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UK firms could soon have to reveal their ethnicity pay gap

U.K. businesses may be forced to publish their ethnicity pay gap data under plans unveiled by the country’s prime minister.

Theresa May launched a consultation this week on what information employers should publish to help address the “significant disparities” in pay among ethnic minority and white employees.

The new consultation will also ask employers how ethnicity data can be collected without burdening businesses. It comes after the British government introduced mandatory gender pay gap reporting for companies with more than 250 employees in 2017.

According to the prime minister, the move follows on from a pledge the government made to “explain or change ethnic disparities in all areas of society.”

“Every employee deserves the opportunity to progress and fulfil their potential in their chosen field, regardless of which background they are from, but too often ethnic minority employees feel they’re hitting a brick wall when it comes to career progression,” she said in a press release.

“Our focus is now on making sure the U.K.’s organizations, boardrooms and senior management teams are truly reflective of the workplaces they manage.”

However, one thinktank researcher said the audits would place an unnecessary burden on businesses.

“This is a Pandora’s Box,” Len Shackleton, editorial research fellow at the Institute of Economic Affairs, told CNBC via email.

“There are over 100 ethnicities in this country, most of which are as different from each other — more so, perhaps — than they are from white Brits.”

“If a company has a board member of Indian heritage, this means nothing to someone from Somalia. Forcing businesses to report on pay will result in meaningless statistics because the numbers for particular ethnicities within one firm are likely to be statistically insignificant, where nothing can really be gleaned from them. Essentially the government would be burdening businesses with more bureaucracy without any useful return.”

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