Indians suffer 'pay penalty' as result of their background in UK: Report

Indians along with other black and Asian minorities in the UK face an unfair pay gap in comparison to their white counterparts, according to a new report released on Thursday.

The Resolution Foundation report says overall Britain's 1.9-million ethnic minority workers have lost out on 3.2-billion pounds a year due to this "pay penalty" suffered as a result of their background.

"We find that between 2007 and 2017 the total annual cost of pay penalties experienced by black, Indian and Pakistani/Bangladeshi men and women would amount to 3.2 billion pounds per year, says the report.

"That's a staggering amount of lost pay across the economy to account for unexplained pay penalties facing Britain's 1.9 million Black, Indian and Pakistani/Bangladeshi employees, it notes.

The research by the UK-based think-tank found that average hourly pay for some ethnic minority groups, such as Indian and black women without degrees, did not differ from white non-graduate women's pay in a "statistically meaningful way".

However, once background factors such as where someone lives or the role they do were factored in that seemingly non-existent pay gap becomes a statistically significant pay penalty.

"All things held equal, Indian non-graduate women earned 44p an hour and Black non-graduate women 61p an hour less than their white counterparts, it found.

Kathleen Henehan, research and policy analyst at the think tank, said: "Black, Asian and minority ethnic workers have made important gains in the labour market in recent years. A record number of young BAME workers have degrees, and a record number are in work.

"However, despite this welcome progress, many of Britain's 1.6 million black, Asian and ethnic minority workers face significant disadvantages in the workplace. Black and ethnic minority workers still suffer significant pay penalties compared to white men and women doing the same types of jobs, and are collectively losing out on 3.2 billion pounds a year.

The report found that while adjusting for background factors served to reduce the pay gaps experienced by Indian and Pakistani/Bangladeshi women graduates, it does not have the same effect for black women graduates. In the main, they earn on average 1.56 pounds less than white women graduates; and with control for background factors that 1.56 pounds pay gap becomes a 1.62 pounds pay penalty.

Pay gaps refer to the average difference in pay that exists between groups and pay penalties cover the average difference in pay that persists after personal and work-related characteristics are accounted for.

The Resolution Foundation concludes that both taken together represent a significant living standards issue for individuals from ethnic minority backgrounds.

Among its findings, the report found the biggest impact was on black male graduates, who were paid 17 per cent or 3.90 pounds an hour, less compared to their white peers.

Pakistani and Bangladeshi male graduates earned an average of 12 per cent less an hour. Among non-graduates, Pakistani and Bangladeshi men were reported to be the worst affected. The research said they earned 1.91 pounds an hour, or 14 per cent, less than white colleagues, with black male non-graduates 1.31 pounds an hour, or 9 per cent, worse off.

The Resolution Foundation said it used data from a survey of 100,000 people over 10 years for its report.

Legislation which came into effect in April this year requires employers in the UK with 250 or more employees to publish annual calculations showing how large the pay gap is between their male and female staff.

In the wake of the gender reporting laws, the British government also launched a consultation on whether it would also force businesses to disclose disparities between the pay packets of black, Asian and ethnic minority employees and white counterparts.

A UK government spokesperson said "diversity is good for businesses" and it is committed to ensuring the workplace "works for everyone".

"We have introduced new laws to help companies ensure the make-up of their boards and senior management is representative of their workforces and we're currently consulting on proposals for mandatory ethnicity pay reporting as part of a series of measures to help employers tackle ethnic disparities in the workplace," the spokesperson said.