Supporting ethnically diverse employees with the Living Wage

Sandra Kerr

• Uncategorized
• Race Equality
• Healthy_Business

No one should be paid so little that they struggle to make ends meet. But the reality is that many adults across the UK currently earn below the real Living Wage, meaning they have next to nothing left over after paying for essentials like rent, bills, and food. In fact, nearly half of UK employees earning below the real Living Wage have less than £10 left each week after paying for essentials¹.

The rise in the cost-of-living has seen many people struggling to afford household essentials, with two in five low-paid UK workers using food banks, and a third having to skip meals for financial reasons, in the past year².

Ethnic disparities in low pay

While the rising cost-of-living has had adverse impacts on the majority of people in the UK, evidence shows that Black, Asian, Mixed Race, and other ethnically diverse employees are disproportionately affected. Ethnically diverse employees can often find themselves in lower-paid, less secure roles, earning below real Living Wage. A third of Bangladeshi employees, three in 10 Pakistani employees, and a quarter of Black employees earn below Living Wage, compared to only two in 10 White employees³.

To support ethnically diverse workers to progress from low-paid jobs, employers must ensure that they’re paying their employees fairly and giving everyone equal opportunities to reach their full potential. Workplaces should be representative of the wider UK population at all levels, but the shocking reality is that ethnically diverse employees currently occupy only one in 10 senior management roles in the UK⁴. This is unacceptable given that one in five working-age adults in the UK are from ethnically diverse backgrounds⁵.

Sadly, more than a third of Black employees have never received a promotion at work, compared to less than a quarter of White employees, leaving them stuck in low-paying roles⁶. Certain ethnic groups are also over-represented in sectors which are commonly paid below Living Wage, such as the hospitality and retail sectors⁷. 

Certain ethnic groups are also more likely to find themselves in part-time roles. Nearly four in 10 Bangladeshi employees and three in 10 Pakistani employees work part time, while a quarter of Black and White employees have part-time roles⁸. In 2021, part-time jobs were around three times more likely to be paid below the Living Wage⁹. Low pay is therefore a huge contributor to the ethnicity pay gap. 

Closing the gap

By paying the real Living Wage, employers can ensure that their employees are being paid fairly – a step in the right direction towards closing the ethnicity pay gap. The government has announced a welcome increase in the national minimum wage, to £12.21 an hour (October 2024). This may be the legal minimum that employers have to pay their employees, but it’s still lower than the real Living Wage – £12.60 an hour – and short of what people need to live on. While Living Wage Week is a great time to think about taking action, low pay is a year-round reality for many, and a commitment needs to be made to decreasing pay disparities so that we can move towards true race equality and equity at work. 

Our Race at Work Charter encourages employers to make a public commitment to improving equality of opportunity at work¹⁰. Signatories are asked to make seven commitments as part of the Charter, including capturing ethnicity data and publicising progress. By tracking employee ethnicity data to identify trends in their workforce and setting ambitious but achievable targets to address any gaps, employers can work out where pay disparities lie, which groups are typically earning below the real Living Wage, and how they can address these disparities to close the pay gap. Now that the Equality (Race and Disability) Bill is set to make ethnicity pay gap reporting mandatory for all large businesses, employers should be looking to get ahead of the curve. 

Becoming an accredited Living Wage Employer is a great way to stay ahead of the curve and publicly demonstrate commitment to tackling workplace pay disparities, ensuring that employees are paid fairly and earning enough to get by. This has benefits for both the individual employee and businesses, helping attract and retain vital talent, boost employee productivity and motivation, and improve brand reputation and employee wellbeing. 

Employers should ensure that they are offering Living Hours alongside the real Living Wage. This can be done by providing the right to at least four weeks’ notice for shifts, with a guarantee of payment if the shift is cancelled within this period, providing a contract that accurately reflects the hours worked, and guaranteeing a minimum of 16 hours of work per week, unless fewer hours are requested by the employee¹¹.

It’s time to do the right thing: act now to ensure fair pay and close the ethnicity pay gap once and for all. 

MAKE RACE EQUALITY A PRIORITY

SIGN THE RACE AT WORK CHARTER