Make ethnicity pay reporting mandatory from 2023, says CIPD

Parliament will today debate a public petition to make ethnicity pay gap reporting mandatory for large companies. The CIPD is backing the proposal and publishing a new guide for employers.

Diverse people sitting round table holding cash in plain sight
Ahead of the parliamentary debate, the CIPD, the professional body for HR and people development, renewed its call to government and employers to monitor pay gaps by ethnicity. Doing so would help to create more inclusive workplaces, social mobility and boost growth.Last year’s Black Lives Matter protests led many organisations to publicly condemn racism and discrimination in our societies and workplaces, but few have voluntarily reported their ethnicity pay gaps, finds the CIPD. This despite increasing expectations from the public, investors and other stakeholders.Just 13 FTSE 100 companies reported their ethnicity pay gaps in their most recent annual report, according to new CIPD research. However, of those, ten organisations published for the first time, suggesting that greater public scrutiny of race inequalities prompted these employers to act. 

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Action and narrative to illuminate gaps 

To bring greater insight and consistency to people reporting, the CIPD is calling on the government to require organisations to provide a narrative, including action plans, alongside the data for gender pay gap reporting.It believes that numbers without a narrative are less likely to drive real change, and too many organisations are not providing this important additional commentary.  “Ethnicity pay reporting is an important lever for businesses and their stakeholders to assess if and where inequality based on ethnicity exists in their workforce,” comments Peter Cheese, chief executive of the CIPD.  

“That’s why we believe it is so important that businesses both capture and learn from this data.  While it’s positive to see some organisations voluntarily report their ethnicity pay, it’s clear that progress is slow and reporting is very inconsistent.“We know that gender pay gap reporting has driven greater transparency and accelerated progress, and we believe the same is needed for ethnicity pay reporting. Mandatory reporting of data, and the associated narrative that shows understanding of the data and the actions being taken to improve, for both ethnicity and gender pay, will help create fairer workplaces and societies and kickstart real change.” 

New guide for ethnicity pay reporting

To support employers on their ethnicity pay reporting journey, recognising it is more complex than gender pay gap reporting, the CIPD has launched guidance to help organisations start collecting and reporting their ethnicity pay data and importantly, create action plans to drive change.Previous CIPD research has found that while most employers (77%) believe that ensuring workforce diversity is a priority, only 36% collect and analyse data to identify differences in pay and progression for employees from different ethnic groups, “highlighting the need for mandatory reporting and clear guidance”. The professional body suggests that organisations use the same snapshot dates in place for gender pay gap reporting, so data would be collected in March/April 2023 and would need to be reported within one year. 

Reporting for real change

“A strong commitment to inclusion and fairness at work is not only good for business and their ability to attract and retain the diversity of talent, experience, and skills they need to thrive, but also for our economies and societies,” comments Baroness Ruby McGregor-Smith, author of the 2017 McGregor-Smith review on race in the workplace.“Every person, regardless of their ethnicity or background should be able to fulfill their potential at work. It must be a collective goal that our organisations reflect the communities we live in and mandatory ethnicity pay data gives businesses, investors, and regulators the tools they need to see the current reality and where changes need to happen.“It’s only once we see organisations publicly start to report the diversity of their workforce that we will see real change start to happen.”

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