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Race and Economic Inequality

Several recent reports have brought together information on the relationship between race and economic inequality.

The race equality thinktank Runnymede looked at the British population as a whole and considered areas such as:

  • Wealth and savings. For example, it found that Black African and Bangladeshi households had one-tenth the average level of savings of a White British household.
  • Poverty. Runnymede said that all Black, Asian and minority ethnic (BAME) households were more likely to be living in poverty, due to factors such as lower wages, higher unemployment, higher rates of part-time working and higher housing costs. For example, it stated that 46% of Pakistani households of working age were in poverty, compared to 19% of White British households.
  • Employment. The report found that unemployment rates among BAME households were much higher than for White British households, and that average pay rates were lower—even allowing for differing levels of education. It said that 25% of BAME workers were employed in the ‘gig’ economy, compared to 14% of the population as a whole.
  • Education. Runnymede stated that while BAME people are more likely to have a university degree, the value of that qualification is worth less in the labour market. For example, it said that nearly 40% of Black African graduates were in non-graduate jobs, compared to 20% of White British graduates.

The report was largely written before the coronavirus outbreak. However, the authors added that people from ethnic minorities were also disproportionately affected by the virus. For example, the report said BAME people were:

  • less able to benefit from the Government’s support measures because they are less likely to be full-time employees;
  • more likely to be asked to undertake tasks which expose them to greater risk of contracting the virus;
  • less likely to have appropriate working conditions at home, because of lower quality, more crowded housing; and
  • less likely to be able to afford IT equipment; for example, for online school lessons.

The report made ten recommendations. These included: linking economic reform to migration policy; greater targeting of economic reforms to target racial inequalities, including using statistical modelling to eliminate unconscious bias effects; and new labour market policies, together with the better enforcement of existing ones.

The Scottish economic research organisation the Fraser of Allander Institute explored similar questions from a Scottish perspective. It too found that economic activity rates in BAME households were lower. For example, the average employment rate in ethnic minority households was 59%, compared to 67% in even the worst performing Scottish local authorities.

It also reported a 10.2% average pay gap between white and ethnic minority households, partly due to the latter being more likely to be in low-paid sectors. It stated that pay gaps remained even after allowing for differences in age, sex, level of qualifications and occupations.

As a result, the institute reported higher rates of poverty among minority ethnic groups, which it said contributed to higher mortality rates during the epidemic. It called for the interests of ethnic minorities to be embedded in the plan for recovery from the virus. This includes taking steps to increase their representation in public-sector employment.

The Centre for Ageing Better explored ethnic inequalities amongst the over 50s. It found that black men and women in their 50s and 60s were on average £100 worse off than white people of the same age, despite the increased likelihood they were still working. The report argued this was because those from ethnic minority groups were more likely to be in low-paid jobs and have lower pension assets and other savings. In addition, it pointed to lower levels of housing assets, stating that only 13% of black people in their 50s and 60s owned their own home outright (ie having no rent or mortgage payments), compared to 47% of white households.

As a result of this disparity in incomes and assets, the centre reported that 28% of white people in this age bracket were retired, compared to 11% of black people.

The report put forward a range of policy proposals, including measures to improve pay, more affordable and better housing, and targeted measures to reduce ill health for people from BAME backgrounds approaching later life. It also called for more research into ethnic inequalities amongst this age group.

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