In the UK, Equal Pay Day serves as a stark reminder of the persistent gender pay gap. It’s the point in the year when, on average, women effectively stop earning compared to men. However, this singular focus on gender doesn’t tell the whole story, and obscures the pay disparities that exist across different ethnic and racial groups. Put simply, women of colour are paid even less than the ‘general’ female population in the UK, and it’s time that businesses and government started to close this gap.

The cost of ignoring racial pay disparities

Overall, men in the U.K. earn 14.3% more than women, a disheartening delta that’s closed a mere 0.1% since 2022. Yet, the discrepancies are even more astounding for women of colour. ONS figures show that Black African women earn a staggering 26% less than their white male counterparts, while Pakistani and Bangladeshi women contend with even larger disparities at 31% and 28% respectively. According to a 2018 report from the Resolution Foundation, workers from Black, Asian, and Minority Ethnic backgrounds are missing out on £3.2 billion in wages every year compared to their white counterparts.

Tackling these racial inequalities could not only boost the UK economy by £24 billion a year, but also ensure that the talent and skills of women of all backgrounds are celebrated. When women of colour are given seats at the table, they have the space and resources to create their own tables. Without this investment, UK workplaces aren’t fully tapping into the talents,  contributions and abilities of women of colour. It’s an enormous loss.

In April 2023, the UK government decided not to commit to instating mandatory ethnicity pay gap reporting, which highlights the flagrant disregard the government has for addressing the deep-rooted inequities faced by minority groups. By failing to mandate this reporting, the government is essentially shrugging its shoulders at its responsibility to address the systemic barriers to career advancement and financial wellbeing working women face.

The US has implemented a calendar of marked ethnicity-based Equal Pay Days, which could serve as powerful catalysts for awareness and prompt employers to confront the complexities of pay disparities and take concrete steps towards achieving pay equity.

So what can be done about it?

The UK must follow suit and embrace ethnicity-based Equal Pay Days as a crucial tool for tackling pay disparities. Shining a spotlight on the specific pay gaps faced by different ethnic groups could foster greater understanding and urgency, compelling employers to address these inequities at the root.

While the government drags its heels, businesses can pick up the slack. Executive leadership should be making a case for and implementing equal pay across race and gender in their organisations. There are a number of companies already reporting their ethnicity gaps, but this is not enough. Businesses that demonstrate their commitment to salary equity will do better at attracting and retaining quality talent, creating a necessary wake-up call for the organisations that aren’t.

How business leaders can take practical steps:

  1. Take stock of your pay practices: The first step to addressing the pay gap is to understand its extent. Regularly gather and analyse pay data by gender and ethnicity to spot any disparities in your organisation. Chief has detailed guidance on implementing ethnicity pay gap reporting in your organisation.
  2. Provide training on unconscious bias: Unconscious bias is a common form of bias that can lead to discrimination. Offer training to all employees on unconscious bias to help them recognise and address their own prejudices.
  3. Review recruitment practices: Evaluate recruitment strategies to ensure they attract diverse talent. Consider blind recruitment techniques to mitigate unconscious bias during the selection process and budget allocation for an employee’s salary based on their skills and capabilities.
  4. Set up support systems: Establish mentoring, sponsorship, and support networks tailored to employees from ethnic minority backgrounds. Make sure employees have equal access to opportunities for advancement, including career development, guidance, and relationships with senior leaders.
  5. Monitor progress and hold people accountable: Set clear goals for closing the pay gap and track progress over time. Hold yourself and your employees accountable for achieving these goals.

“We all know that there are challenges for organisations to report, but there are remedies to these challenges,” says Dianne Greyson, who runs the #EthnicityPayGap campaign, which can provide support and tools to help you talk to fellow leaders about your organisation’s pay equity efforts.

Greyson says leaders should also pressure the government into mandating ethnicity pay gap reporting, noting there is “enough data to show that Black, Asian and other ethnic minorities are being financially crippled because of the Ethnicity Pay Gap.”

By failing to address this issue head-on, the government perpetuates a system of inequity that further marginalises and disadvantages minority groups. By ignoring racial pay gaps, women of colour lose out on billions of dollars in wages each year, and their communities and the UK economy as a whole also suffers.

“The government needs to start bringing the voices of the people into their discussions, not just the organisations,” Greyson says “Those who the Ethnicity Pay Gap affects will tell you, it is past time for action.”