Labour’s plans for putting into law the right to equal pay for black, Asian and minority ethnic (BME) workers largely focuses on reporting pay discrepancies when it comes to jobs of equal value. But as Heather Connolly, Miguel Martinez Lucio, Stefania Marino and Holly Smith argue, this focus obscures the fact that the pay gap between white and BME workers is mostly generated by the latter occupying lower-paid and precarious jobs. Labour should recognise and address this fundamental discrepancy.   

The Labour Party recently announced plans for a new race equality act. The new act would include measures such as compulsory anti-racism training for the police, addressing the disproportional maternal deaths of Black women, a more diverse school curriculum, the appointment of a Windrush commissioner, mandatory ethnicity pay gap reporting, and the right to equal pay for black, Asian, and minority ethnic (BME) workers.

This move is being presented by Labour as an important development in terms of equality and social justice, as well as a means to encourage growth. This is the so-called ‘business case’ for equality, though some research shows that relying on such a justification can undermine equality outcomes. Speaking at the Ethnicity Pay Gap Summit, Anneliese Dodds, Shadow Women and Equalities Secretary, said that “equality and economic growth are two sides of the same coin,”. This stems from the findings of the McGregor-Smith Review, an independent report commissioned by the government which considers the issues affecting BME groups in the workplace, which estimated that the potential benefit to the UK economy of BME labour market inclusion could be £24 billion a year.

As researchers of work and labour market inequalities, we believe that Labour’s plans are an important first step to acknowledge and begin to address the racialised disparities and discrimination within the UK labour market. However, these plans don’t go far enough.

The limits of current proposals

The proposed legislation would provide BME workers the legal right to equal pay. Currently, equal pay law is covered by the Equality Act 2010, and stipulates that men and women must receive equal pay for carrying out equal work. The proposed new law would mean that this right would be extended to include BME workers.

But securing equal pay for BME workers doesn’t address the pay gap between BME and white workers. Equal pay means paying a white worker and a BME worker the same rate for carrying out the same job, or one of equal value. The pay gap on the other hand highlights the difference in the average wage of BME and white workers across the workforce. An organisation could have an exemplary equal pay record because all workers within the same pay grade earn the same, and yet an ethnicity pay gap could persist if BME workers predominantly occupied lower pay grades within the organisation.

When the Mayor of London’s office conducted a pay audit of organisations within the Greater London Authority group which revealed a 37 per cent ethnicity pay gap, an analysis of the data found that this was due to BME employees’ predominance within jobs on lower pay bands. Analysis carried out last year by the Trades Union Congress showed that BME men are almost twice as likely to be in insecure employment as white men.

This occupational segregation is most evident in what has been termed “bogus self-employment” whereby drivers for companies like Amazon and Uber are not entitled to rights that employees have, such as the minimum wage and Statutory Sick Pay. In the UK 1 in 3 BME men are in these “self-employed” driving and delivery jobs. Denied workplace protection against unfair dismissal, these workers are less likely to report discrimination and challenge unfair pay practices.

The Labour Party had planned to abolish this tiered system of worker rights, and replace it with the single status of ‘worker’, ensuring the same full workplace rights for everyone, excluding the genuinely self-employed. Regrettably, at a meeting of its National Policy Forum in August last year, this was watered down.

Gender pay gap reporting is currently mandatory, and despite the Government’s own commissioned review recommending this policy was extended to ethnicity, it has ruled this out. Labour’s proposed legislation includes ethnicity pay gap reporting, yet in practice their failure to recognise all workers under a single legal category will mean that ethnicity pay gaps will be reported only for employees who already benefit from workplace protections. Those at the insecure end of the labour market in the gig economy, where low pay practices are rife and BME workers are disproportionately represented, will not be covered by such a policy.

What’s more, even for those in secure employment, mandatory pay gap reporting only tells us what the problem is, it does not provide a remedy. There is currently no legal requirement for organisations to provide a justification for their gender pay gap data, nor for them to set out what actions they will take to mitigate it. In Spain, the 2007 Organic Law on Equality between Men and Women requires companies with over 50 employees to develop and implement an equality plan agreed by management and worker representatives. While a lot of this work is still embryonic, it is more advanced than the UK.

How to improve Labour’s proposals

For Labour’s proposed new legislation to be effective,  we propose that they adopt a similar approach, and require employers to put forward mandated action plans which research shows can produce results. Such mandates could be complemented with pay audits, and the implementation of monitoring committees. The OECD emphasises the integral role that worker representatives and collective bargaining can play in the design and application of equal pay policies, and research has concluded that ethnicity pay disparities are reduced by a third if there is a recognised trade union in the workplace. Trade unions should be provided with a right of access to the workplace, and trade union equality representatives should be embedded within collective bargaining frameworks. Furthermore, given that both individual redress and voluntary corporate governance initiatives can be ineffective, we would suggest that the action plans would require strong enforcement measures such as fines for non-compliance. Jacqueline McKenzie, a human rights lawyer who was on the Labour Party taskforce which developed this proposed new act, said herself that if it did not include enforcement penalties it would not end up making a difference. To ensure such monitoring and enforcement is possible, labour inspectorate capacities would need to be redeveloped after years of austerity and understaffing in a range of regulatory bodies.

Even if this is all implemented, pay gap reporting is not a perfect metric. If the Labour party is committed to ensuring the fair treatment for BME workers, the planned legislation still has a long way to go.

All articles posted on this blog give the views of the author(s), and not the position of LSE British Politics and Policy, nor of the London School of Economics and Political Science.

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