In last week’s King’s Speech Prime Minister Sir Keir Starmer unveiled plans to push ahead with a Draft Equality Bill which seeks to enshrine in law the full right to equal pay for ethnic minorities and disabled people, and mandates ethnicity and disability pay gap reporting. On the face of it, this may sound like Labour is making the UK a fairer place, but, in fact, the Bill is rooted in identity-based politics and is likely to only deepen divisions.

As Lord Tony Sewell, author of the Sewell Report for the Commission on Race and Ethnic Disparities recently pointed out, the Bill “ignores statistical refinements [and] disparities driven by geography, age, poverty, and low aspiration.” It further pedestalises ‘visible’ diversity by over-focusing on immutable characteristics such as ethnicity to the detriment of ‘invisible’ diversity such as class. It risks promoting ineffective, virtue-signalling Diversity Equality and Inclusion (DEI) programmes and sows division.

In particular, the Bill’s the pursuit of mandatory pay gap reporting – which may seem like an innocuous data-gathering exercise – could see firms needlessly labelled as discriminatory. This is due to the proposed methodology for reporting ethnicity and disability pay gaps. The same as that used for reporting gender pay gaps, it only captures disparities across whole companies and not between them. As such, the approach fails to account for variations in both an individual’s age and position within an organisation. This is significant, given that those from ethnic minority backgrounds are more likely to be younger and so more likely to be in more junior, lower-paying roles. A consequence of this is that firms that take on new hires from a variety of demographics, when viewed through the prism of the new pay gap reporting regulation, could incorrectly be seen as holding back minority groups and be persecuted under the Bill as a result. 

If this mischaracterisation was not bad enough, to mitigate against new potential reputational harms, companies could end up ploughing money into DEI initiatives. These are not only divisive but of questionable efficacy. There is a growing body of literature that highlights that many diversity initiatives do little to actually improve workplace diversity. What is worse, they can leave people feeling resentful and even reinforce identity-based stereotypes. 

Similarly, the Equality Bill risks breeding resentment. The Bill makes it easier to bring forward legal cases for being paid differently for different jobs, provided those jobs can be considered of “equal value.” This highly subjective dictum opens up endless opportunities for legal disputes, which may create plenty of work for activist lawyers, but for the rest of us it could merely entrench a culture of victimhood in the workplace. How exactly this would support our economy, as the King’s speech claims, is difficult to see.

What is more, the Labour Party’s Equality Bill, like the DEI industry more widely, has tunnel vision when it comes to diversity. DEI often places visible diversity over and above invisible diversity – namely socio-economic background – despite the mixed evidence of the performance benefits of visible diversity. For instance, recent research debunked a high-profile McKinsey study purporting to show that having more ethnically diverse company boards improves profitability. Indeed, the research could not find any statistically significant connection between “executive racial/ethnic diversity” and company success.

Perhaps it should not be surprising given that, if a company were to hire individuals who only differ in their appearance, but who are advantaged otherwise, they may still contribute very similar perspectives and ideas. Conversely, individuals from the same ethnic group but who have different socio-economic backgrounds could offer more varied insights and ideas. 

If Labour fails to recognise this, it will show that it cares more about ideologically-motivated virtue signalling than helping those from disadvantaged backgrounds get on in life. This would be  counterproductive given the challenges those from lower socio-economic backgrounds currently face in accessing good jobs. Indeed, graduates from socio-economically disadvantaged backgrounds still earn half as much as their more privileged peers in their first job after university and they often cannot access the highest-earning jobs where having connections to current employees is still the central factor in gaining well-paid employment. This feature of the current job market is not only highly unmeritocratic but widely overlooked by DEI practices.

Labour should instead be focusing on initiatives that lower barriers to employment for those from more disadvantaged socio-economic backgrounds. In essence, equality of opportunity – not equality of outcome – should be at the centre of recruitment practices and the drive to create a fairer Britain.

Promisingly, some shift in recruitment approaches along these lines is already happening. Many organisations are moving away from examining a candidate’s background and existing qualifications towards skills-based recruitment, assessing an individual through technical assessments and job simulation exercises, while others are stripping applications of personal information through blind recruitment. These practices can enable a more objective assessment of an individual’s potential, regardless of background. Labour should be doing more to encourage this.

Of course, there is no perfect way to realise equality of opportunity, but the promotion of innovative recruitment practices would not only prove far less divisive than the Draft Equality Bill, it would also ensure that the benefits of invisible diversity are not sidelined and help talented individuals from disadvantaged backgrounds gain access to good jobs.