Before the pandemic there seemed to be significant momentum behind the introduction of mandatory ethnicity pay gap reporting.
Back in 2020 I wrote a blog on ethnicity pay gap reporting. At the time of writing we were still awaiting the UK Government's response to a 2018 consultation that had sought views from employers on the introduction of a mandatory duty to report ethnicity pay gaps and what that should encompass. A leaked report on the consultation suggested that almost three quarters of respondents to it had been in favour of mandatory reporting being introduced. Pressure for change was coming from a variety of different sources - a petition to the UK Parliament signed by over 125,000 people and a campaign launched by the CBI that (amongst other things) called for the disclosure of ethnicity pay gaps by 2022 to mention two.
In fact what happened in 2022 was the UK Government announced that mandatory ethnicity pay gap reporting would not be implemented. The UK Government Race Disparity Unit, Equality Hub and the Department for Business and Trade then published Ethnicity pay reporting: guidance for employers in the spring of 2023. The guidance is intended to assist employers who wish to report voluntarily to do so in a consistent way. But there was still no official UK Government response to the 2018 consultation.
That response was finally published in July 2023 and goes some way towards explaining why the UK Government decided not to introduce mandatory reporting. The response to consultation explains that the UK Government believes that, "while ethnicity pay gap reporting can be a valuable tool to assist employers, it may not always be the most appropriate mechanism for every type of employer". It also stated that the consultation "highlighted genuine difficulties in designing a methodology for ethnicity pay reporting, with mixed views on the best metric to use". The UK Government therefore concluded that it was not appropriate for a particular methodology to be mandated.
Calls for ethnicity pay gap reporting to become mandatory continue to be made. While pay gap reporting is not a quick fix (as has been demonstrated by gender pay gap reporting) it does help businesses identify where action is needed. Ethnicity pay gap reporting is complex but lessons can be learnt - such as the importance of action plans to address the pay disparities - from the gender pay gap reporting that is in place already. The cost-of-living crisis has resulted in more pressure being placed on the current government. We are likely within 12 months of the next general election. The Labour party employment rights green paper "A new deal for working people" confirms that Labour will make ethnicity pay gap reporting mandatory for firms with more than 250 staff. Irrespective of which party wins the election, it is unlikely we have heard the last of mandatory ethnicity pay gap reporting.
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