As working women, you're probably familiar with the detrimental effects of the gender pay gap around the world, but how much do you know about the ethnicity pay gap?

Affecting women of colour more than any other group, the ethnicity pay gap identifies the difference in pay between white and ethnic minority employees.

According to the newest Ethnicity Pay Gap Report 2021 from professional services firm PwC, the pay penalty for UK-born ethnic minorities is 4.1%, and that number goes up to 10.4% for non-UK born minorities - and a shocking 20% in London, the highest in the UK.

The Ethnicity Pay Gap Campaign's 2022 report is even more staggering. The research found that: "52.3% of respondents confirmed they had experienced a pay disparity where they were being paid less than their White colleagues working in the same role."

I spoke to Sarah Churchman OBE, Global Inclusion & Diversity Co-Leader and Chief Inclusion, Community & Wellbeing Officer at PwC UK, and contributor to the PwC Ethnicity Pay Gap Report 2021, to understand how the ethnicity pay gap affects women and minorities in the workplace.

Here's everything you need to know about the ethnicity pay gap.

What is the ethnicity pay gap, and why does it exist?

"Since 2017, organisations of 250+ employees in the UK have been required by Government regulations to collate and report their Gender Pay Gap data. In January 2019, the Government closed its consultation on Ethnicity Pay Gap reporting and, while it was recently debated in Parliament, has yet to issue any proposals or regulations.

"A number of employers, including my own, have elected to publish their Ethnicity Pay Gap (EPG) alongside their Gender Pay Gap (GPG). These gaps show the difference in earnings and in most cases, serve to highlight the fact that the organisation has fewer female or minority ethnic employees in the more senior, more highly paid positions," said Sarah.

"The EPG is primarily driven by the underrepresentation of ethnic minority talent in more senior roles. It's why it makes sense to share demographic data alongside pay gap data and to set demographic targets for change, as a critical means of reducing the pay gap.

“The EPG is not the same as Equal Pay or pay inequality per se and employers should conduct regular Equal Pay Audits to ensure that any differences in pay can be justified," she said.

Why don't we hear about the ethnicity pay gap as much as the gender pay gap?

"Over the past few years, inequalities have been laid bare by the pandemic; George Floyd's very public murder and the ensuing Black Live Matter movement served to make many people uncomfortable about their own lack of awareness and understanding. Because of this context, I am more optimistic than ever that the wider engagement with this agenda will lead to positive change," said Sarah.

"We don't hear so much about the EPG because public reporting isn't required by Government Regulations and therefore, very few organisations report it. However, since 2019, many employers have been 'getting ready' to report, which has principally involved a better understanding the ethnic makeup of their UK workforce. I see this as a very positive step forward," Sarah said.

What are the most important takeaways from the Ethnicity Pay Gap Report 2021?

"White British men earn more than women from 14 of the 16 ethnic minority groups and pay gaps are unevenly spread across regions; the gap is largest in London where people from ethnic minority groups earn over 20% less than their White counterparts.

"The 'pay penalties' that are revealed in this report should serve to clarify the concept of privilege which is all too frequently taken for granted by those who have it - in this case, White British people," said Sarah.

"The report calls for collective action by Government, policymakers and business, notably:

- Mandating EPG reporting to strengthen business and national accountability

- More robust data at a national level on EPG, including meaningful intersectional data

- Workplace action plans targeting the recruitment, promotion and representation of ethnic minorities.

"Taking a data driven approach to action planning and target setting is the most important thing any employer can do to demonstrate commitment and deliver impact and results," Sarah explained.

How can professional women of colour contend with and overcome the ethnicity pay gap?

"My advice to professional women of colour is to conduct your own due diligence. When considering a future employer, how transparent are they with their workforce demographics and at the very least, is there anyone like you on their Board? Have they calculated and published their EPG?

"If you are already working for an employer, be bold and ask some questions about representation and pay gaps, especially in the current context of the Great Resignation where employers are examining their Employee Value Proposition to ensure they are able to attract and retain talent.

"In my own experience, we benefitted enormously from a series of listening groups with our ethnic minority staff to explore how they experienced our culture at PwC. Impactful solutions depend on employer/employee collaborations," said Sarah.

How can employers consciously close the ethnicity pay gap?

Sarah provided a list of reflection questions for different key stakeholders to ask themselves and their organisation, and build action plans accordingly:

Hiring Manager: How is your vacancy being promoted? Are you accessing the widest pool of talent by targeting specific agencies, search firms or publications? Are the candidates meeting a diverse range of people during the selection journey?

HR professionals: What drives pay in your organisation? For performance-related pay, are evaluations fair and free of bias? Are promotions to more senior grades proportionate and reflective of the ethnic diversity in the junior grades? If not, take action to address the root causes, which may relate to the way opportunities are allocated in your workplace.

Leadership: How diverse is your leadership team? Do you ensure that succession pools for senior positions include female and ethnic minority talent?

What can white professionals and senior executive leaders do to support, advocate and provide allyship for their colleagues, staff and peers of colour affected by the ethnicity gap?

"Closing the EPG starts with a conversation, and all too often white professionals or senior leaders have not taken the time to understand the experiences of ethnic minority colleagues working in their organisations. All too often, we assume our own experience of the workplace culture is everyone's experience - but that is far from reality. Only by engaging in dialogue to explore these differences can you attain a level of awareness that allows you to become an ally.

"The three essential behaviours of an effective ally are:

1. Reflect: on yourself (look within) and organisational systems (look out).

2. Respond: the motivation and purpose one has for taking action and demonstrating new behaviors, based on reflection.

3. Engage: commit to building a culture of belonging through solidarity, awareness, and action."

Although the government does not mandate ethnicity pay gap reporting from UK employers, those organisations that take these first and crucial steps to understanding the experiences of the ethnic minorities in their workforce will only stand to benefit from the diversity of their skillsets, talents and perspectives.