Every person, regardless of ethnicity or background, should be able to fulfil their potential at work. Employers who take action can unlock the potential of BAME employees, growing the talent pool and addressing skill shortages in the process.

The situation

Too many individuals from an ethnic minority background still face discrimination and disadvantage when trying to get into and progress at work compared with their white British peers.

According to the McGregor-Smith Review (2017), the employment rate for ethnic minorities is only 62.8% compared with an employment rate for White workers of 75.6%. This gap is even worse for some ethnic groups, for instance the employment rate for those from a Pakistani or Bangladeshi background is only 54.9%.

Overall, about 1 in 8 of the working age population are from a black or minority ethnic (BME) background, yet BME individuals make up only 10% of the workforce and hold only 6% of top management positions. The Parker Review (2016) of the ethnicity of UK boards found that only 85 of the 1,050 director positions in the FTSE 100 are held by people from ethnic minorities.

Addressing this issue is not just about tackling discrimination, it is also about boosting business performance. It is estimated the economy stands to gain an additional £24 billion if there was full representation of black, Asian and minority ethnic individuals in the workplace.

CIPD viewpoint

Every person, regardless of their ethnicity or background, should be able to fulfil their potential at work. The need to create more diverse and inclusive workplaces has been recognised but not acted on for too long, and ethnicity pay gap reporting can serve as a catalyst.

CIPD research shows that there is a significant lack of ethnic diversity at the top of UK organisations. BAME employees are more likely than those from a white British background to say they have experienced discrimination, that their career progression has failed to meet their expectations and that they have felt the need to change aspects of their behaviour to ‘fit’ into the workplace.

As well as the cost to individuals of missing out on job opportunities due to prejudice or bias, employers who don’t take action will be left with a more limited talent pool, and inequalities in progression opportunities mean people’s skills will be underused.

While there has been some shift in board composition, it has not been to the extent or at the pace required. It is important to build on the success of campaigns that have increased female representation at the top of organisations to make significant strides with ethnic diversity.

The CIPD is actively contributing to government consultations on the issues and supporting employers to drive sustainable change in their organisations. For example, in 2019, the CIPD in consultation with senior level members provided practical recommendations to the UK Government on whether organisations should be required to report on the pay differentials between people from different ethnic backgrounds.

We were also one of the first organisations in the UK to sign the Race at Work Charter. Internally, the CIPD’s EmbRACE employee action group on race and ethnicity is actively working with HR to raise staff awareness of issues and advise on action the CIPD needs to take as an organisation.

Actions for Government

  • Introduce mandatory reporting on ethnicity pay gaps for large businesses with more than 250 employees, based on the same quartiles used for gender pay gap reporting. There should also be a single pay gap figure that compares average hourly earnings of ethnic minority employees as a percentage of white employees.

  • Require organisations to produce a narrative and action plan, based on government guidance, as part of ethnicity pay gap reporting. Progress against the action plan should be included in subsequent reports, to drive tangible change in recruitment, management, development and promotion of employees across all ethnicities.

  • Set a timeline for revisiting the impact of ethnicity pay gap reporting and consult with employers on whether it would be appropriate to provide more detailed data against standardised classifications of ethnicity.

  • Advocate and support better quality people management. CIPD research found that people management practice is poor according to all ethnicities.

  • Develop guidance for employer action. There is a clear need for practical guidance and case study examples to kick-start and maintain the actions called for in the McGregor-Smith Review, as well as developing better quality workforce data.

Recommendations for employers

  • Build the business case for increasing diversity and inclusion in terms of attracting a wider more diverse talent pool and boosting innovation and customer service by developing a workforce that is more reflective of the organisation’s customer base and wider society.

  • Identify levels of ethnic diversity using HR data and use this benchmark to explore any structural and cultural barriers that are maintaining workplace inequalities.

  • Avoid generalisations: ‘BAME’ encompasses a wide range of backgrounds, cultures and traditions and many different barriers to career progression.

  • Review recruitment practices to eliminate bias and discrimination. This could include how and where employers recruit new workers, whether the images and language used in recruitment materials are inclusive, line manager interview practices and the approach of recruiters working on employers’ behalf.

  • Review people processes to retain diversity. Identify barriers in career progression and ‘cliff edges’ where employees leave and address this. Also consider intersectionalities, such as the combined effect of race and gender, and examine progress from different angles.

  • Build an inclusive culture. Explore whether policies and practices are underpinned by principles that actively celebrate and encourage difference. Identify whether there are mechanisms in place to enable employees to voice issues about inequality and need for change. Take steps to understand how inclusive the workplace currently is, and what could be done to improve inclusivity.

CIPD resources and references

External resources and references

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