Jump in number of firms calculating ethnicity pay gap

The number of companies calculating their ethnicity pay gap has grown “significantly” in the past two years – and firms should be harnessing such data to help improve workplace diversity, according to a new report from PwC.

Almost half of businesses surveyed are planning to disclose their ethnicity pay gap in the next three years (file image). Picture: Corbis.

The accountancy giant – which says it was one of the first companies to voluntarily report its ethnicity pay gap – undertook a survey of more than 100 businesses that collectively have more than one million UK employees.

It found that the percentage of firms now collecting ethnicity data on their staff has increased to 67 per cent from 53 per cent in 2018. The percentage of those calculating their ethnicity pay gap in 2020 has risen from 5 per cent in 2018 to 23 per cent in 2020, and 40 per cent of the organisations that have calculated their gap have already published it voluntarily.

Furthermore, almost half of businesses surveyed are planning to disclose their ethnicity pay gap in the next three years. An additional 10 per cent have already done so, up from 3 per cent in 2018.

The most common reason cited for not doing so was a lack of ethnicity data, with reasons including data protection restrictions, while others expressed concerns around, say, low response rates and unease about how to ask questions around race and ethnicity. Around seven in ten companies say they are planning new initiatives to encourage more staff to voluntarily share their ethnicity data.

Katy Bennett, director in PwC’s HR consulting practice, said: “It’s very encouraging to see so many more companies taking action to collect, analyse and publish their ethnicity pay gap data. Collecting, analysing and reporting ethnicity pay gaps is an important first step for an organisation, but reporting on its own will not drive change.

"Ultimately, the key is the insight that this data provides into where change is most needed. By measuring inclusion as well as diversity, organisations can gain a holistic understanding of where improvements can best be made.”

Jason Buwanabala, HR consulting actuary and data scientist at PwC, said organisations “should be looking across the entire employee experience to ensure fairness in areas such as recruitment, progression and attrition - and data is critical here”. He added: "Improving data quality should be a priority for organisations but this shouldn’t prevent them from starting the process by using the data they already have.”

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