What is Black history month?
October in the UK is when we observe Black History Month. This is an annual observance originating in the United States, where it is also known as African-American History Month. It has received official recognition from governments in the United States and Canada, and more recently has been observed in Ireland and the United Kingdom. It began as a way of remembering important people and events in the history of the African diaspora. It is celebrated in February in the United States and Canada, while in Ireland and the United Kingdom it is observed in October. In the UK this national celebration aims to promote and celebrate the contributions of those with African and Caribbean heritage to British society and to foster an understanding of Black history in general. As we foster that understanding it is important to learn how we can improve the lived experience for employees with African and Caribbean heritage in the workplace.
Pay Gaps, a simple metric to understand the lived experience of ethnic groups in the workplace
One simple metric that can be used to understand that lived experience are average pay gaps. We are used to seeing these reported here in the UK for gender but currently there is no mandatory reporting or data collection required for ethnic groups. Earlier this year the UK government did publish new guidance on ethnicity pay gap reporting and action in the workplace, which I wrote about here.
While calculating the average pay gap is simple the factors that drive them are anything but. These often have less to do with pay itself but are more a consequence of structural or systemic issues in the workplace and society that create barriers to entry or career progression for certain groups of employees. Average pay gaps are less about equal pay (being paid the same for like work or work rated as equivalent and equal value) but pay equality, which is more concerned with creating an environment where all employees have the opportunity to earn the same.
Data on UK ethnicity Pay Gaps
With no mandatory reporting on ethnicity pay gaps we can use the ONS Ethnicity Pay Gap data, with the last available data set being from 2019. This examines the different ethnic groups in England, Scotland and Wales. In this study, the pay gap is calculated as the difference between the average hourly earnings of White British and other ethnic groups as a proportion of average hourly earnings of White British earnings. So, a positive pay gap indicates an ethnic group is paid less than those employees categorized as White British, whilst conversely a negative pay gap indicates an ethnic group is paid higher.
The data shows significant disparities between the averages paid to White British workers and those from other ethnic backgrounds. The findings were based on comparisons using the 10-category ethnicity breakdown with three ethnic groups: Chinese, Indian and Mixed/Multiple ethnic group which were paid higher on average than White British as shown below.
| White Other | 5% |
| Mixed or Multiple ethnic groups | -2.5% |
| Indian | -12% |
| Pakistani | 16.9% |
| Bangladeshi | 20.2% |
| Chinese | -30.9% |
| Any other Asian | 4.0% |
| Black African, Caribbean, or Black British | 9.2% |
| Other ethnic group | 9.2% |
What issues drive ethnicity pay gaps?
Coming to grips with the factors that cause ethnicity pay gaps is more complex. Not only because each ethnic group has a different experience in society and the workplace, but also because it is difficult to generalize between countries due to different immigration histories.
As with gender, occupational and vertical segregation prevail with ethnic minorities being less likely to be in higher paid managerial positions and more concentrated in lowest skilled types of job and occupation. A Business in the Community (BITC) report, Race at the Top: Revisited, found just 54,900 of the 3.9 million managers, directors and senior officials in the UK are black. According to the report, there has been even less progress on black representation in the public sector, where the number of black employees in leadership roles remained static at 1 per cent over the same period. The proportion of top private sector roles held by employees with Black, Asian and ethnic minority (BAME) backgrounds has increased by little over 1 percentage point, rising from 9.2 per cent of all senior positions in 2014 to 10.3 per cent today.
Education also has a part to play here, with ethnic minority children facing challenges including: racial and ethnic marginalization, concentrations of minority ethnic groups often residing in more deprived areas, and language and cultural barriers. This can then translate into weaker educational achievements that affect pay disparity as education opens up access to occupations of higher status and greater earnings. Yet it is important to understand that there is data to support that where educational achievement is level, ethnic minorities still earn less than their white colleagues, suggesting other factors are still in play.
Additionally, past research has examined what individuals aspire to, as well as what they expect to achieve in terms of educational and career ambition, has an impact. Aspirations and expectations may not actually align with one another, as it’s argued that expectations are more determined by the “perceived structure of opportunity” within society or the socio-economic factors and realities. Within the research, it’s noted that minority ethnic groups are able to offset their (on average) poorer financial capital through family norms, values and networks which promote higher goals and ambitions. But regardless of these positive attitudes toward career aspirations, social disadvantage and other factors may impact education and career progression significantly – one being geography.
Geographic location impacts ethnicity pay gaps due to the concentration of ethnic minorities in certain locations. According to the ONS data the ethnicity pay gap was largest in London at 23.8% in 2019 and smallest in Wales at 1.4%. There was a negative pay gap in the East of England region (negative 8.6%) meaning that, for that region, those ethnic minority earn a higher median hourly wage than those in the White ethnic group. From an employer’s perspective this can cause challenges as it can impact goals to achieve balanced representation.
Interestingly, another major contributing factor leading to pay differentials is status of whether or not an individual is a first-generation immigrant. For example, many who are first generation immigrants have issues with language and customs, and lack the connections that could help them find a suitable job. When immigrants’ qualifications are not recognized in the labor market of the host country, they can experience ‘occupational downgrading’ meaning many are likely to be overqualified for the job they do end up pursuing.
What can employers do about ethnicity pay gaps?
Collect employee data, including race
Data-driven ethnicity pay gap reporting is essential to understanding the different experiences of individual ethnic groups. Only by analyzing employee data can we move beyond anecdotal evidence and subjectivity to truly measure inequality. From there, we can start to understand where disadvantage and barriers occur to take corrective action.
Make leaders accountable and create open communication channels
When it comes to actions, driving accountability from the top is critical to success. Agreeing which diversity and inclusion objectives are most important and which shortcomings are most in need of addressing in your organization is just the beginning. Objectives and shortcomings need to then be translated into an actionable plan that sets measurable goals aligned to your accountability framework.
More generally, opening up conversations on race across organizations and giving all employees a safe, comfortable space and voice to share thoughts and ideas is paramount. Many choose to do this through staff networks, encouraging discussions on different experiences to provide insight into unseen barriers and devise practical and creative solutions. It’s all about fostering an inclusive culture where a diverse range of people are fully and happily able to be themselves.
Consider barriers and tackling bias
As with gender, considering barriers to entry for ethnic minorities can have a short-term impact on representation. So going back to some of those societal issues mentioned above, challenging educational selection or work experience bias during recruitment can help alongside creating work experience opportunities for everyone – rather than just through existing networks and referrals. Then it comes down to incorporating other approaches such as: drafting job specifications in a more inclusive way, requiring diverse shortlists and introducing diversity to interview panels to tackle any unconscious bias.
Just as important as barriers to entry, consider barriers to progression. Company-wide transparency is crucial so communicating openly around topics including: career ladders, pay and reward guidelines, and how and why people are promoted, helps ensure employees do not deselect themselves based on perceived hurdles. As with recruitment, diversity in selection panels and appropriate manager training can also help tackle unconscious bias issues.
Offer mentor opportunities
When reviewing progression, the UK’s Business in the Community’s Race at Work charter highlighted the importance of mentoring for ethnic minorities who value mentors more, with a greater desire to expand their personal networks than other groups. Senior leaders can operate as active sponsors and use their influence to highlight and recommend employees when progression opportunities arise. These opportunities can also take the form of reverse mentoring, where junior employees are paired with senior leader mentees to provide a safe channel to learn and share insights and experiences, while providing a fresh perspective on the firm’s business, strategy, and culture.
The ultimate aim of analyzing ethnicity pay gaps should be to make employers reflect on why discrepancies in pay exist within their organization and prompt them to raise awareness and understanding of these issues. Only then can we consider solutions. But with diversity, equity and inclusion metrics becoming part of broader environmental, social and governance concerns, and companies seeking to redefine their purpose to generate a positive impact on society, taking action now is fast becoming a business priority.
