What is the ethnicity pay gap?

Samantha Atta-MensahSamantha Atta-Mensah
Last updated on:
January 4, 2023
Published on:
December 21, 2022

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The ethnicity pay gap refers to the difference in pay between employees of different ethnicities. In some countries, employers are required to report on the pay gap between their different ethnic groups as a way of promoting pay equality and identifying any potential issues or disparities. This information can be used to take action to address any pay disparities and help ensure that all employees are being paid fairly.

What is ethnicity pay gap reporting? 

Ethnicity pay gap reporting refers to the practice of collecting and analysing data on the pay differences between employees of different ethnicities within a company. This practice is intended to help identify any potential pay disparities based on ethnicity and take action to address them. The goal of ethnicity pay gap reporting is to promote fairness and equality in the workplace.

Is it mandatory to report your ethnicity pay gap?

In some countries, companies must report their pay gaps based on gender and ethnicity. This requirement is intended to help reduce pay inequality and promote fairness in the workplace. The specific requirements for reporting pay gaps vary depending on the country. For example, in the United Kingdom, companies with 250 or more employees are required to report their gender pay gap. Ethnicity pay gap reporting is not yet a legal requirement in the UK, however there is an increasing demand which may force the government to act.

In the United States, there is no federal requirement for companies to report pay gaps based on ethnicity, but some states have their requirements. It is important for companies to be aware of the requirements in their country and to take steps to reduce any pay gaps that may exist.

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How to calculate the ethnicity pay gap 

To calculate the ethnicity pay gap, you will need to gather data on the salaries of employees within your organisation, broken down by ethnicity. Then, you can compare the average salary for each ethnic group to the overall average salary for the organisation. This will give you a general idea of the pay gap between different ethnic groups within your organisation.

It's important to note that calculating the pay gap is just the first step in addressing any disparities that may exist. Once you have the data, you can take steps to address any pay gaps and ensure that all employees are paid fairly, regardless of their ethnicity.

Why is there an ethnic pay gap 

Many factors contribute to the pay gap between different ethnicities. Some of these factors include discrimination, unequal access to education and job opportunities, and differences in career choices and negotiation skills. 

Additionally, systemic biases and prejudices in society and within the workplace can also play a role in perpetuating the pay gap.

How to reduce the ethnicity pay gap

Several policies can help reduce the ethnicity pay gap. One approach is to implement pay transparency measures, which require companies to disclose information about the pay of their employees. This can help identify any disparities in pay between employees of different ethnicities and allow organisations to take steps to address them. 

Another approach is to implement recruitment and hiring policies that prioritise diversity and ensure that job candidates from a variety of backgrounds are considered for open positions. Additionally, organisations can provide training and development opportunities to help employees from underrepresented groups advance in their careers. Finally, companies can work with employee resource groups and other organisations to promote diversity and inclusion in the workplace.

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