Why everyone’s talking about the pay gap

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The government is proposing to compel large companies to report their remuneration disparities by ethnicity, as well as gender. What should all employers be doing already?

RENÉ CARAYOL, an executive coach and broadcaster who has served as a senior executive at M&S and a board director at PepsiCo, and advised bodies such as the UN and the World Bank

Revealing your race pay gap data isn’t just the right thing to do; it’s the smart thing. When I worked with Google and Apple recently, I found that both companies were convinced that inclusive workforces drive innovation. What’s more, today’s younger generations think differently: when these consumers discover that your company is a dinosaur, why would they bother shopping in Jurassic Park?

The figures will shock people when they’re published. In March an audit of public bodies under the control of the Greater London Authority revealed that the capital’s Bame employees were being paid up to 37.5 per cent less than their white colleagues. And that’s in London – dare we imagine what the ethnicity pay gap might be in other cities?

Businesses could struggle when it comes to collecting pay data. Many people of colour don’t see any advantage in specifying their ethnicity in surveys – they may feel that it could be used against them. I remember applying for jobs and never wanting to reveal that I was born in the Gambia, for instance. Given that there will be scepticism surrounding the collection of any racial data, we must make it feel like the positive exercise it is. The #MeToo and gender pay gap movements did this brilliantly. They amassed facts and figures, found strong role models and put key people under pressure. Before we knew it, we had a best-practice model to follow.

Things won’t change, though, unless business leaders set the right example. They need to be inspiring and paint a picture of the promised land. Mike Coupe, the CEO of Sainsbury’s, has done some excellent work on this, through mentoring schemes and by ensuring that 14 per cent of the company’s workforce is Bame to reflect the UK population.

The race pay gap isn’t just an issue for people of colour; it’s a battle for all of us. The UK is a fair and tolerant country. Let’s remind ourselves of that. This one’s worth shouting about. carayol.com

Sarah ChurchmanSARAH CHURCHMAN

UK head of diversity, inclusion and wellbeing, PwC

Last year PwC became one of the first British firms to publish the pay gap between its Bame employees and their white colleagues: 12.8 per cent. A key factor behind this finding was that a disproportionate number of Bame employees were quitting before they reached management level. One reason they cited for doing so was the lack of role models – some felt that they had few people like them to look up to at PwC.

Since then, we’ve acted to create an environment where people from any background can thrive. For instance, we have introduced senior progression coaches. These are supportive individuals who help to ensure that Bame employees have access to the right opportunities, contacts and networks to take their careers to the next level.

I believe that a diverse workforce helps to attract talent, serve a diverse market and drive PwC’s growth. It’s a commercial imperative for us.

I also think that many people – especially those whose social circles lack diversity – are reluctant to discuss issues of race, fearing that they’ll get it wrong. Firms can combat this by giving their staff, including senior executives, training that equips them to have such conversations. pwc.co.uk

Zubaida HaqueZUBAIDA HAQUE

Deputy director, race equality think-tank Runnymede Trust

It’s important that ethnicity pay gap reporting becomes mandatory – there is just too much inequality. Until recently, employers explained away pay disparities by citing the lack of educated ethnic minorities. But today minorities are just as likely as their white counterparts to have degrees. We often talk about how the world is your oyster if you get a degree, yet black male graduates earn 14 per cent less than their white equivalents.

I fear that some firms might lump all minorities together when collecting data. Looking at the pay gap in terms of Bame versus white is useless – many Indian Hindus earn close to average white pay, while Bangladeshi and African- Caribbean people are at the other end of the spectrum.

Pay disparity exists because business leaders continue to recruit people just like them. The problem with such bias is that it harms productivity. In her independent review of Race in the Workplace last year, Baroness Ruby McGregor-Smith reported that improving the participation and progression of Bame people across the labour market would add £24 billion a year to the UK economy. It’s time to get this right. runnymedetrust.org

Sarah GregorySARAH GREGORY

Inclusion and diversity partner, Baker McKenzie

Putting disclosure legislation in place will force companies – probably those with more than 250 employees – to shine a light on the issues causing Bame people to be under-represented, both in the workforce generally and particularly at senior level.

The first thing I’d recommend that employers do is set up a confidential system to monitor diversity data and be clear about how this data will be used. If it does indicate a serious pay gap, consider publishing an explanatory statement. For instance, if you recruit locally in an area where a relatively low proportion of Bame people live, you should include this fact in your report. That said, you should also consider looking further afield to improve the diversity of your workforce. Should you be recruiting from a broader range of universities, for instance?

We know that graduate jobseekers will consider any potential employer’s position on diversity when researching the market. Employers are realising that they’ll lose out on some of the best people if their organisations don’t reflect the diversity of the talent pool available to them. Looking into any pay discrepancies provides a real strategic opportunity for business leaders to redress the balance. bakermckenzie.com

LORD KARAN BILIMORIAKaran Bilimoria

Founder and chairman, Cobra Beer

There’s no question that we have come a long way as a country since I arrived here from India in the early 1980s. Back then, there really was a widespread view that no one from an ethnic minority could reach the top of a UK business.Despite this, it’s unacceptable to have a pay gap today. I hope that the proposed legislation will improve transparency, spread awareness and serve as a wake-up call for employers.

Once the discrepancies have been disclosed, what can be done to improve the situation? It comes down to leadership. I’d expect business owners to shout from the rooftops: “I will not tolerate this!” We also need to highlight senior role models to show that ethnic minorities can make it to the top.

A diverse workforce is beneficial to a company. Even when Cobra was a small firm, it was like the UN, with staff from all over the world. This made us far more innovative. The UK would not be the world’s fifth-largest economy without the contribution of its ethnic minorities. I hope that statutory pay gap reporting will enable us to appreciate this even more. cobrabeer.com

Baron Bilimoria of Chelsea is a fellow of the IoD

Closing the gap

37.5% – The ethnicity pay gap disclosed this year by the Old Oak and Park Royal Development Corporation, one of the public bodies covered by the Greater London Authority’s pay audit

In October 2018 Theresa May announced proposals for large companies to report their ethnicity pay gaps as part of the government’s efforts to improve Bame representation in the workplace. The plans mirror those issued for reporting on gender pay disparities.

Only three per cent of UK employers measure their ethnicity pay gap, while many that have voluntarily disclosed data have revealed huge chasms. The Metropolitan Police reported a 17 per cent gap, for instance, while ITN admitted that its Bame employees were paid 20.8 per cent less than their white colleagues on average.

The government is seeking views from employers on the issue. To contribute to the consultation, email ethnicitypayreporting@beis.gov.uk before 11 January 2019.

About author

Christian Koch

Christian Koch

Alongside his work for Director, Christian has written features for the Evening Standard, The Guardian, Sunday Times Style, The Independent, Q, Cosmopolitan, Stylist, ShortList and Glamour in an eclectic career which has seen him interview everybody from Mariah Carey to Michael Douglas through to Richard Branson with newspaper assignments including reporting on the Japanese tsunami and living with an Italian cult.

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