5. Analysis of ethnicity pay gaps

Figure 1: White Other accounts for the second-largest proportion of employees at 7.9% Proportion of employees by ethnic group excluding White British, aged 16 years and over, Great Britain, 2018 Source: Office for National Statistics - Annual Population Survey Notes: Employees refers to everyone employed in Great Britain between the ages of 16 and 64 years. Download this chart Figure 1: White Other accounts for the second-largest proportion of employees at 7.9% Image .csv .xls

Great Britain’s (England, Scotland, Wales) employee workforce includes people from a number of different ethnic groups. The most prominent ethnic group is White British, estimated to account for 79.5% of the working population, followed by White Other (7.9%) and Black African, Caribbean or Black British (3.2%).

The ethnic groups that make up the smallest proportions of those employed within Great Britain are the Bangladeshi and Chinese ethnic groups, at 0.7% and 0.5% respectively. The estimates of average hourly pay and subsequently the pay gaps are likely to be more volatile or inaccurate for the ethnic groups with smaller sample sizes such as these.

The White Other ethnic group (referring to any person who identifies ethnically as white but does not identify as British, for example, those who might identify as White Australian or White European) is the most prominent ethnic group other than White British. This is likely because of the UK being a part of the European Economic Area where the free movement of persons is one of the core rights of citizens of any member country. Other large groups such as the Indian ethnic group are members of the Commonwealth of Nations and formerly had rights to migrate to the UK.

Figure 2: The White Other ethnic group has the highest employment rate of all ethnic groups at 81.7% Employment rate by ethnic group for all persons of working age (aged 16 to 64 years), Great Britain, 2018 Source: Office for National Statistics - Annual Population Survey Notes: Working age is defined as aged 16 to 64 years. Download this chart Figure 2: The White Other ethnic group has the highest employment rate of all ethnic groups at 81.7% Image .csv .xls

Figure 2 shows the employment rate of each ethnic group in 2018. The ethnic group with the highest employment rate is White Other at 81.7%. The White British and Indian ethnic groups follow White Other with employment rates of 76.4% and 75.9% respectively.

The two ethnic groups with the lowest employment rates are Pakistani and Bangladeshi, with employment rates of 58.2% and 54.9% respectively.

Figure 3: Inactivity rates among women of the Pakistani and Bangladeshi ethnic groups are substantially higher than other ethnic groups Inactivity rates by ethnic group and sex, all persons, working age (aged 16 to 64 years), Great Britain, 2018 Source: Office for National Statistics - Annual Population Survey Notes: Inactivity rates refers to proportion of the population not in the labour force. "Women- Looking after family/ home" refers to one of the reasons given for inactivity. Download this chart Figure 3: Inactivity rates among women of the Pakistani and Bangladeshi ethnic groups are substantially higher than other ethnic groups Image .csv .xls

There were large differences in inactivity rates between males and females for certain ethnic groups in 2018. For example, the inactivity rate of men in the Pakistani ethnic group was 19.6%, while the inactivity rate for Pakistani women was 54.5%.

Figure 3 also shows that the inactivity rates of women in the Pakistani and Bangladeshi ethnic groups are substantially higher than that of any other ethnic group. This may be because of cultural differences in the dynamics of the family unit. For example, 38.1% of women from a Bangladeshi ethnic group and 32.1% of women from a Pakistani ethnic group are inactive because of looking after the family or home. In comparison the next highest are women from Other ethnic groups at 21.6%.

Figure 4: Employees in the Chinese ethnic group had the highest median hourly pay of any ethnic group in 2018 Median gross hourly earnings (including overtime) for all employees aged 16 years and over, Great Britain, 2012 to 2018 Source: Office for National Statistics - Annual Population Survey Notes: Median gross hourly earnings refer to both full-time and part-time employees. Download this chart Figure 4: Employees in the Chinese ethnic group had the highest median hourly pay of any ethnic group in 2018 Image .csv .xls

Figure 4 shows the median gross hourly pay for employees from 2012 to 2018 for all ethnic groups. There were three ethnic groups which were shown to have a higher median hourly pay than White British in 2018. These being Chinese, Indian and Mixed/Multiple ethnic groups with hourly earnings of £15.75, £13.47 and £12.33 respectively, in comparison to White British whose median pay was £12.03. The ethnic group that had the lowest median hourly pay in 2018 was Bangladeshi at £9.60 followed by Pakistani at £10.00.

All ethnic groups experienced a rise in their median hourly pay between 2012 and 2018 (not adjusted for inflation). All ethnicities experienced an annual growth rates 1.5% and 3.1%, except for those from the Chinese ethnic group which experienced a growth rate of 5.3% annually. It must be noted however, that the Chinese and Bangladeshi ethnic groups have a smaller sample size1 than the other ethnic groups and are therefore more susceptible to volatility and inaccuracy than estimates from larger ethnic groups. Although they have smaller sample sizes the Chinese are shown to consistently earn more than White British.

Figure 5: There is a mixed picture when looking at pay gaps between ethnic minority employees and White British employees Percentage difference between gross hourly earnings (including overtime) for ethnic minority employees and White British employees, Great Britain, 2012 to 2018 Source: Office for National Statistics - Annual Population Survey Notes: Median gross hourly earnings refer to both full time and part time employees. Pay gap figures represent the difference between White British and ethnic minority groups hourly earnings as a percentage of White British earnings. Download this chart Figure 5: There is a mixed picture when looking at pay gaps between ethnic minority employees and White British employees Image .csv .xls

Figure 5 shows how different ethnic groups compare with White British in average hourly pay where the 0% line represents White British. The average employees from the Chinese and Indian ethnic groups have consistently earned more than the average White British employee since 2012. For the Indian ethnic group, the gap has stayed relatively consistent since 2012 and in 2018 stood at negative 12%. The pay gap for Chinese employees stood at negative 30.9% in 2018.

For those of mixed or multiple ethnic groups, the pay gap has switched between positive and negative, suggesting the average earnings for employees from this ethnic group are similar to those of White British employees.

Employees in the remaining ethnic groups consistently earned less, on average, than White British employees. Employees in the Black African, Caribbean or Black British, Other and White Other ethnic groups on average earned 5% to 10% less than their White British counterparts between 2012 and 2018. Employees in the Other Asian ethnic groups' pay gap with White British peaked in 2014 but has since narrowed to 4% in 2018.

Finally, Pakistani and Bangladeshi ethnic groups have experienced the largest positive pay gaps. In 2012, Pakistani and Bangladeshi ethnic groups had pay gaps of 18.9% and 21.6%, respectively. Similar to the Other Asian ethnic group, the pay gap for these groups has narrowed somewhat since 2014, however, in 2018 it remains little improved from its level in 2012. In 2018, the pay gaps for Pakistani and Bangladeshi ethnic groups stood at 16.9% and 20.2% respectively.

Figure 6: The Bangladeshi ethnic group has the lowest proportion of employees in the highest quartile of median hourly pay Proportion of ethnicities within each gross hourly pay quartile using the 10-category ethnicity breakdown, Great Britain, 2018 Source: Office for National Statistics - Annual Population Survey Notes: The quartiles of the median pay are as follows Quartile 1: 0-8.5, Quartile 2: 8.51 - 11.83, Quartile 3: 11.84 - 17.80, Quartile 4: 17.81 - 1212.00. Download this chart Figure 6: The Bangladeshi ethnic group has the lowest proportion of employees in the highest quartile of median hourly pay Image .csv .xls

Another way of understanding ethnicity pay gaps is to look at representation for different ethnic groups across the earnings distribution. Pay quartiles split employees into four equal parts based on their earnings.

The first quartile contains the quarter of the employee population with the lowest earnings, while the fourth quartile contains those employees with the highest earnings. Figure 6 shows the proportion of ethnicities within each gross hourly pay quartile in 2018.

The two ethnic groups with the highest proportion of employees in the highest quartile were Chinese (41.3%) and Indian (36.3%). This reflects the pay gaps shown previously where Chinese and Indian employees had positive pay gaps when compared with White British employees. Conversely, the two ethnic groups that had the largest negative gaps, Pakistani and Bangladeshi, also had the largest proportions of employees in the first quartile.

Figure 7: The largest pay difference between males and females in 2018 was for the Indian ethnic group

Median gross hourly earnings for all employees by sex, Great Britain, 2018

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Notes:

Median gross hourly earnings refer to both full time and part time employees.

When looking at males and females separately, the difference in hourly pay between men and women differs among ethnic groups. For example, women in the Bangladeshi ethnic group earned more per hour on average than their male counterparts, showing a gender pay gap of negative 10.5%. Black African, Caribbean or Black British men and women also have similar median hourly earnings, with men earning 3.3% more on average. However, it must be noted that the Bangladeshi ethnic group has a smaller sample size and so these estimates are more susceptible to volatility and inaccuracy than some of the other ethnic groups. For example, the pay gap estimates for Bangladeshi and Chinese women show greater volatility over time.

Comparatively, the two ethnic groups with the highest median hourly pay, Chinese and Indian, had a larger difference in hourly earnings between men and women. Chinese men on average earned 19.1% more per hour than Chinese women, and Indian men earned 23.3% more per hour than Indian women. Similar to the Bangladeshi ethnic group, the Chinese ethnic group has a smaller sample size than the other ethnic groups.

Figure 8: 16 to 30-year-olds from ethnic minority groups tend to have narrower pay gaps than older ethnic minority groups Ethnicity pay gap for median gross hourly earnings (including overtime) by age group, Great Britain, 2018 Source: Office for National Statistics - Annual Population Survey Notes: 1.Pay gap figures represent the difference between all ethnic groups and White British hourly earnings as a percentage of White British earnings. Download this chart Figure 8: 16 to 30-year-olds from ethnic minority groups tend to have narrower pay gaps than older ethnic minority groups Image .csv .xls

Figure 8 compares the earnings of those aged 16 to 30 years from an ethnic minority group, with the earnings of those who are White British and aged 16 to 30 years, alongside the same comparison for those aged 30 years and over. In broad terms, it can be seen that the earnings for younger ethnic minority employees tend to be closer to their White British counterparts compared with older ethnic minority employees.

All ethnic groups apart from the Mixed or Multiple ethnic group experience a smaller positive pay gap or, a larger negative pay gap for those aged 16 to 30 years compared with those aged 30 years. This has been consistent between 2012 and 2018. The biggest difference is seen for the Bangladeshi ethnic group, where 16- to 30-year-olds earn 3.1% per hour less than White British employees on average, while those aged 30 years and over earn 27.9% less.

Additionally, Other ethnic group and White Other are shown to have negative pay gaps for those aged 16 to 30 years and positive pay gaps for those aged 30 years and over. For example, those aged 30 years and over in the Other ethnic group are shown to earn 15.8% less, while those aged 16 to 30 years are shown to earn 5.2% more than White British employees. There are a variety of reasons why this might be the case. For example, second-generation migrants are performing better than their parents in terms of pay, another possibility is that earnings progression could differ between different ethnic groups.

Figure 9: London has the largest pay gap, with ethnic minority groups earning 21.7% less than White employees on average Regional ethnicity pay gap for median gross hourly earnings between White and ethnic minority groups, Great Britain, 2018 Source: Office for National Statistics - Annual Population Survey Notes: White refers to White British and White Other employees, Ethnic minority groups refers to all other ethnic groups. Pay gap figures represent the difference between White and Ethnic minority groups hourly earnings as a percentage of White earnings. Download this chart Figure 9: London has the largest pay gap, with ethnic minority groups earning 21.7% less than White employees on average Image .csv .xls

Figure 9 shows the pay gap between White and ethnic minority groups in different regions of Great Britain. Here we use a more aggregated ethnicity breakdown to improve sample sizes. London, the region that has the highest proportion of its population classified in an ethnic minority group, also has the largest pay gap of 21.7%. The East and the North East both have negative pay gaps with the North East having the largest at 6.5%. Employees from an ethnic minority group in the region therefore had average earnings that were 6.5% more than average earnings of White employees.

Notes for: Analysis of ethnicity pay gaps