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Ethnicity pay gaps remain in UK, according to analysis, while study outlines public’s priorities for addressing inequality

Dec 06, 2021

Ethnicity pay gaps continue to exist across the UK, according to PwC analysis, while separate research shows that the majority of people from minority ethnic backgrounds say they are treated differently than those who are white when applying for jobs. 

Analysis of ethnicity pay gap data has revealed that, on a like-for-like basis, white British people earn more on average than people from almost every other ethnic group. And a poll of 4,000 people in the UK, carried out as part of PwC’s Future of Government research, shows those from ethnic minority backgrounds are most likely to believe that the pandemic has exacerbated inequality. However, the respondents from ethnic minorities are more positive about the chances of racial and ethnic inequality being eradicated in the coming years, along with younger generations who are also far more likely to personally want to do more to address the issue. 

The Ethnicity Pay Gap Report 2021, produced by Strategy&, PwC’s global consulting house, builds on an approach previously developed by the Office for National Statistics. The analysis of 2020 data shows that while, on a basic level, the overall pay gap between white people and those from minority ethnic backgrounds has now been closed for the first time since 2012, a series of imbalances remain when comparing people from different ethnic groups on a like-for-like basis.

White British people are, on a like-for-like basis, paid more on average than people from 11 of the 15 ethnic minority groups, even those in the same positions and with the same qualifications

  • Significant pay gaps remain at a regional level, particularly among people working in London where ethnic minority groups earn on average £14.76 an hour -  more than 20% less than their white counterparts who make £18.47. The figure is also only slightly above the overall national average despite higher living costs 

  • White and Black African - i.e. mixed race - people are paid on average 16% less than the White British population

  • Despite a significant improvement in overall ethnicity pay in Scotland in 2020 compared to 2019, there are no UK regions where people from an ethnic minority background who were not born in the UK earn more than their white counterparts. 

Ethnicity pay gap is also a gender pay gap

The report also demonstrates how pay differences based on ethnicity interact with the gender pay gap, with white and Black Caribbean mixed race women on average earning 70p for every £1 earned by a white British man. In white and Black African mixed race, Bangladeshi, and other mixed ethnicity groups, women out-earn men by a small amount, although women in all of these groups still earn less than the average white British man. 

The key drivers for this disparity include higher numbers of ethnic minority women employed in insecure jobs, the report says, as well as lower employment rates among ethnic minority women and over-representation in jobs below their qualification level. There are also reports of women from ethnic minorities facing higher levels of discrimination in the workplace.

Public perception of racial inequality is divided 

The survey, conducted as part of PwC’s Future of Government research which explores fairness across the UK, found that six out of 10 people from ethnic minority backgrounds believe that people from other racial or ethnic backgrounds are treated differently when applying for a job than white people. Just over four out of 10 (42%) of white people taking part in the survey believed this to be the case. 

Respondents from minority ethnic backgrounds believe that a greater focus on career development for ethnic minorities would be the most effective way for employers to improve racial and ethnic equality. Processes for reporting racial biases and injustices in the workplace and an increased visibility of ethnically diverse people as role models in recruitment material and in the media were identified as the next most important measures.

Nearly four out of 10 (39%) of people from ethnic minority backgrounds believe that the Covid-19 pandemic has exacerbated racial and ethnic inequality compared to one quarter (25%) of white people.

The study found that young people are almost twice as likely to take responsibility for tackling racial inequality than those who are older, with 56% of 18-to-34-year-olds saying they personally want to do more to address the problem compared to 29% of over 55s. Younger age groups also appear to be more hopeful that racial inequality will be eradicated in the UK, with 73% of 18-24 year olds expecting it to end at some point in contrast to less than half (38%) of those above 65. Four out of 10 respondents (40%) from ethnic minority backgrounds say they believe the inequality can be eliminated within 10 years compared to one quarter (25%) of those who are white.

When asked who was responsible for improving ethnic and racial inequality in the UK, respondents from ethnic minority backgrounds are most likely to identify the media and social media (33%), schools (32%) and individuals (also 32%). White people believe the responsibility lies with individuals (46%), central government (38%) and parents (36%). 

Karen Finlayson, PwC Partner and Regional Lead for Government, said:

“Events of the past two years have shone a light on the numerous inequalities that exist in our society and kick-started the conversations that need to happen for them to be properly addressed. These two studies highlight the divides not only in the perception but the reality of ethnic and racial inequality in the UK. The pay gap research underlines the extent to which workers from ethnic minorities across the UK are still earning less than their white counterparts even when they have the same qualifications and are working in the same jobs.

“This difference between perception and reality illustrates that despite considerable progress on social attitudes, as well as the endeavours of policymakers, businesses and individuals, there is still a long way to go to knock down the structural barriers and behaviours and attitudes towards racial equality that exist in the British workplace and in society. At the same time, there is clearly hope for the future, and it’s heartening to see that young people, in particular, appear to be not only the most determined to tackle inequality but are the most positive about our prospects of seeing it eradicated in the future.” 

Commenting on the reports, Sandra Kerr CBE, Race Director at Business in the Community, said:

“As we look toward a fair recovery, we can see that while many believe the pandemic has worsened racial inequality in the UK, they also are optimistic for the future. It is a sign of progress that more people believe that companies can play a part in stamping out inequality. But this optimism comes with an awareness that we cannot rely on employers alone.

“This study has shown a greater drive for personal responsibility to stamp out racism. I’m heartened by the growing number of respondents who shared their belief that racial inequality will be eradicated in the next 10 years. The youth of today will be the decision-makers of tomorrow, and I take hope from their push for action, starting with a call for the UK Government to implement mandatory ethnicity pay gap reporting. Their belief in our ability to make positive changes for the future makes me proud to push for action. As leaders, we must not let them down.”

Laura Hinton, Chief People Officer at PwC, added:

“These findings emphasise the need for organisations to meaningfully report on ethnicity pay gaps, as well as on gender and social background. Meaningful reporting is more than data alone - it should also include a clear action plan, as that is how you drive and measure change.”

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