Almost a quarter now calculate ethnicity pay gap

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“The results are often stark reading – but that’s the point,” says PwC’s chief people officer Laura Hinton
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Two-thirds of businesses are now collecting ethnicity data on their employees and almost a quarter have calculated their ethnicity pay gap, according to a survey by PwC.

The consulting firm’s poll of more than 100 companies found that the proportion of them calculating their ethnicity pay gap – which is yet to become a legal requirement – has grown from 5% in 2018 to 23% in 2020.

Furthermore, the percentage of companies surveyed now collecting ethnicity data on their people is up to 67% from 53% in 2018.

Of those that have calculated their ethnicity pay gap, 40% have published it voluntarily.

Almost half of all the businesses surveyed said they would disclose their ethnicity pay gap over the next three years. The most common reason for not doing so was a lack of data, for which many blamed GDPR restrictions.

Other challenges in collecting data included low response rates, issues with HR systems or “unease about how to ask questions around race and ethnicity”, PwC found.

On this point, around seven in 10 companies are looking at new initiatives to encourage staff to share their ethnicity data. Almost four in 10 now provide targeted career sponsorship and advice to employees from an ethnic minority background, compared to none two years ago.

Katy Bennett, director in PwC’s HR consulting practice, said it was encouraging to see an increase in companies taking action to collect, analyse and publish ethnicity pay data.

“Doing this is a critical first step towards identifying the actions that will drive real and sustainable change,” she said. “At a time when issues surrounding race and ethnicity in the workplace are in sharp focus, it’s positive to see more companies looking to demonstrate a commitment to improving ethnic diversity.

“Collecting, analysing and reporting ethnicity pay gaps is an important first step for an organisation, but reporting on its own will not drive change,” she added. “Ultimately, the key is the insight that this data provides into where change is most needed. By measuring inclusion as well as diversity, organisations can gain a holistic understanding of where improvements can best be made.”

Other actions organisations are taking around race diversity and inclusion include ensuring recruitment processes are open and using tools to reduce bias (cited by 77%); setting out a clear strategy on ethnic diversity actions (70%); and taking steps to provide fair access to the best working opportunities (63%).

Jason Buwanabala, HR consulting actuary and data scientist at PwC, added: “In order to address inequalities caused by systemic and structural biases, organisations should be looking across the entire employee experience to ensure fairness in areas such as recruitment, progression and attrition – and data is critical here.

“There are undoubtedly challenges when it comes to collecting and analysing information on ethnicity in the workplace and the companies we’ve spoken to reflect some of these in their concerns – data protection, technological capacity and low response rates are big ones.

“Improving data quality should be a priority for organisations but this shouldn’t prevent them from starting the process by using the data they already have.”

PwC itself is now in its fourth year of voluntarily reporting its ethnicity pay gap. On 5 April 2019, the median BAME pay gap for PwC UK was 4.70%, and the median bonus gap was 47.20%.

Chief people officer Laura Hinton said: “It’s not been straightforward and the results are often stark reading – but that’s the point. Ultimately, our pay gap is improving year on year but we still have work to do.

“The data we collect helps us identify issues and take targeted action within our business to reach new people, nurture their development and take steps every day to ensure our culture is inclusive and provides equal opportunities for all.

“Communicating clearly and honestly with our people about why we’re asking for this information, and the positive steps we’re taking as a result, helps build trust and reinforce the message that it’s on all of us to continue challenging the status quo.”

Although ethnicity pay gap reporting legislation has been through government consultation, its passing into law has been delayed. A petition urging the government to make it mandatory has amassed more than 130,000 signatures, meaning Parliament will consider it for a debate.

Earlier this year, a report by the CBI and Eversheds urged companies not to wait until reporting became law to disclose their ethnicity pay figures.