Race Commissioner: Ethnic pay reporting won’t help minorities
Did you know that almost all big minority groups outperform White British people in school? That there is a higher proportion of ethnic minority people in the top social class than White British people? And that Black Caribbean women earn on average more than White British women (and Black African women about the same)?
Last year, I joined the Commission on Race and Ethnic Disparities, to explore inequities, based on data, in education, healthcare, criminal justice, and my own area of the economy.
We are a majority ethnic minority Commission which is maybe why we were keen to explore what propels some groups forward and holds others back. We have studied the data and empirical trends on ethnic minority outcomes and there is a more positive story to be told than is widely believed.
Our report reveals the positives about ethnic minority life in Britain, and proposes ideas to redress racial and ethnic disparities that do exist, without ignoring the fact that the country has a long way to go before it is truly a land of equal opportunity.
And for those who are lagging behind, it is clear that racism is only part of the story, and that different attitudes to education, and family life across different communities are also a big part of the equation.
For the commission, I chaired the Economy and Enterprise sub group, drawing on my two decades working in the City, both as an employee at Goldman Sachs and on the board of directors of Barclays.
In the areas of the economy and business the Commission was happy to note real progress on pay and employment and entry into the higher professions over recent decades. The ethnicity pay gap – the gap between average White British pay and all ethnic minorities – is around minus 2 per cent, and several groups including British Indians and British Chinese have markedly higher average pay levels than the White British. We do, however, remain concerned that these trends could materially change given the global pandemic.
No doubt disparities remain at the top of British business and we make some concrete recommendations about tackling “affinity bias”- the tendency to appoint and promote people like oneself – via enhanced approaches to mentoring schemes and networking.
But we are interested in actions that are scalable and impactful, and we are sceptical about the impact of random targets and certain unconscious bias training programmes that are set without rigour.
What matters is what works. And given the relatively successful experiment with gender pay reporting we naturally took a close look at whether ethnic pay reporting might be a good idea too. We heard from many employers on this issue and we applaud those big employers like the NHS who have implemented it but we did not think a statutory national system is a sensible idea.
After all, it is clear that pay gap reporting as it is currently devised for gender cannot be applied to ethnicity with integrity. The main data problem is the unreliability of sample sizes. If an employer with 250 employees (the threshold proposed for ethnic pay gap reporting) reports a gender pay gap, on average they will be comparing 125 men with 125 women. If they report an ethnicity pay gap they will on average be comparing 225 White employees with 25 ethnic minority employees. Any findings from such a comparison will be unreliable. Moreover, lumping all non-white colleagues in a firm together obscures the differences between ethnic groups.
There are numerous studies that incontrovertibly show how gender diversity, ethnic diversity and diversity of thought all add value to businesses and institutions. As such, the best leaders recognise that finding just one ethnic minority board member, for example, is not a substitute for a proper fairness strategy.
The data clearly show that Britain, including British business, has become a more open place in recent decades both in terms of race and class, and it continues to benefit from this trend. Our report takes issue with what often seems like an overly-pessimistic narrative on race while pinpointing where real, transcendent change is still crucial.