Highlighting Issues Around Capturing and Analysing Ethnicity Data

We have been undertaking pay gap analysis for our clients for many years to help them identify whether they have a gap, where the key problems are if there is a gap, and what the underlying causes might be. 

Our main focus has been, and is, on assisting organisations to assess whether they are paying appropriately to keep their people. More recently we have been focusing on specific gaps – initially focusing on gender pay gaps and are now looking at ethnic pay gaps as well. As we undertake ethnicity analysis for more of our clients, we have come across several issues with recording ethnicity.

For any analysis, sample sizes affect the quality of the resulting figures. To make meaningful statements that will assist an organisation to deal with the underlying causes of pay gaps, the information needs to be statistically significant. We also need to be extremely careful about respecting the privacy of the individuals involved. The smaller the sample, the higher the risk of an individual’s pay level being identified.

We are finding that for gender in organisations that tend to be female or male-dominated and particularly with ethnicity, this is a potential problem.

In the overall New Zealand workforce, for example, only 6% of employees are in the Pasifika  category – for a small organisation, say 50 employees, this means there might be only 3 Pasifika people – this would not be sufficient to protect an individual’s privacy if results were reported  especially by level, let alone enough data to make a meaningful statement about discrimination within that organisation.

One issue we have repeatedly come across when starting to analyse clients’ ethnicity pay gaps, is the hesitancy of organisations to collect this information. To encourage employees to contribute this data, we can only point to the value of knowing whether ethnicity is affecting people’s employment opportunities and pay – i.e. it is in their interests to provide this information.

Employers will need to be able to reassure their staff that providing this information will not negatively affect the individual nor will it breach their privacy. Equally as important is assurance that there will be appropriate action if any gaps are identified.

We are also seeing the issues arising with totally open self-reporting of ethnicity.

While self-reporting demonstrates an appropriate level of sensitivity to how people wish to identify themselves, it does raise a problem for analysis. For instance, if someone indicates that they are Australian or American, how should we classify them for analysis?

We could assume both the Australian and American are European but they could be African or Middle Eastern for instance. Making assumptions about the data provided will affect the quality of the information that can be produced from the analysis.


Our Approach – This is where Strategic Pay can help

At Strategic Pay we are using the 6 high-level ethnic groupings that StatisticsNZ, as the country’s guardian of official statistics, uses to enable meaningful analysis and interpretation. We suggest this as an approach for categorizing ethnicity within an organisation to start exploring any ethnic pay gaps. This does not preclude allowing employees to selfreport but provides a framework for analysis and reporting which will protect both the dignity and privacy of employees as well as enabling meaningful analysis.

We can help with analysis and advice in this area as well as with gender pay gaps and your broader approach to ensuring you are paying your staff fairly.

If you’d like more information about how we can help get in touch with our team of advisors today.

 ‘Supplied content’ – By Lyn Brieseman, senior consultant at Strategic Pay. 

www.strategicpay.co.nz | [email protected]

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