Ethnicity pay gap data highlights impact of race on earnings

Publication of new UK ethnicity pay gap analysis coincides with today's launch of a government watchdog, OfTI, which is tasked with tracking progress on social justice, including workplace inclusion.

Ruth Holmes

12 July 2019

New data from the Office for National Statistic (ONS) shows a mixed picture across the ten categories of ethnicity it uses in the assessment.The difference between median hourly earnings of White British and some ethnic groups is as much as 22% in some cases, the ONS finds.The newly weighted analysis, based on the Annual Population Survey, follows the government’s 2017 pledge set out in its Race at Work report to improve inclusion and social mobility for everyone through work and career development.The analysis comes also as the government is considering evidence from its recently closed consultation on ethnicity pay reporting. According to the government’s calculations, equal participation and progression across ethnicities could be worth an additional £24 billion to the UK’s economy per year. The government believes quantifying pay gaps by ethnicity is a first step towards identifying barriers that cause pay differentials for people of different backgrounds.

What is the ethnicity pay gap?

The ONS’s headline measure, which uses a similar approach to gender pay gap reporting, shows a range of experiences among different groups in the UK workforce. Overall, people across six of the ten categories earned less per hour than the median White British person.This is highest for people of Pakistani (22.7%), Bangladeshi (20.2%) or Black/African/Caribbean/Black British ethnicity (9.2%). By region, the ethnicity pay gap is largest in London at 21.7%.The pay gap between White British and other ethnic groups is generally smaller for younger employees than it is for older employees.The ethnicity pay gap between White British employees and most other ethnic groups also narrows once other characteristics such as education and occupation are taken into account.

People with Chinese and Indian heritage do best - but make up tiny percentage of the workforce

While the ONS warns its figures should be read with some caution because of the relatively small number (0.5%) of people in employment who identify as being of Chinese ethnicity, the ONS finds that in 2018, on average, employees from the Chinese ethnic group earned 30.9% more than White British employees.People of Indian ethnicity (2.9% of the UK labour force) also had a negative ethnicity pay gap of -10.3%; that is to say they earned more than the median average hourly earnings of the White British group, which is the largest in the UK workforce at around 80%.People in the ‘Mixed/Multiple’ ethnic group make up 1.2% of the UK workforce and also have a negative pay gap, at -2.5%.

Using data to improve social mobility

Publication of the analysis also comes as Theresa May announced the launch of an independent body tasked with holding all government to account for progress in tackling social injustices.The new Office for Tackling Injustices (OfTI) will use data and analysis to find out what the key barriers are for specific groups and gather information that is currently unreliable or simply not available.It will look at disparities in areas including socio-economic background, ethnicity, gender, disability and sexual orientation and explore if specific groups of people are unfairly discriminated against or held back from getting on in life.Prime Minister Theresa May said: “Deep-seated societal injustice requires a long-term focus and cannot be eliminated overnight.“Since becoming Prime Minister, I have challenged the injustices which still exist in our society through the power of data – from our world-leading gender pay gap reporting to the Race Disparity Unit – and I have demanded that if disparities cannot be explained, they must be changed.“I am proud of what we have achieved to make the UK a more just society. But there is more to be done now and in the years to come, if we are truly to say that this is a country which works for everyone – no matter who they are or where they’re from.“That’s why the Office for Tackling Injustices will go further, using the power of data, gathered from extensive sources, to shine a spotlight on key injustices and provide the catalyst for better policy solutions. By holding Government and wider society to account, we can create lasting change.”

'Shining a light on social injustice'

Sir Simon Woolley, Director of Operation Black Vote and Chair of the Advisory Group to the Race Disparity Audit said: “As the Office for Budget Responsibility acts as an independent watchdog over the public finances, so will the Office for Tackling Injustices objectively assess the government’s progress towards social justice. “This new Office I believe will become a shining beacon that not only shines necessary lights on those injustices the Prime Minister cares about such as gender equality, social mobility and race inequality, but also a powerful bulwark for change.”