Tackling structural inequalities in the UK is fundamental to social cohesion and to enabling economic growth to benefit all. And the case for businesses to do so is clear. Reducing the gender pay gap in labour market participation, Science, technology, engineering and maths (STEM) qualifications and wages could increase the UK economy by £55 billion by 2030. Likewise, companies in the top 25 per cent for gender diversity on their executive team are 21 per cent more likely to experience above-average profitability than companies in the bottom 25 per cent. For ethnic diversity, top-quartile companies are 33 per cent more likely to outperform on profitability. As CBI director-general Carolyn Fairbairn has noted, ‘the case for change is watertight: diverse companies are better companies.’
Businesses have been playing their part, implementing diversity and inclusion teams and strategies, and stepping into classrooms to provide career advice and guidance. However, further work remains to ensure equality in both the workforce and the labour market more broadly.
The UK’s looming departure from the EU and the uncertainty businesses face can make it tempting to push equality agendas to the back-burner. Yet tackling inequalities cannot be regarded as ancillary to business strategies. The UK’s employment rate has been on a continual upward trajectory since 2012, with current levels of employment extremely high. However, the picture for BAME adults tells a different story.
At 67.6 per cent, the proportion of BAME adults in work has increased from the rate of 61.7 per cent recorded just a decade ago. But it still lags behind the rate recorded by the white population by 10.6 percentage points. And it is a similar picture on pay. In raw terms, the average hourly pay of black male graduates is 24 per cent lower than that recorded among white male graduates. And even when we control for the characteristics of the two populations and the jobs they do, the gap remains in place. That is, where we compare workers and jobs that differ only in terms of the colour of their skin, a pay gap of 17 per cent is still recorded.
Likewise, while unemployment rates have fallen for all other groups since 2008, they remain almost two percentage points above their pre-crisis levels for disabled white men, at 10.6 per cent, indicating that inequality in unemployment appears to have grown for disabled groups. Yet such figures are even higher for BAME groups – with unemployment figures for disabled BAME men and disabled BAME women at 14.5 per cent and 14 per cent respectively. In this regard, consideration needs to be given to not just implementing diversity and inclusion measures to diversify workforces, but to also achieving equality in both access to the labour market and opportunities within it.
UCL’s new report on structural inequalities explored the existing evidence on inequalities in the UK across a range of issues from housing to employment. The report sets out several actions for employers and the business community to tackle inequalities.
An improved understanding of the make-up of workforces and disadvantages faced by certain groups would allow firms to make evidence-based initiatives to tackle racial inequality. After the introduction of gender pay gap reporting, businesses could consider race reporting to ensure they begin to close gaps, and they proactively remain ahead of government enforcement measures.
Additionally, ensuring diversity of thought in organisations is essential for businesses to keep pace with society. However, positive and diverse representation can only be ensured if the make-up of a workforce is known. Taking positive action to measure and report on race could provide employers with an opportunity to achieve this.
The landscape of employment has shifted in recent years and with it, the terms of inequality in the labour market. With the rise of the gig economy, increasing informality of the labour market, and a move toward more flexible working, there is a need for the business community to consider what inclusivity in business looks likes in today’s society. More broadly, it is time for the business community to consider what levers individual employers, as well as the business collective, have to tackle structural inequalities in UK society.
Reporting on race would be a positive step toward demonstrating that UK business is serious about tackling inequalities, and they intend to take positive action to get the job done.
- This blog post appeared first on LSE British Politics and Policy.
- The post gives the views of its author(s), not the position of LSE Business Review or the London School of Economics.
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