In the final instalment of his three-part series, Tim Mickleburgh asks whether it is time to mandate socio-economic background reporting.
In last month’s PQ magazine I discussed the barriers to entry and progression faced by finance professionals from working- class backgrounds. But could mandatory socio-economic background reporting prompt employers to take action to boost working-class representation in their workplaces?
The UK government’s draft Equality (Race and Disability) Bill is anticipated to mandate ethnicity and disability pay gap reporting by large employers in the near future, mirroring the gender pay gap reporting obligation that has been in force since 2017.
I believe that it is also time for the UK government to introduce a socio-economic pay gap reporting obligation. Large employers should be required to publish their socio-economic pay gaps on an annual basis, to set pay gap targets, and to link executive pay to performance against targets.
In addition to this, I believe that large employers should be required by law to annually report on the proportion of roles filled by employees from lower, middle or higher socio- economic backgrounds, across all levels of seniority, and to set targets for the level of lower socio-economic representation.
The most reliable indicators of socio-economic background that could be used include parental occupation at age 14, type of school attended at age 11 to 16, free school meal eligibility, and highest parental qualification.
Mandatory socio-economic background reporting is achievable. There are a number of large UK employers – including 60 in financial services who represent one-third of the sector’s workforce – who are already voluntarily collecting and publishing their socio-economic background data. For example, KPMG and PwC both started back in 2021.
The success of reporting, of course, depends on the willingness of employees to disclose their socio-economic background. Although employers already collecting socio-economic data have seen high participation rates – 70% at KPMG and 80% at PwC, for example.
Low participation rates could undermine the quality of reporting. It’s crucial that employees are educated on the importance of high participation rates in giving a more complete picture that enables disparities in representation and earnings to be properly identified and understood.
In addition to this, employers must keep their employees informed about the actions being taken to boost working-class representation in their respective workplaces, so that employees are assured that sharing their socio-economic data is making a difference.
So, there is a lack of working-class representation in the finance profession; there are barriers to entry and progression inhibiting the success of professionals from working-class backgrounds; and there is a pressing need for mandatory socio-economic background reporting to prompt employers to take action.
That brings us to the end of my three-part series. Until further notice…
