Diverse Professionals in the UK Navigate Dual Challenges: Unequal Pay and Soaring Living Costs

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"The government must act now to make legislation mandatory that will bring ethnicity pay gap reporting into force and make it on par with gender pay gap reporting, if it is truly committed to ending discrimination for all."

A recent study, conducted by People Like Us and Censuswide, has revealed that ethnically diverse professionals in the UK are grappling with a dual crisis – the burden of unequal pay coupled with the escalating cost of living. The research sheds light on disparities between white and diverse professionals and underscores the urgency for mandatory ethnicity pay gap reporting to address systemic inequalities.

The study's key findings are striking. Ethnically diverse professionals are 38% more likely to be underpaid than their white counterparts at the same career level. 47% of ethnically diverse professionals believe they are being underpaid in contrast to their white colleagues, leading to an annual financial loss of almost £2,000 on average. 

The reluctance to disclose pay gap information is multifaceted, with concerns about public perception cited by 23% of respondents. However, a more substantial 40% believe that the primary reason companies avoid reporting data is the lack of legal requirements.

The research also highlights the positive correlation between a diverse workforce and enhanced business performance. Professionals in the UK are more than four times as likely to believe that an ethnically diverse workforce enhances business performance (48%) rather than hinders it (11%). The perceived benefits include fresh perspectives and increased innovation, with 47% of employees asserting that diversity leads to more innovative businesses.

Despite the acknowledgment of these benefits, the repercussions of pay disparities extend beyond the professional realm. Ethnically diverse professionals face a potential long-term disadvantage compared to their white counterparts. While 35% of white professionals feel their work performance has suffered as a result due to the cost of living, this figure rises to 40% among ethnically diverse professionals. The challenges stem from difficulties in managing rent increases (37% of ethnically diverse professionals, compared to 24% of white professionals) and a third of ethnically diverse professionals being compelled to move back in with their families, a situation faced by only 20% of their white peers.

The research aligns with the efforts of organisations in the public sector, such as the NHS, local authorities, universities, trade unions, the police, and professional institutes, which already publish their ethnicity pay gap data. However, the private sector, employing an estimated 28 million people, lags behind in addressing these inequalities. A PWC report from 2021 already addressed these disparities.

Sheeraz Gulsher, co-founder of People Like Us, commented: “There is a well of research including our own which highlights the need and financial imperative for ethnicity pay gap reporting. It is not just a ‘nice to have’, but one of the many tools that can be used to identify and improve disparities for staff in an organisation. PWC’s research highlighted that closing the ethnicity pay gap could generate up to £24 billion a year for the UK economy, as well as countless benefits for organisations. The government has failed to deliver on its promise to make ethnicity pay gap reporting mandatory.

"Many organisations have taken it upon themselves to voluntarily report as they see the benefits of this as a driver for changing their culture, systems and addressing deep rooted inequality within their organisations. The government must act now to make legislation mandatory that will bring  ethnicity pay gap reporting into force and make it on par with gender pay gap reporting, if it is truly committed to ending discrimination for all, as set out in the Equality Act 2010.”