How can we overcome the ethnicity pay gap?

27 August 2019

Business leaders are tackling inequality on many fronts. From the gender gap to pride, neurodiversity to disability.  Amongst all this, another gap has emerged – that of the ethnicity pay gap. But it’s not as clear-cut as the gender pay gap. While minority workers (females) are underpaid across the board in the gender pay gap, with the ethnicity pay gap there’s more variation.

 

Explaining the ethnicity pay gap

A new study has shown that Chinese, Indian and Mixed ethnicity individuals have a higher median hourly pay than White British employees. Meanwhile, Pakistani and Bangladeshi ethnic groups experience the lowest median hourly pay. On average, Chinese employees earn 30.9 per cent more than their White British colleagues with Bangladeshi employees earning 20.2 per cent less.

 

The cost of inequality

Inequality in any form isn’t ideal in business, it hinders growth, stymies innovation and creates power imbalances. A non-diverse workforce prevents an organisation from serving all of its customers most effectively. There’s less diversity of thought, weakened expertise and fewer representations of different life experiences, something that’s partly attributed to the 2008 financial crash.

It’s imperative, therefore, for organisations to address the ethnic pay gap and everything it stands for. This approach pays too, equal participation across ethnicities is predicted to be worth an additional £24 billion to the UK’s economy per year.

 

Setting the start line

To first address the ethnic imbalances in the workplace, business leaders must first measure the disadvantage that some minorities face. Published pay figures go some ways towards that (and helps to promote transparency). However, leaders must also consider the number of BAME (black and minority ethnic) individuals in the C-suite too. How many manage to climb the career ladder – and some of the obstacles that are holding them back. Currently, 95 per cent of companies are failing to analyse their ethnicity pay gaps and 75 per cent don’t have enough data collected to do so.

Consider cultural nuances

Different communities integrate in different ways. They hold differing views about education, the values that are fostered by parents or their surrounding environments and influences. However, to understand the pay gap, leaders cannot lump different ethnicities under one umbrella.

But they also have to create a culture when people feel that they can be themselves. A CIPD study found that BAME employees, particularly  those from an Indian, Pakistani or Bangladeshi background feel like they have to change their behaviour to ‘fit in’. Conversely, Chinese employees are the least likely ethnic group to feel this pressure. This has to be eradicated by improving the levels of diversity in all levels of the business.

 

Inclusive cultures needed

Inclusive cultures lay the foundations for all other efforts. With a knock-on boost for gender equality, LGBTQ and other minorities. Hilton Hotels offers a good example of this, taking the top spot in Fortune’s Best Workplaces for Diversity.

Almost 70 per cent of its workforce are BAME. With Hilton guiding them through several corporate systems and social interactions that they may not otherwise understand. Including how to ask for a raise or promotion, to taxes and pension schemes.

 

Collaboration is vital

Finally, the effort to bridge the gap must be collaborative. No business will benefit from white guilt. Transparency and communication are key. Opening up the dialogue between different ethnic communities, to understand how best to enable their careers. Again, there’s no one-size-fits-all solution for the ethnicity pay gap.