by Simonetta Longhi
In the UK, as in many other countries, ethnic minorities are paid on average less than the white British majority. Although the exact magnitude of the difference varies across studies due to the use of different data and methodology, the patterns are rather consistent.
However, there are important differences in labour market outcomes across ethnic minorities. On average, the groups of Indian and Chinese men are paid similarly to white British men, while Black African and Black Caribbean men are paid on average between 15% and 20% less. Bangladeshi and Pakistani men are the groups experiencing the largest pay gaps, of about 20-30%.
Perhaps surprisingly, among women, ethnic pay gaps are much smaller than among men, with many ethnic minority groups being paid on average more than white British women. This is not specific to the UK: also in other countries ethnic pay gaps seem to be smaller among women than among men. As a result, gender pay gaps also vary across ethnic groups.
It is important to keep in mind that ethnic pay gaps do not necessarily reflect unequal pay. Research has shown that, although part of the pay gaps can be explained for some groups by lower levels of education, concentration in low-pay occupations seems to be the most important factor explaining the ethnic pay gaps.
For example, the proportion of white British men working in high-paying managerial and professional occupations is 19-20% and 16-17% respectively. Only about 10% work in low-pay elementary occupations. Compared to white British men, Indian men are overrepresented in high-paying professional occupations (between 25 and 30% of Indian men work in these occupations), while Pakistani and Bangladeshi men are overrepresented in low-pay elementary occupations (between 14 and 22% of Pakistani and between 16 and 25% of Bangladeshi men work in these occupations). The smaller percentages refer to ethnic minorities who were born in the UK, while the larger ones refer to those who were born abroad; this is consistent with the lower ethnic pay gaps observed for ethnic minorities born in the UK, compared to those who were born abroad.
There is still lack of knowledge of why ethnic minorities are overrepresented in low-pay occupations. Is occupational concentration the result of minorities being overrepresented in low-pay jobs across all employers, or is it due to minorities being more likely to work for employers offering mostly low-pay jobs? Is it the result of (possibly voluntary) self-selection, or of (possibly involuntary) segregation? Does it appear already at the point of entry into a job or into the labour market, or does it develop over time and is related to lack of career progression?
Finally, one caveat for these research findings is that, by necessity, only the largest ethnic minorities have sample sizes that are large enough for meaningful quantitative analysis. All other minorities are often excluded or combined in an “other” residual group – which may conflate very different experiences.
Dr Simonetta Longhi is Associate Professor at the Department of Economics of the University of Reading. Her research focuses on inequality in labour market outcomes of disadvantaged groups (eg gender, ethnicity, disability and social class), unemployment and on-the-job search. Most of her research uses large individual and household data such as the UK Labour Force Survey, the British Household Panel Study, and the UK Household Longitudinal Study.
Part of her research has been supported by, among others, ESRC, EHRC, and Joseph Rowntree Foundation.