Mandatory pay gap reporting will make discrimination more common, not less.
Last month, the Government launched a consultation into mandatory ethnicity and disability pay gap reporting. This will extend the Equality Act 2010 through a new Equality (Race and Disability) Bill, with more powers for the Equality and Human Rights Commission and a brand new quango — the Equal Pay Regulatory and Enforcement Unit.
On the face of it, mandatory ethnicity pay gap reporting appears like a relatively benign, progressive idea. The Government argues this will “create a more equal society”, and why not? Enforced only on employers with more than 250 staff and copying the 2017 mandatory gender pay gap legislation as closely as possible, it is on the whole a fairly light piece of regulation. After all, it is hard to oppose the publication of new and interesting data, even if you are an ardent small-state libertarian.
The fundamental problem, however, is that the often dangerous conclusions that accompany pay gap reporting results in more discrimination, not less. This happens because of the alarming blurring between disparity and discrimination. Disparity is the state of two things being unequal. Discrimination is the less favourable treatment of a person or group because of a particular characteristic (e.g. race or gender). While discrimination occurs because of a wrongful motive, disparity occurs because of a whole host of reasons, not necessarily including discrimination.
While discrimination does often result in a disparity, a disparity is not necessarily the result of discrimination, and therefore must never be conflated as the same. To explain this problem, let me give a very relevant example.
The Business Disability Forum (BDF) is critical of mandatory disability pay gap reporting for precisely the reason that it confuses discrimination and disparity. The purpose of publishing a disability pay gap is to point out a disparity, and then try to close it. Perhaps counterintuitively, the BDF argue that this will lead to worse employment opportunities for disabled people.
The reason for this is surprisingly simple. Most disabled people — as many as 86 per cent according to BDF’s 2023 survey — would consider decreasing their hours or responsibilities to manage their disability or condition. In other words, disabled people are far more likely to want to work less and, crucially, earn less — for a very understandable and rational reason.
This chimes with what the BDF continues to find: businesses with disability employment schemes are far more likely to have wider disability pay gaps than those without. This is again because disabled people are more likely to work part-time, hold entry-level jobs, and avoid leadership positions for the perfectly reasonable object of their own self-regard.
Publishing disability pay gaps, therefore, can undermine a disabled person’s employment desires. Employers may decline a request for a disabled person to work fewer hours, or simply not hire a disabled person to entry-level jobs to avoid widening their disability pay gap statistics. This is the worst of both worlds.
This gets to the very crux of the matter: that closing a non-discriminatory disparity is necessarily a discriminatory process.
Unfortunately, the Government does not seem to appreciate the crucial difference between disparity and discrimination. The Government already recommends, in statutory pay gap guidance, the creation of action plans, with “specific, time-bound targets”. Now the Government is considering making action plans mandatory alongside the pay gap reporting. Rachel Reeves, discussing the gender pay gap, has said she wants to close it “once and for all”. This is an implicit conflation of disparity and discrimination.
The consequences of this conflation can be very discriminatory indeed, as the RAF found to its peril only a few years ago. Wishing to increase its diversity, a specific ten-year time-bound recruitment target of 40 per cent women, 20 per cent BAME and 5 per cent LGB was set for the year 2029, with incremental targets in between.
Achieving these targets proved exceedingly challenging for the RAF — especially the BAME target. To meet the quotas, the RAF ended up pursuing positive discrimination by accelerating 161 women and BAME candidates into training ahead of others. This became very controversial internally, with staff complaining it was against the spirit of the values and standards of the RAF.
Only when the RAF Group Captain of Recruitment and Selection resigned in 2022 were actions taken to remedy the situation. The RAF found itself acting contrary to the Equality Act 2010, offered a formal apology from the new Air Chief Marshall, and compensated 31 white men. Simply put, the RAF discriminated against white people in order to satisfy diversity targets.
There can be some very acceptable reasons behind ethnic pay disparities
The importance of differentiating between discrimination and disparity is not a new or novel idea. The 258-page long Commission on Race and Ethnic Disparities, launched in the wake of the George Floyd protests, noted that there has been a “misapplication of the term ‘racism’ to account for every observed disparity”.
There can be some very acceptable reasons behind ethnic pay disparities — including educational attainment, geographical location, levels of family breakdown, overall average age, fluency of English among many, many others. Of course, discrimination may be one factor among many behind a disparity, but by conflating the two, the Government is only destined to create more discrimination, not less. As the former RAF Group Captain of Recruitment and Selection described it, it will create a “toxic culture of chasing statistics”.
