ETHNICITY pay gap reporting can be a useful tool, *but* it may not be appropriate for all employers, the government has warned.
The Department for Business and Trade reiterated that it would not be passing legislation to make ethnicity pay gap reporting mandatory because it “may not always be the most appropriate mechanism for every type of employer”.
The government responded to the consultation on ethnicity pay reporting, which was published this week after the consultation ended in 2019.
It announced in 2022 that it will not proceed with a legislated reporting mechanism for the ethnicity pay gap.
Since then, the government has had many requests to bring the plans back and has released formal instructions for firms and businesses that are wishing to freely disclose their own data.
According to the report, the government has kept up its meetings with corporations and representative groups to better understand the obstacles to reporting.
To further understand the issues, it conducted a voluntary methodology testing exercise between June and August 2019 utilising payroll data from a variety of firms.
“This work has highlighted the genuine difficulties in designing a methodology that produces accurate figures that allow for interpretation and action from employers, employees, and the wider public,” the report said.
Problems with ethnicity data collection included low response rates, the fact that the data is not binary, and the reality that results might be distorted by unusually high or low pay values because of low numbers within certain ethnic groups.
According to the study, the government sought to carry out additional research to comprehend differences in salary and job outcomes based on ethnicity.
The consultation results found that, almost all employers agreed that a uniform method for defining ethnicity should be used to make sure that data is accurate, useful, and consistent through time and between enterprises.
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