In February 2016, the government appointed Baroness McGregor-Smith to lead a review into race in the workplace. The review considered the issues and obstacles faced by businesses and individuals in developing black and minority ethnic (BME) talent, from entry into the workforce through to executive level.
1 in 8 of the working age population is from a BME background, yet BME individuals make up only 10% of the workforce and hold only 6% of top management positions (2015 figures). By 2051, the proportion of the working age population coming from a BME background is estimated to be 21%. The employment rate of BME people is over 12% lower than the employment rate of white people. All BME groups are more likely to be overqualified than white ethnic groups, but white employees are more likely to be promoted.
Baroness McGregor-Smith found that there was discrimination and bias "at every stage of an individual's career, and even before it begins". There remains a structural bias favouring certain groups, as organisations and individuals tend to hire in their own image, whether consciously or not. There remains a lack of BME role models, and individuals responding to the call for evidence felt that the main barrier to their progression was the lack of connections to the "right people".
Research has shown that companies in the top quartile for racial and ethnic diversity are 35% more likely to have financial returns above their respective national industry medians. The potential benefit to the economy from full representation of BME individuals across the labour market, through improved participation and career progression, is estimated to be 1.3% of GDP or £24 billion a year.
BEIS published its response at the same time as the report was released. It encourages all employers to adopt the recommendations of the review and "will lead from the front in the public sector". The government announced a new Business Diversity and Inclusion Group, to be chaired by Business Minister Margot James. It will bring together the CBI, Institute of Directors, BITC, Financial Reporting Council, the Equality and Human Rights Commission and the Equalities Minister, as well as the leaders of the three industry-led diversity reviews (Sir Philip Hampton and Dame Helen Alexander, Sir John Parker and Baroness McGregor-Smith). However, there has been criticism that no representatives of BME organisations have been asked to participate.
The government will not bring in legislation requiring mandatory pay reporting by race. It prefers to follow a voluntary, business-led approach, similar to that taken with regard to increasing the number of women on boards. However, the government "will monitor progress and stand ready to act if sufficient progress is not delivered".
The government will continue to work with Business in the Community (BITC) and others to develop a guide on discussing race in the workplace, as well as establishing a single portal where useful case studies and unconscious bias training packages can be sourced. BITC has agreed to publish an annual list of Best 100 Employers in terms of diversity.
The government will write to all institutional funds to highlight the importance of effective diversity and inclusion policies and the significant financial benefits of greater diversity in the workplace.
The factual findings of the review are probably unsurprising, and many of the recommendations will be uncontroversial. In light of the promised financial rewards for organisations that successfully become more diverse, business leaders may find it helpful to incorporate some of the recommendations into their organisational practices. However, with the government already making clear that it will not be legislating in this area, and with uncertainty on the horizon due to Brexit, businesses could be forgiven for prioritising other issues (such as the requirement for larger businesses to publish data on their gender pay gap. As Business Minister Margot James has said this week, it has taken 40 years of learning on gender issues before the current gender pay gap reporting regime was introduced; we can't help but feel that similar legislation requiring the publication of pay data by race is not around the corner.
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