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Pay gaps are a measure of the difference in average hourly pay between different groups and a good indicator of inequality in access to work, progression and rewards. There is an equality argument for closing pay gaps: no one should be at a disadvantage because of their gender, ethnic origin or disability status. 

The Equality and Human Rights Commission’s (EHRC) pay strategy (EHRC, 2017) identifies significant economic benefits to decreasing pay gaps. It notes that closing the gender pay gap could add £600 million to the UK’s gross domestic product (GDP); improving the employment rate and workplace progression for people from ethnic minorities could contribute £24 billion per year; and raising the participation of disabled people could reduce the annual £100 billion cost of people being out of work. 

The requirement1 for employers with 250 or more employees to report on their gender pay gaps has focused attention on the existence of, and reasons for, pay gaps. Pay gaps exist where members of one group have (on average) a lower hourly wage than another group. This may reflect an uneven distribution of people from different groups within workplaces, with some more likely to be in senior, higher paid roles.

EHRC are working to extend the focus from gender pay gaps and make employers aware of the drivers of inequality in work for some ethnic minority groups and disabled people. One potential way of monitoring and measuring this inequality is by employers collecting data on ethnicity and disability, including on employment and pay gaps. 

The aim of measuring pay gaps is not just to assess the size of pay gaps, but also to understand their causes and identify potential solutions to addressing both the causes and the resulting pay gaps. Understanding the drivers of, and solutions for, differences in pay can help us to address pay gaps, which will be different across gender, ethnicity and disability. This understanding will support us to work towards a society in which people are not disadvantaged in terms of access to education and work opportunities.

EHRC’s pay gaps strategy ‘Fair opportunities for all: A strategy to reduce pay gaps in Britain’ calls for employers to publish data on the ethnicity and disability pay gaps. It also calls for the UK Government to ‘monitor the effectiveness of mandatory gender pay gap reporting on closing gender pay gaps and consult with employers on the most effective way of extending the reporting requirement to ethnicity and disability pay gaps’ (EHRC, 2017, p. 26). 

This research seeks to identify the extent to which employers are currently measuring and reporting on the ethnicity and disability pay gaps, and to identify good practice in the collection and publication of relevant data. As well as looking at pay gaps, it also considers how employers are supporting in-work progression for people from different groups. The methodology included a web-based review, a telephone survey, and online research and telephone interviews with ‘good practice’ employers. 

Key findings

The majority of employers (77%) report that ensuring workforce diversity is a priority and many are committed to supporting employees with protected characteristics. However, this is not always backed up by collecting and analysing data to identify if there are differences in pay and progression for employees from different ethnic groups (only 36% of employers do this), or for disabled and non-disabled employees (44% of employers do so). Very few employers publish data on their ethnicity or disability pay gaps.

Where employers report on workforce make-up or pay by ethnicity, they tend to use binary categories (such as White, Black and ethnic minority) rather than reporting at a more detailed level. Reporting on the disability status of the workforce is less common, but when it occurs employers also tend to use binary categories (disabled and non-disabled). 

This tends to be because of concerns around confidentiality and the need to avoid identifying individuals in reporting. The organisations that are most successful in encouraging staff to share information on ethnicity and disability tend to put significant effort into encouraging employees to provide information and explaining how the data they will use the data.

While relatively small proportions of employers analyse or publish pay gaps data (other than for the gender pay gap), more than half (55%) collect data around progress and pay. Just under a quarter (23%) of all employers collect pay and progress data that could be used to analyse differences by ethnic group or between disabled and non-disabled employees. 

Just over half of employers (51%) report barriers to collecting data on the ethnicity of employees, and 52% to collecting data on disability. These barriers include stating that data collection is too intrusive, that employees do not want to share the information and that data collection is too onerous. Employers suggested that ways to overcome these barriers could include explaining to employees how the data will be used (70% agreed); developing a way of collecting the information easily, for example through an online form (58%); and making it mandatory to collect the information (48%). However, 13% of employers said that nothing would help overcome barriers. 

Good practice actions

While very few employers report on their disability and ethnicity pay gaps, many more are working towards ensuring disabled people and those from ethnic minorities do not face barriers in terms of progression to the highest levels of an organisation. 

Examples of good practice actions (both mandatory and voluntary) by employers include:  

• collecting information on, and encouraging staff to self-report, their ethnicity and disability status on a rolling basis  

• running internal communications campaigns before collecting data, to highlight to staff how data will be used to support equality  

• publishing details of the proportion of staff who are from an ethnic minority or disabled, and conducting a pay review.

• publishing equality reports that show workforce breakdowns of employees by protected characteristics  

• using frameworks to identify how protected characteristics affect issues such as recruitment and annual reviews  

• monitoring recruitment bias by looking at the percentage of those with protected characteristics who applied for jobs, were shortlisted, and appointed, and  

• establishing working groups or develop action plans to address the ethnicity and disability pay gaps, and take action (for example, running leadership workshops targeted at staff from ethnic minority groups).

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