(Monday 11th September) Two of the UKs leading organisations working to end the racial pay gap are today launching a policy document asking the government to introduce mandatory reporting on the ethnicity pay gap for all companies who employ over 250 employees.

The legislation being proposed by the Runnymede Trust, the UKs leading race equality think tank and ShareAction, the charity campaigning for responsible investment, aims to end the deep-rooted inequality in pay that has been identified over the last 4 years. Research by Baroness McGregor-Smith indicates that improved racial equality could boost the UK economy by £24 billion, equivalent to 1.3% of GDP.

In 2018, following a consultation with business, the Government committed to introduce mandatory reporting, yet 5 years later they announced that they would prefer a voluntary code. As today’s policy document shows, making it mandatory to publish ethnicity pay gap differentials is the first vital step to measuring and addressing the scale of racial disparities and tackling structural racism in companies.

Commenting on the launch of the policy, Senior Campaigns Officer at ShareAction, Kohinoor, Choudhury said:

“The evidence is clear; there is a structural wage differential in far too many companies. Not only is this is bad for those who suffer from it, it is bad for our economy. Only 18 out of the FTSE 100 companies presently volunteer to report their pay gap. Mandatory transparency is the only way to begin to fix this.”

Along with the call for the Government to introduce mandatory reporting, the two organisations make 3 further recommendations to support the policy:

• New legislation should require employers to publish an action plan to combat any disparities;
• Provide additional guidance on the data targets and as recommended by the Women and Equalities Committee, release guidance explaining:

1. Data protection to reassure employers as to how they capture, retain and report data;

1. Methods for capturing, analysing and reporting data;

1. The powers of the enforcement body responsible for monitoring EPG reporting;

• Conduct a 2-year on review to assess progress made by employers.

Commenting on how these measures would work Dr Shabna Begum, Interim co-CEO of the Runnymede Trust said:

"Mandatory ethnicity pay reporting should no longer be an issue for debate. The government needs to catch-up with the shift in the business community, where the conversation is no longer about the merits of reporting, but instead revolves around to maximise the benefits of reporting to meet social justice obligations. The avoidance of statutory measures has relied on this idea that ethnicity pay gap reporting is a 'burden', and yet our research shows the real burden is the absence of consistency and guidance - this can only come from the government.

The UK's labour market remains riddled with racialised pay gaps that reflect systemic inequalities and are compounded by intersectionalities that relate to gender, age and disability. Ethnicity pay gap reporting and, crucially, the related action plans that it necessitates, are a vital first step to disrupt and diminish the barriers faced by the UK’s ethnic minority workforce."

Notes to editors

The policy briefing can be read in full here.