Artillery Row

The problem with reporting “ethnic pay gaps”

Pay disparity does not prove an underlying system of discrimination

Former UK Prime Minister, Theresa May, talked of the “burning injustices” in British society and called for British businesses to disclose ethnicity pay gaps, as “minority employees feel they’re hitting a brick wall when it comes to career progression”. March’s release of the long-awaited Commission for Race and Ethnic Disparities (CRED) report dialed back on the compulsory element of May’s original call and instead suggested voluntary reporting. This makes sense for several reasons.

First, given the UK’s  85 per cent white British demographic makeup, ethnic pay gap reporting is problematic. An employer in North Devon (99 per cent white British as recorded in the 2011 census) that employs 200 people would likely only have two non-white employees. Any comparison between the median of 198 with the median of 2 is not only meaningless but, as the leading statistician Nigel Marriot argues, “is likely to change considerably just from adding or subtracting one non-white employee”. This picture is further complicated because ethnicity is not binary (as in the case of sex). Thus, to have confidence in the data, the problem identified above is amplified across all ethnicities. As such, Marriot concludes that “only employers with 5,000 or more employees are likely to be in a position where an HR professional can carry out a meaningful ethnicity pay gap analysis”.

Second, it is not clear that “burning injustices” exist, at least concerning differential pay gaps between the UK’s diverse population. For example, ONS data shows that since 2012, today’s ethnicity pay gap between White and ethnic minority employees is at its smallest level ever. They argue that in 2019, “those in the Chinese, White Irish, White and Asian, and Indian ethnic groups all earned higher hourly pay than White British employees”. They continue that for those over 30, ethnic minorities collectively tend to earn less than those of White ethnicities, but, (and crucially in terms of future trends) “those in the ethnic minority group aged 16 to 29 years tend to earn more than those of White ethnicities of the same age”. No doubt part of this trend is the rapid expansion of higher education in the UK leading to more ethnic minority graduates entering the labour market. This trend seems set to continue despite the disruption of COVID-19, just last month Cambridge University admitted a record share of both ethnic minority and state-school educated pupils.

How do we explain the higher hourly pay between the generic black and white population?

Third, and most importantly, the new thinking around equality, ethnicity and identity signals what is arguably a long-overdue pushback against a prevalent left-identitarian narrative, common across the media and seemingly most British institutions. This narrative argues that any disparity between groups is evidence of an underlying system of discrimination. 

On the other hand, what seems to be new thinking within Government develops a more nuanced analysis: to help explain a social phenomenon, instead of taking just one explanation, we need to examine a range of variables to identify how they influence outcomes. In the case of apparent differences between the UK’s diverse population, these variables would include family structure, cultural values, education or even something as simple as human choices and agency. The dominant narrative posits disparity as a result of racism, the other controls for a range of factors to help us discover what’s working and what’s not to help advance equality of opportunity.

The differences in these approaches are illustrated when we examine pay gaps amongst the UK’s black population. For example, ONS data shows that between the 16 to 29 age group, hourly pay in 2019 for the white British population was £9.82; for the Black Caribbean, it was £10.09; for the Black African population, £11.08. We see similar differences within the Black population in pre-tertiary education: in 2017/18, almost 27 per cent of Black Caribbean pupils achieved a “strong pass” in GCSE Maths and English. This contrasts with 44.3 per cent of Black African pupils, a higher per centage than their White British peers. Similarly, temporary exclusion rates at school show that Black Caribbean rates ran at just over 10 per cent but Black African just over 4 per cent (lower than White British at just over 6 per cent).  

This granular data between the UK’s black population is what is the most interesting here. If we accept the dominant narrative, how do we explain not only the higher hourly pay between the generic black and white population but, more importantly, within the disaggregated black population as a whole? If the dominant narrative is correct, both would be subject to the same levels of anti-black institutional racism. However, we have very different outcomes. Why? The tragedy is that this simplistic narrative robs us all of identifying what works and what doesn’t, and thus more effectively advancing social mobility for the UK’s diverse population. Surely it is worth finding out why Black African kids do so much better at school than white and Black Caribbean kids and how this translates into the workforce and earnings?

Later in the summer, the government delivers its verdict on the CRED report and its many recommendations. It signals a mature approach that moves the debates beyond a decades-long and outdated “burning injustices” view of social mobility as a way of providing a much more fine-tuned analysis. As such, it’s a useful tool for advancing equality of opportunity and social mobility in our multi-racial democracy, and it would be a travesty if No 10 did not make good use of it as it seeks to “level up” the UK.

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