspectives. It’s great for creativity and great for innovation.”

When the issue was brought in front of government in 2019, their published report found that it was not “the right time to take forward a mandatory approach”, citing “genuine difficulties in designing a methodology for ethnicity pay reporting” – a point Gulsher takes issue with.

“The government has said in the past that it’s complicated for businesses to report, but in reality, it isn’t,” Gulsher said. “The benefits totally outweigh the time it would take to report and address pay disparities.

“We created our own methodology, which honestly makes it as simple as possible. The government last year in April released guidelines of how companies could report their ethnicity pay gaps, which is obviously a positive step. But we feel that the way forward is legislation – companies should be held to account.”

If you, or your company, are interested in fostering a fairer workplace through equitable pay, People Like Us has a Pay Gap toolkit which lays out guidelines for reducing wage disparities in the workplace.

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