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Ethnicity Pay Gap Report 2021

Exploring the difference in pay between white and ethnic minority employees in the UK

We launch this report after we celebrate Black History Month, recognising the contributions and achievements of those with African or Caribbean heritage in every area of endeavour throughout the UK's history. And we do so in the knowledge that over the last two decades, the working population in the UK has become increasingly diverse. Yet barriers remain, preventing people from different ethnic backgrounds from reaching their full potential. Individuals from different ethnic backgrounds are less likely to participate in, and progress through, the workplace than their White counterparts, and they are paid less, as this report highlights.

As we look towards a recovery from COVID-19, the public is increasingly aware of the disproportionate impact the pandemic has had on marginalised or overlooked groups in our society. There is a wealth of evidence demonstrating how ethnic minorities have experienced higher rates of unemployment, financial adversity and mental health struggles since the pandemic began.

To date, however, very little has been done to look at how the pay received by ethnic minorities compares to that of their White equivalents, despite repeated calls from industry bodies.

PwC's Ethnicity Pay Gap attempts to fill this gap. Our report builds on a previous approach developed by the Office for National Statistics and is brought to you with the capability of Strategy&, PwC's strategy consulting business.

In this report, our analysis shows that after controlling for personal and work-related characteristics, the White British population earn significantly more, on average, than those from almost all other ethnic groups. We also reveal that there is little sign of these pay penalties reducing over time.

Increasing the diversity of organisations isn’t just the right thing to do - organisations with a diverse range of employees have a better understanding of the needs of a wider range of customers, and they are able to foster greater creativity and innovation, and build a more resilient workforce. As we discuss in this report, 'Lost’ productivity and potential not only represents a huge missed opportunity for businesses, but impacts the economy as a whole.

Explore the key findings from the research below and find out more about how governments and organisations can improve outcomes for people from different ethnic minority backgrounds, and support a sustainable and inclusive economic recovery.

If you have any questions about our research, please do not hesitate to get in touch.

Key findings

Exploring the ethnicity pay gap through an intersectional lens is vital to understanding the different dimensions of historically marginalised groups.

Median hourly pay by ethnicity and gender in England and Wales, 2020

  • White British men earn more than women from 14 of the 16 minority ethnic groups.
  • White and Black Caribbean women are the lowest female earners, earning as little as 70p for every £1 earned by the average White British man. For full-time workers, this amounts to a difference in earnings of around over £8,000 a year.
  • Pay is just one part of the story - women from ethnic minority backgrounds experience systematic structural inequalities across the labour market that see them overrepresented in insecure jobs, and at a higher risk of being underemployed, as well as facing discrimination in the workplace.

Ethnicity pay disparities are magnified once you move from ‘pay gaps’ to ‘pay penalties’, where we hold individual characteristics constant and compare like-for-like.

Pay penalties by ethnicity and country of birth, 2020

  • In 11 of the 16 minority ethnic groups, both UK-born and non-UK born people earn less on average than the White British population, even when you control for a selection of individual characteristics.
  • The non-UK born pay penalty is larger than the UK-born pay penalty in just over half of the ethnic groups.
  • This provides convincing evidence that race remains a significant determining factor for professional success - and that ethnic minorities are being held behind in the workplace for reasons behind their control.

Ethnicity pay penalties have remained stubbornly high over the past seven years, with the pandemic worsening disparities for UK-born workers.

Ethnicity pay penalty, by country of origin, 2013 to 2020, England and Wales

  • Over the past seven years, there has been some movement in pay penalties - but overall there is little evidence that the UK is making the progress it needs to make.
  • While the COVID-19 pandemic has not resulted in significant movement to overall pay penalties, there is significant evidence to suggest that ethnic minorities have borne disproportionate health and economic impacts from the pandemic.

Working together to equalise pay

Our analysis shows ethnic minorities are earning less than their White counterparts working in the same occupations and with the same level of qualifications, suggesting that any policies aimed at upskilling ethnic minorities alone are likely to have relatively limited success.

We believe governments, policymakers and businesses should take action through:

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Mandating ethnicity pay gap reporting

Collect disaggregated data on metrics such as pay, working hours, promotion, representation in senior roles, and attrition to diagnose specific disparities that exist and inform the design of effective workplace initiatives. Reporting on ethnicity pay gaps may reveal harsh truths, but that’s a real trigger for action.

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Providing robust data on a national level, to support effective policy response

The responsibility for ethnicity pay gap reporting does not fall to businesses alone, however. Without meaningful intersectional data in large government datasets, meaningful policy analysis will not be possible. The timing has never been more urgent - it is vital that we understand the barriers faced by different groups, and why they exist, so as not to leave anyone behind in our plans and priorities for recovery.

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Implementing effective diversity action plans

Support and empower ethnic minorities in the workplace by devising Diversity and Inclusion (D&I) plans which set targets and outline initiatives to address ethinc disparities (for example, considering recruitment, promotion, and representation of ethnic minorities).

Contact us

Dr Jonathan Gillham

Dr Jonathan Gillham

Chief Economist and Director of Econometrics and Economic Modelling, PwC United Kingdom

Tel: +44 (0)7714 567297

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