Employees from ethnic minority backgrounds earn on average up to 10% less than their white counterparts with the same characteristics, according to research by Bayes Business School, UCL and the University of Cyprus.
The research found that female employees from ethnic minority backgrounds earned approximately 7% less on average than white female employees with the same other characteristics, while the gap for male employees reached 10%.
Both male and female employees from ethnic minority backgrounds were more likely to feel over-skilled than their white counterparts, and were also found to be less satisfied with their pay.
The study accounted for differences in educational qualifications, job type and the characteristics of the businesses in which employees work, and found that an ethnicity pay gap still existed.
The research showed that the average ethnic wage gap was around 33% smaller in workplaces with a job evaluation scheme, as well as being smaller in those workplaces with a recognised trade union. In contrast, the ethnicity wage gap was found to be no smaller in workplaces with voluntarily reviewed relative pay rates by ethnicity compared with those that did not.
Dr John Forth, senior lecturer in human resource management at Bayes, said: “While there may have been explanations for ethnicity pay gaps across different sectors and careers, this is the first research to show that the problem extends to those with comparative positions within [organisations].
“The research paper intensifies the need for measures which bring about greater fairness in pay setting within firms.”
Alex Bryson, professor of quantitative social science at UCL’s Social Research Institute, said: “Whereas the gender wage gap has been gradually closing in Britain for some time, ethnic wage gaps have not been closing. Ours is the first study to show that most of the earnings disparities across ethnic groups in Britain occur within workplaces, rather than across workplaces. This means employers need to do more to ensure employees from ethnic minority groups are treated fairly in the workplace.”
In March 2022, the UK government decided against legislation that would require all large organisations to report their ethnicity pay gap, despite the fact that reporting around gender has been found to help reduce the gap. Many UK businesses have chosen to report their ethnicity pay gap voluntarily, alongside mandated gender pay gap figures, including Asos, Sodexo and Linklaters.