The Society of Pension Professionals is calling for smaller employers to be included in new ethnicity pay reporting standards, to improve transparency and narrow the ethnicity pay gap.
The Government is currently proposing to introduce legal requirements for large employers to report pay gaps by both ethnicity and by disability. This will follow a similar structure to gender pay requirements.
However in its response to this consultation the SPP said it would like to see current proposals go further. It says its report into this issue finds “compelling evidence” that these mandatory proposals should “specifically include mid-size employers [those with 50 to 249 staff] into this new regime.”
It says these firms account for more than 4.1m jobs across the private sector and are particularly dominant in local and regional economies and in sectors where racially minoritised workers are often over-represented.
The SPP points out many firms already have structured HR and payroll systems in place, and evidence from the Chartered Institute of Personnel and Development (CIPD) shows that a majority are already collecting some form of ethnicity data.
Jabeer Butt OBE, chief executive, Race Equality Foundation who contribute to his report says: “The current voluntary approach has clearly reached its limits. Where reporting is optional, it remains patchy, inconsistent, and lacking in both context and follow-up. Moreover, even among those who do report, few set clear targets or publish concrete actions in response to their findings.”
He pointed out that what is often missing form the reporting done by these firms “is the external requirement and support to report it transparently and act on the insights.”
The SPP is recommending a phased implementation approach, with the largest employers required to report this data first.
It said that alongside the requirement to publish data “accessible guidance, sector-specific example and technical support should be provided to ensure organisation of all sizes can comply meaningfully.”
Butt adds: “Without the inclusion of mid-sized firms the proposed legislation risks leaving millions of workers outside the reach of transparency and accountability. It will also reinforce the misconception that only large companies bear responsibility for pay equity – and in turn pension equity. In reality all employers have a role to play in dismantling structural inequality.”
The SPP adds: “Ethnicity pay gap reporting can be a powerful level for change but only if it is bold in scope, intersectional in focus and inclusive of the employers that shape the everyday realities of the UK workforce.”
