Ethnic wage reporting challenges ‘not insurmountable’
Mandatory ethnic pay gap reporting is due to be introduced by April 2023. This is the central recommendation of the latest report from the Women and Equalities Committee. The committee said laws on reporting on the ethnic pay gap should include a requirement for employers to publish a supporting narrative and an action plan alongside the raw data.
You may recall that the government was consulted on the approach to ethnicity wage reporting in 2018. It then said that “it is time to move to mandatory wage reporting according to ethnic origin. However, it has yet to publish its response to this consultation, which ended in January 2019. Currently in the UK, while employers are required to report their gender pay gap on an annual basis , there is no legal requirement to report the ethnic pay gap, although many do so voluntarily.
This latest report from the Committee follows a unique evidence session held in January that considered the case for a mandatory ethnic pay gap report. The Committee says it had asked Paul Scully, Minister of Small Business, Consumers and Labor Markets, for an update on the government’s proposals. Scully said the government was continuing to assess next steps and would respond “in due course”, but the situation was “not straightforward”. Scully has previously reported what he sees as the major challenges with this exercise, namely: (1) statistical robustness, (2) data anonymity, (3) barriers to data collection, (4 ) the wide range of ethnic groups in the UK. ; and (5) The possibility that the results will be biased. In response to this, the Committee now states that, while it recognizes the complexities of capturing and reporting ethnic pay gap data, “solutions are available as long as employers want them, and the purpose exercise is clear”.
Writing in Outlaw, Susi Donaldson agrees with the Committee’s view. She says: “In the absence of legislation, a number of employers have voluntarily published their ethnicity-related pay gaps using the same pay data and similar methodology as applies to GPG reports, demonstrating that the obstacles identified by the government are not insurmountable. .’
On the proposed timeline, she says: “In practical terms, this means that employers may not be required to report until April 2023. In the meantime, employers should focus their efforts on collecting and analyzing their ethnic data and opening conversations about race and ethnicity more generally within their organization to build trust and understanding.
The work carried out by the Women and Equalities Committee focuses on UK law and UK business, not the international dimension, however multinational companies, including many of our clients, are following these developments and many of them already deal with this problem. , collecting data in a number of jurisdictions ahead of any new legislation imposing a mandatory requirement. So let’s hear more about it – why they collect the data and the challenges they face in doing so. Susi Donaldson joined me by phone from Glasgow to discuss it. I told Susi that the data collection exercise must be a challenge:
Susi Donaldson: “Yeah, that’s been a huge problem, actually, because a lot of the clients we work with operate globally and of course they’re very keen to have a consistent approach to their collection of diversity data and to use consistent categorisations across the business to then have a consistent point of comparison but in reality it is very difficult because what is an ethnic minority in the UK United may not be an ethnic minority in Asia, for example. You must therefore ensure that the ethnic classifications you use in a particular jurisdiction are relevant, otherwise employees will not respond or respond in a meaningful way. So what some of our clients have done, for example, raises a more general question: do you consider yourself an ethnic minority in the place where you work and, if so, please specify”
Joe Glavina: “Yes, I see how this more general style of questioning is a better way to go, so adapt the questionnaires?”
Susi Donaldson: “Yes, many employers who have embarked on this exercise have done so with the overriding objective of using consistent classifications that are consistent issues across their entire business, but I think they realized that in many cases this is not going to be possible if they want to obtain meaningful data and they may need to adjust their questionnaire depending on the jurisdiction it is intended for.
Joe Glavina: “The MPs’ debate highlighted two big issues with this exercise: data protection and anonymity. I guess data is much more useful if you can give it a name, but you have to think about data protection. »
Susi Donaldson: “Yes, obviously given that this information is sensitive data, assuming it’s not obtained anonymously, and I would say increasingly, employers are trying to link the information to the individual rather than doing it on an anonymous basis because it’s so much more useful you can use it for purposes like the ethnic pay gap report for example if you can identify the individual and obviously that n “It’s not possible if it’s done anonymously. But when you collect information on this basis, you need to be absolutely clear with your employees about what you’re using it for. So most employers need to be very open with employees about what they are getting this data for and how it will be used and I would argue that most organizations use it to inform their internal decision making and to inform their broader D&I strategy. tegy.”
This report from the Women’s and Equalities Committee Ethnicity Pay Gap Reporting was released last week and is available on the government’s website. We have put a link to it in the transcript of this program.
– Link to Women’s and Equalities Committee Report on Ethnic Pay Gap Reports