Definition
The difference in average pay between employees of different ethnic backgrounds within an organisation, expressed as a percentage of the higher-paid group's earnings.
UK Context
Ethnic pay gap reporting is not currently mandatory in the UK, unlike gender pay gap reporting which has been required for organisations with 250 or more employees since 2017. The Ethnicity Pay Gaps Bill has been introduced to Parliament several times but has not progressed. The Government's Inclusive Britain strategy (2022) encouraged voluntary reporting. Large employers including the BBC, Deloitte, and the Civil Service have published ethnic pay gap data voluntarily.
Best Practices
- Collect ethnicity data through voluntary self-declaration with high response rates before analysing pay gaps
- Analyse pay gaps by detailed ethnic group rather than using a single binary comparison
- Contextualise pay gap data with narrative explaining contributing factors and planned actions
- Set measurable targets for reducing ethnic pay gaps and report progress regularly
- Address root causes including recruitment practices, promotion rates, and retention patterns alongside the headline figures
Frequently Asked Questions
Is ethnic pay gap reporting mandatory in the UK?
No, ethnic pay gap reporting is not currently mandatory. Unlike gender pay gap reporting, which is required for organisations with 250 or more employees, there is no legal obligation to report on ethnicity pay. However, a growing number of employers publish this data voluntarily, and there are ongoing campaigns for mandatory reporting.
How is the ethnic pay gap calculated?
The ethnic pay gap is typically calculated as the percentage difference between the average hourly pay of white employees and the average hourly pay of ethnic minority employees. Both mean and median figures are usually reported. Organisations should also break down figures by specific ethnic groups for a more meaningful analysis.
What is the UK ethnic pay gap?
According to ONS data, the overall UK ethnic pay gap varies by ethnic group. While some groups such as Chinese and Indian employees have median hourly pay above the white British average, Bangladeshi, Pakistani, and Black African employees typically earn less. The overall median pay gap between white and ethnic minority employees has been approximately 2 to 5 percent in recent years, but this masks significant variation between groups.