If last year was all about firms being made to report on their gender pay gap, the Resolution Foundation think tank believes that 2019 should see a determined attempt to make large firms report on their BAME pay gap too.

According to its analysis, Britain’s 1.9 million black, Indian, Pakistani and Bangladeshi employees are experiencing an annual pay penalty of £3.2 billion.

In fact, such is the scale of pay penalties facing BAME (black, Asian and minority ethnic) workers, the think tank argues that it should prompt government action.

It notes that BAME workers have long earned less, on average, than white male workers, and accepts that these “pay gaps” are in part due to differences in workers’ qualification levels and the types of jobs they do.

However, the latest analysis has controls for this and converts these pay gaps into pay penalties by taking into account factors such as a worker’s occupation, contract-type, industry, education level and degree class in its calculations.

Even after accounting for these differences, black, Indian, Pakistani and Bangladeshi workers still face significant pay penalties compared to white workers with identical characteristics doing the same types of jobs.

Having a degree does not end the pay penalties facing BAME workers.

Black male graduates face the biggest pay penalties of all groups included in the research, with an average penalty of £3.90 an hour (17%), while Pakistani and Bangladeshi male graduates face a pay penalty of £2.67 an hour (12%).

Among female graduate workers, black women face the biggest pay penalty of £1.62 an hour (9%).

Kathleen Henehan, Research and Policy Analyst at the Resolution Foundation, said: “BAME workers have made important gains in the labour market in recent years. A record number of young BAME workers have degrees and a record number are in work. However, despite this welcome progress, many of Britain’s 1.6 million black, Asian and ethnic minority workers face significant disadvantages in the workplace. “

Only 3% of employers voluntarily report their ethnic pay gaps.

ITN, one of the companies that does so, found that its BAME employees are paid 21% less per hour than white colleagues.

Comment by Croner Associate Director Paul Holcroft

Employers should bear in mind that this issue continues to receive increased levels of scrutiny from the Government, with an ongoing consultation currently in progress to consider whether ethnicity pay gap reports should be submitted on an annual basis.

If minority workers do not feel they will receive the same opportunities and rights as white employees they may become demoralised within their current roles, which can have a serious effect on productivity and workforce retention.

A company which publicly displays an ethnicity pay gap could also see its overall reputation suffer as a result, potentially leading it to lose out on otherwise highly skilled individuals.

It should be remembered that a diverse workforce can prove to be highly beneficial for a company, enabling employees from different backgrounds to suggest a variety of ideas and solutions that can assist in overall development.

Last reviewed 10 January 2019