There are significant differences in the earnings between white workers and workers from ethnic minority groups, a new study revealed.
Male workers from ethnic minorities earn 10% significantly less than their white counterparts, while female workers from ethnic minorities earn 7% less than female white workers.
Both male and female workers from ethnic minorities are more likely to feel overskilled in their role and more dissatisfied with their salary than white employees.
The research, which was a collaboration between Bayes Business School, University of Cyprus, and City University of London and published in the British Journal of Industrial Relations, is the first of its kind.
The report used nationally representative survey data for Great Britain that includes information about employees, their co-workers, and the companies they work for. It showed that most of the aggregate wage gap exists within the workplace between ethnic minority and white workers as opposed to arising across high- and low-wage firms.
Co-authored by Dr. John Forth from Bayes Business School, the research emphasises that employers must ensure fairness in compensation to produce pay equality in the workplace. According to the report, one explanation for the pay gap between white workers and workers from ethnic minorities is that ethnic minorities work in companies that pay relatively low wages to all their employees, whereas white employees are found in high-wage companies.
However, the study shows that a wage gap still persists between white workers and ethnic minority workers on average, accounting for differences in job type, educational qualifications, and the characteristics of companies in which they work.
“The research paper intensifies the need for measures which bring about greater fairness in pay setting within firms,” said Dr. Forth.
Additional findings revealed that the average ethnic wage penalty is about one-third smaller in workplaces that evaluate performance than in workplaces without this scheme. The penalty is smaller among workplaces with a recognised trade union.