Ethnic minorities in the UK earn around 10 per cent less than white workers, even once individual and job characteristics are taken into account, the Bank of England has found.
The central bank set out to go beyond simple data on pay differences and added another layer of analysis to remove the effects of such attributes as education, location and the kind of jobs different ethnic groups choose.
For example, working in London boosts earnings by 21 per cent compared with a job in the north, and 40 per cent of ethnic minorities work in the capital. Ethnic minority workers also tend to have higher qualifications than their white counterparts.
The findings, laid out in a speech by Bank of England chief economist Andy Haldane on Monday, reveal a wider ethnicity pay gap than raw statistics suggest. It is also a “strikingly” persistent gap, having narrowed less over the past quarter-century than the pay disparity between genders.
“The ethnicity pay gap problem in the UK is every bit as acute as the gender pay gap problem,” Mr Haldane said.
He went on to argue for compulsory reporting of ethnicity pay gaps, drawing a parallel with the existing obligation on UK companies with 250 employees or more to reveal their gender pay gap.
The adjusted data also points to large variations between different ethnic groups. While mixed race workers earn 2 per cent more than their white peers, all other ethnic minorities earn less, ranging from 20 per cent less for people of Bangladeshi origin to 6 per cent less for workers of a Chinese background.
The analysis emphasises the importance of looking at each group separately, rather than necessarily treating ethnic minorities as a single cohort, Mr Haldane said.
While adjusting the raw data for the various characteristics helps explain a large part of the pay gap, it does not mean that part of the gap is justified, he noted.
“For example, consistent and large education and skills differences between cohorts could themselves be taken as evidence of a policy failure. So too might a preponderance of certain [worker] types in certain industries or occupations,” he said.
“In other cases the choice of an occupation or sector may be a personal decision, reflecting lifestyle and values, and less obviously a market failure or policy concern.”