The Shocking Ethnic Pay Gap

A recent report from the Resolution Foundation has found that there are still “huge gaps” in pay between different ethnic minorities living in Britain today.

The Resolution Foundation, established in 2005, is a non-partisan and award-winning think-tank that works to improve the living standards of those in Britain on low to middle incomes. They do this by conducting analytical research into UK living standards and producing policy solutions that will help shape the debate on social policy.

With one fifth of the UK population identifying as something other than ‘White British’, the Resolution Foundation looked at how typical household incomes differed by ethnicity, offering explanations as to the causes and pointing towards what needs to change in order to see the ethnic pay gap closed.

And the results of these recent report are pretty damning.

The Report

There are extreme differences between typical household incomes by ethnic grouping. For instance, the average household income for a Bangladeshi family is £8,900 a year less than the average White British family. Pakistani households bring home £8,700 less, and Black African homes bring in £5,600 less than White Britons on average.

When it comes to accounting for housing costs, the income gaps are even greater; Bangladeshi households bring in £9,800 less than their White British counterparts. Taking housing into consideration, the gap between Black Caribbean and Black African also increases to a difference of around £2,000.

However, this is explained in the report as being a consequence of home ownership. Fifty-eight percent of White British families own their own home, whilst only around a quarter of Bangladeshi, Black and Other White families do. In the case of African and Caribbean household, this is explained as being a consequence of the age gap; Black Caribbean families have, on average, been in the country for a longer time and had a better chance to accumulate the money to get on the housing ladder.

Gender Employment

In part the pay gap between ethnic households is also as a result of employment differences. For White women the employment rate is around 72%, whilst for Bangladeshi women this is dramatically less at only 31%, and 37% for Pakistani women. Although this is still a very small amount of women in employment, this has increased by 10 and 18 percentage points over the last 14 years.

During the same period employment rates for Black African women have increased considerably to around 60%. Employment rates for Black Caribbean women have also increased to near White British women at around 70%. This is considerable for the fact that post-economic crisis female employment rates exceeded male in the Caribbean community.

At the same time, male employment rates have increased across the board for ethnic minorities. Black male employment is at a record high after a serious post-crisis slump. Employment has increased for Bangladeshi and Pakistani men by 17 and 10 points respectively since the beginning of the millennium. In the past 15 years typical weekly earnings for men of Bangladeshi and Pakistani backgrounds has increased by 28%, compared to 1% for all other male employees.

However, unemployment rates remain higher for Black, Bangladeshi and and Pakistani men today than for White men during the recession, at 8-12 percent.

Speaking on the report, Adam Corlett, senior economic analyst at the Resolution Foundation had this to say,

“Differences in living standards between ethnicities in Britain too often go ignored. This matters because income gaps between different minority ethnic groups and white British households are significant and persistent.

“However, we should be encouraged by the fact that there have been big improvements in some instances, such as the impressive employment gains seen among black, Bangladeshi and Pakistani men and women.

“Thanks to this and other factors, since the turn of the millennium Bangladeshi and Pakistani households have actually seen the fastest income growth.”

So whilst there are clear signs of the gap improving, and changes afoot, the pay gap between ethnic minorities remains worryingly large. Hopefully not for much longer.

You can read the full report from the Resolution Foundation here.

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