Read: Measurement is key to levelling up success

The Government’s recent White Paper on Levelling Up was a step in the right direction.

It recognised the huge scale and complexity of the challenge this country is facing to deliver equality of opportunity and acknowledged that there is no easy solution. What it also made clear was the importance of assessing progress and measuring outcomes, based on improved data and transparency.

That will be a key element in the drive to level up. Measurement will help to provide a roadmap to success. It can identify where the gaps are and help us to understand what works and what doesn’t so that we can share best practice. It will encourage improvement and keep individuals and communities informed about progress, helping to foster confidence and cooperation.

In 2017, the UK became one of the first countries in the world to make gender pay gap reporting mandatory. Introduced by Justine Greening when she was Minister for Women and Equalities, it helped employers to understand the size and causes of any gaps in their employees’ pay. Research conducted last year by the London School of Economics found that employers affected by that legislation have narrowed the wage gap between women and men by 19%, almost one fifth on average.

In the latest call to do the same for the ethnic minority pay gap, the cross-party Women and Equalities Committee in Parliament has urged the Government to introduce similar mandatory reporting to tackle racial inequality in the workplace. It has been estimated that it could boost the economy by £24 billion a year. A 2021 report by PwC had already highlighted a significant ethnicity pay gap, with the pandemic worsening disparities for ethnic minorities across the labour market. We know now that also extended to economic and health outcomes. The missed opportunities not only for those individuals but for the organisations they work for – and therefore also for the UK economy – are huge in terms of productivity and potential lost.

Some organisations have already committed to reporting their ethnic pay gaps. The same PwC survey found that almost 70% are now collecting this data, up from 53% in 2018. Many of the Purpose Coalition members – businesses, universities, NHS Trusts and local authorities – have recognised that their workforces should reflect the diversity of the communities they serve and are developing robust diversity and inclusion strategies to address the barriers that still exist for less advantaged groups. They understand that will increase their competitiveness and attract the brightest and best talent. Many law firms, a sector which has traditionally been much more closed to those groups, are also working with the Coalition to improve not only access but also retention and progression in their companies.

A group of organisations within the Purpose Coalition have formed the Equality of Opportunity Coalition. They have committed to going further than reporting on gender and ethnicity by developing measurements to evaluate the socio-economic diversity of their employees and potential recruits. They will help them better understand what needs to be done to improve their socio-economic diversity and identify progressions challenges.

As with any data collection and evaluation, there are undoubtedly challenges in how we measure ethnic pay gaps. There is always the danger that incomplete data will produce unreliable results. The Commission on Race and Ethnic Disparities has previously warned employers who decide to publish their data to ensure that figures are broken down by different ethnic groups. Companies have also reported that it is difficult to collect accurate data. Staff are not obliged to provide it and there can be issues with the way in which employers choose to categorise races and nationalities.

But the need to press ahead now is compelling if there is to be meaningful change and if we are to use the talent of all our  potential workforce. Admitting the gaps will undoubtedly be uncomfortable for many organisations but it will be a start in improving a situation which has already persisted for too long. 

Rt Hon Lord Walney, Crossbench member of the House of Lords & former Labour MP for Barrow & Furness