Ethnicity Pay Gap Day: Inequality, Economic Justice, and Advice for Policymakers

By Christabelle Quaynor

We are all aware of the significant impact money has on the quality of our lives.

That’s why wealth inequality and the cost-of-living crisis are amongst the most pressing challenges being addressed globally – and it is critical that we include the ethnicity pay gap in these conversations.

The ethnicity pay gap measures the difference in the average pay between Black and Minoritised Ethnic staff compared to white British staff, and can be calculated for an organisation, industry or society.

This deeply reflects racial inequality and structural racism, illustrating how our society oppressively values labour based on identities and structural factors. This includes race, ethnicity, occupation, nationality, qualifications, and gender. In 2022, the lowest earnings were among Black workers born outside the UK, closely followed by non-UK born Asian workers and employees from other ethnic groups who earned 10% less than their UK-born white peers in 2022.

In the workplace, this is illustrated by the concentration of Black and Minoritised Ethnic staff in lower-paid roles and insecure work compared to white employees. In civil society, the number of Black CEOs has fallen below 1%.

At home, this manifests as stark and entrenched income inequalities, with Black and Minoritised Ethnic people 2.5 times more likely to be in poverty. This is skyrocketing the socioeconomic gap across the UK and deepening financial anxiety.

To achieve long-term systemic change and a healthier society, we must close the ethnicity pay gap. It is essential to reducing deprivation and transforming access to education, health, housing, work, and financial stability for generations to come. In the UK, addressing race inequalities in the labour market could boost the economy by up to £24 billion annually.

Today (January 8) marks Ethnicity Pay Gap Day 2026, founded by Dianne Greyson, who also established the #EthnicityPayGap Campaign. We will continue to support her campaign (see our interview with Dianne here).

We will also continue to participate in the movement to end the ethnicity pay gap, working with the UK government and centring Black and Minoritised Ethnic people in our work. For workplaces who are ready for genuine change, we have developed resources through our partnership with ACEVO, Home Truths 2. We encourage civil society organisations to publish their pay gap to identify and end racism by changing values, structures and behaviours.

Racial justice cannot be achieved without economic justice, and workplaces have a critical role to play in making this a reality.

Policy recommendations for long term systemic change:

Advice to Government

• Mandate ethnicity pay gap reporting, bringing it in line with gender pay gap reporting. Without a legal requirement, transparency remains inconsistent and accountability is weakened.

  
  

• Standardise how ethnicity pay gaps are calculated by developing a clear, government-backed methodology and tool. This would support organisations (particularly smaller workplaces) to report accurately and confidently to avoid common calculation mistakes from the gender pay gap.

  
  

• Enable sector-specific benchmarking, so organisations can understand how their pay gaps compare within their sector and identify where structural issues are most pronounced.

  
  

• Support intersectional analysis where data allows, recognising that ethnicity pay gaps are not experienced uniformly and are shaped by gender, nationality, geography, and other factors.

  
  
  
  

Advice to civil society organisations (see our Home Truths 2 resources here, including a blog, webinar and guidance notes – all free to access).

• Collect and analyse workforce data across pay, progression, and leadership, particularly in non-support and senior roles, to understand where disparities are concentrated. View our Home Truths 2 calculation method here.

  
  

• Publish an action plan alongside any ethnicity pay gap data, setting out clear steps to address pay disparities rather than treating reporting as a tick-box exercise.

  
  

• Embed transparency in pay, reward, and progression processes, ensuring decisions are clear, fair, and open to scrutiny.

  
  

• Create safe mechanisms for employees to share lived experiences, helping organisations identify cumulative and systemic bias across recruitment, retention, and pay.

Approach ethnicity pay gap reporting with care and responsibility, ensuring data collection complies with GDPR and is communicated clearly to staff to build trust.