The feasibility of constructing a race equality index

Ethnic minorities have long experienced substantial disadvantages in the labour market. Following recommendations from the National Employment Panel, the Department for Work and Pensions commissioned ‘correspondence tests’ for the presence of racial discrimination by employers when recruiting staff. The research showed significant levels of net discrimination against ethnic minorities and significantly higher levels of discrimination in the private sector than in the public sector. The Department therefore commissioned the present report to explore the feasibility of constructing a race equality index in order to understand, in detail, how discrimination is happening, how proactive businesses are in promoting race equality in recruitment, retention and promotion, and to monitor trends over time in order to determine whether new measures to promote race equality should be introduced by government.It is not at present practicable to construct a regular annual measure that captures all the separate employer-side mechanisms that contribute to ethnic minority disadvantage in the private sector. However, an index based on the Labour Force Survey and covering the three outcome measures of ethnic minority under-representation in the private sector, in managerial occupations, and pay disparities can be constructed. Our proposed index involves adjusting for individual characteristics and geographical region, just as the correspondence tests for discrimination involve the matching of ethnic minority and majority group applicants. The index shows that, overall, the inequalities have been fairly stable over time, although among the separate components there is clear evidence of some equalisation with respect to employment.