60/76

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AA RREEPPOORRTT BBYY TTHHEE NNAATTIIOONNAALL EEMMPPLLOOYYMMEENNTT PPAANNEELL

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NEP - Report 07 3/10/07 11:12 Page 102

60% is the ethnic minority employment rate; 76% is the white employment rate.

NEP - Report 07 2/10/07 15:59 Page 103

Chair’s Foreword Gordon Pell 03

Executive Summary 05

Chapter One The Commission 07

Establishment and Membership 07

Approach 08

Chapter Two The Challenge 09

The Ethnic Minority Employment Gap 09

Employer Discrimination 12

The Employer Response 13

Summary 14

Chapter Three The Role of Business 15

The Law and Official Guidance 15

Actions to Promote Workforce Race Equality 15

Smaller Companies 18

Chapter Four The Role of Government 19

Four Areas for Government Action 19

National Leadership, Local Delivery 19

Chapter Five Measurement and Reporting 21

A Clear Long Term Goal 21

Benchmarking and Measuring 22

Chapter Six Incentives 25

The Need to Motivate Business 25

Public Procurement 25

Thematic Reviews 29

Legislation 31

Chapter Seven Support at the City Level 33

Supply Side Interventions at City Level 35

Technical Support to Employers 35

Chapter Eight Leadership and Communication 37

Top Level Leadership 37

Communication 37

Conclusion 39

Contents

01

NEP - Report 07 2/10/07 15:59 Page 1

Annexes 1 Summary of Recommendations 41

2 Implementation Timetable 43

3 Business Commission Members 44

4 Project Team and Research Team Members 45

5 Individuals Consulted During the Project 46

6 Bibliography 50

7 Baseline Statistics for the City-Regions 54

8 DWP Submissions to the Business Commission 56

9 The Race Equality Index 67

10 Sample Clauses for Procurement Contracts 68

02

NEP - Report 07 2/10/07 15:59 Page 2

From Gordon PellTwo years ago Gordon Brown, then Chancellor of the Exchequer, asked the National

Employment Panel to set up a Business Commission on Race Equality in the

Workplace, and invited me to chair it. He asked us to recommend policies and

practical measures to increase recruitment, retention and progression for ethnic

minorities in the private sector. I am delighted now to present our final report.

We have entitled this report “60/76” because it is important to get one striking fact

into as many minds as possible. 76% of white people in the working age group have

a job; only 60% of working age people from ethnic minorities are in employment.

This gap has remained largely unchanged for a generation. It is unjust, socially

divisive, and bad for the economy.

Closing the ethnic minority employment gap calls for a long term collaborative

endeavour. Responsibility is shared between Government, public sector employers,

and business. Every aspect is important. The skills element, in particular, is vital.

But we have concentrated on that part of the problem we understand best:

what business has to do.

Submissions to the Commission suggest that up to half of the ethnic minority

employment gap may result from discrimination in employment of one sort or

another. Often this is a matter of culture and practice, rather than intentional

racism. But any kind of discrimination is both an injustice and a missed opportunity.

By ensuring all roles are open to anyone, regardless of ethnicity, a company gets

access to the widest possible pool of talent.

The Commission’s message is that all businesses need to make sure their

recruitment and promotion is fair and open to everyone. This will mean doing

different things, depending on the circumstances of the company involved. But

the practices they need to adopt are well understood. Government’s role is to give

business reasons to adopt these practices, and to support companies as they

go through the process of change.

Whilst there are subtleties to putting this into action, the general proposition is a

simple one. Government motivates and equips; business makes the necessary

changes. The Commission’s remit was to consider race inequality: but we think

much of what we recommend would help tackle other kinds of workplace

unfairness. There should be economies of scale in tackling different kinds of

discrimination together.

Chair’s Foreword

03

NEP - Report 07 2/10/07 15:59 Page 3

In any event, the key to success is political will. We were asked how to solve the

problem. We think our report answers that question. But it is not an easy problem,

and parts of the solution will meet resistance. It is for Government to decide whether

to implement the solutions we recommend. The tools for tackling workplace race

inequality are to hand. We urge Government to take them up with resolution. If it

does so, it will dismantle an injustice, and build a platform for economic success.

Gordon PellChief Executive, Retail Markets, RBS

04

NEP - Report 07 2/10/07 15:59 Page 4

1. If you are white you have a 76% chance of being employed. If you belong to an

ethnic minority there is only a 60% likelihood you have a job. This is the ethnic

minority employment gap: sixteen percentage points in 2007. Britain takes itself

to be one of the most tolerant and open-minded countries in the world, and

among the most economically efficient. But we will never live up to this ideal

whilst the ethnic minority employment gap persists. It is unfair; it foments social

strife; it excludes productive talent from the workplace; and it is not going to go

away on its own.

Source: Labour Force Survey

2. Part of the problem stems from underdeveloped skills and social capital. Part

of it results from workplace cultures and practices that disadvantage ethnic

minorities. Both sides of this equation are important. This report is primarily

concerned with what employers need to do1. If employers do not change practices

and cultures, people from ethnic minorities, no matter how good their skills, will

not compete on fair terms, and the ethnic minority employment gap will persist.

3. More than one in ten people of working age in the UK belongs to an ethnic

minority. This proportion will continue to increase. Employer discrimination will

therefore disadvantage a larger and larger group of people. Not only that, but one

in five children in poverty belongs to an ethnic minority. Work is the best route out

of poverty. So tackling workplace race inequality is a key to reducing child poverty.

4. Discrimination stops businesses making rational choices about whom to hire.

As the Business Commission, our major long term concern is to make sure UK

businesses recruit the most productive staff, regardless of ethnicity. There is a

moral dimension to this ambition, but the long term economic imperative is

enough on its own to make this something the UK needs to do.

80%

70%

60%

50%

40%

30%

1985

WhiteEmploymentRate

EthnicMinorityEmploymentRate

1987 1989 1991 1993 1995 1997 1999 2001 2003 2005 2007

White Employment Rate versus Ethnic Minority Employment

Executive Summary

05

1 For a more detailed treatment of the labour supply issues, see the National Employment Panel’s

report Enterprising People, Enterprising Places, NEP May 2005.

NEP - Report 07 2/10/07 15:59 Page 5

5. Most employers think they are already tackling discrimination: but few in reality

go beyond passive adherence to the existing law. Some do not even go this far.

Few state their policies on race equality, back them up with concrete plans and

milestones, or report publicly on whether they achieve them. Very few adopt the

full range of well-understood practices to attract and retain the whole spectrum

of available talent.

6. This report therefore puts forward an ambitious and challenging programme,

a collaborative endeavour between:

• business,

• public sector employers, and

• Government.

Most of our recommendations are about what business needs to do and how

Government should motivate and equip business to act. We would expect to

see public sector employers taking the same steps we advocate for the private

sector, but, as the Business Commission, our focus has been on how business

needs to change.

7. The report falls into two sections of four chapters. The introductory section covers:

• The Commission: background on how the Business Commission came into

existence and how it has carried out its work.

• The Challenge: detailed discussion of what is at stake, the scale of the

problem, and the barriers to solving it.

• The Role of Business: the improvements in employer recruitment, retention

and promotion practices necessary to achieve workforce race equality.

• The Role of Government: critically, as well as training and other supply side

actions, Government needs to work with business, motivating and equipping

employers to promote race equality.

8. The second section contains recommendations about what Government needs

to do in order to motivate and equip employers:

• Measurement and Reporting: set targets and monitor progress against

them. We propose a medium term goal of reducing the ethnic minority

employment gap by a quarter in eight years.

• Incentives: motivate business to act by

• using public procurement (without unduly burdening small companies) to

ensure government suppliers promote race equality

• motivate individual sectors through thematic reviews, and

• signal its resolution to legislate on workplace race equality in future if necessary.

• Support at the City Level: promote local activity in cities with large or

growing ethnic minority populations, and provide technical support for

businesses to make workplaces fairer.

• Leadership and Communication: the Chancellor of the Exchequer should

have overall responsibility for leading this programme across Government.

For a full list of recommendations and a suggested timeline see Annexes 1 and 2.

06

NEP - Report 07 2/10/07 15:59 Page 6

Establishment and Membership9. The National Employment Panel established the Business Commission in

September 2006 at the request of the Chancellor of the Exchequer. This

followed a recommendation in the Panel’s earlier report, Enterprising People,

Enterprising Places2.

10. The Commission’s formal task was to “advise Government on policies and

practical measures to increase the recruitment, retention and progression of

ethnic minorities in the private sector”. Its specific objectives were to:

• analyse demographic and economic trends that underlie employment gaps

in ethnic minority employment;

• propose key performance indicators for measuring progress in ethnic

minority recruitment, retention and progression at national and local levels;

• work with selected cities to establish goals for closing local employment

gaps and help develop strategies for increasing private sector employment;

and

• recommend national policies to tackle discrimination and accelerate ethnic

minority employment and career progression in the private sector.

11. The Commission has, in keeping with its remit, not considered other types of

discrimination than that on grounds of race. But there will be large areas of

overlap between our recommendations and the measures necessary to

promote equality more widely. Where possible we favour using common

measures to tackle a range of inequalities.

12. A full list of Commission members is at Annex 3. Most members are drawn from

the leading ranks of the UK business community. They are joined by senior

officials from the civil service and the trade union movement. This report

represents the considered views of experienced business leaders responsible

for companies which between them employ 275,000 people.

13. Our recommendations are formally addressed to HM Government. In some

cases the Government has the power to implement them in England only. We

hope, nevertheless, that where relevant powers have been devolved, countries

other than England will give them serious consideration.

Chapter 1: The Commission

07

2 National Employment Panel, May 2005

NEP - Report 07 2/10/07 15:59 Page 7

Approach14. The Commission has drawn in the first instance on the experience of its

members. Its members bring to bear a great breadth of experience and

analytical ability. The Commission has naturally, however, sought the views of a

wide variety of other individuals and organisations, and drawn on a wealth of

new and existing research material. These sources are summarised in Annexes

5 and 6.

15. The Commission’s focus has been on practical measures to reduce that part of

the ethnic minority employment gap that results from employer discrimination.

This is difficult but achievable. Our proposals are intended to be stretching but

realistic. Where possible we draw on existing structures rather than introducing

new measures.

16. We offer a national framework: but, recognising the facts of Britain’s

demography and economy, we argue for concentrating effort at the level of

major cities. In the first instance we recommend concentrating on the following

cities, most of which also formed the focus of our research:

• Birmingham

• Bradford

• Glasgow

• Greater Manchester

• Leeds

• London

• Sheffield

17. The Commission recommends working in these cities because:

• they have large numbers of residents from ethnic minorities;

• they have large concentrations of employers, with the majority of UK

employers either headquartered or represented;

• they show a high degree of labour market race inequality (see Annex 7); and

• they are home to supply side institutions equipped to tackle the problem.

18. There are of course many other places in the UK where the problem exists and

could and should be tackled. But a focused programme will be more likely to

succeed. And if Government can solve the problem in these seven cities, then:

• it will solve the bulk of the national problem; and

• it will reform recruitment and retention practices of most large employers,

which will have a positive effect in the rest of the UK.

08

NEP - Report 07 2/10/07 15:59 Page 8

The Ethnic Minority Employment Gap19. The gap between the employment rate of ethnic minorities and that for the

white population is sixteen percentage points. Moreover, the ethnic minority

population is growing as a proportion of the total; and this growth is

concentrated in younger age groups. Hence workplace race inequality, if it is

allowed to persist, will affect a growing number of people. And the damage it

causes will be in just those demographic segments that are closely bound up

with prosperity and social cohesion.

The Current Picture20. These headline figures summarise a more complex picture with quite wide

variation between groups and places. Employment rates vary widely within

ethnic groups, and between men and women. The Indian community in Britain

has an employment rate close to that of the White British. People of Caribbean,

African, Pakistani and Bangladeshi origin have a much lower likelihood of being

in work. Employment rates also vary between cities (see Annex 8).

Source: Labour Force Survey, Q1 20073

21. It is important to be clear that this difference in employment rates is not a matter

of people from ethnic minorities choosing not to work. There may indeed be

80%

70%

60%

50%

40%

30%

20%

Em

plo

ymen

t ra

te

Male

Female

White

Ind

ian

Oth

er

Asia

n

Oth

er

Bla

ck A

fric

an

Bla

ck C

arib

bean

Pakis

tani

Bangla

deshi

Mix

ed

Chin

ese

Eth

nic

Min

orities

Gre

at

Brita

in

Chapter 2: The Challenge

09

3 These figures include people who are classified as economically inactive because they are enrolled

as students. Filtering the data to remove students does not change the overall story of ethnic

minority disadvantage, except in one regard: a high proportion of inactive Chinese people,

especially men, are students; taking this into account, non-student Chinese people have an

employment rate comparable to non-student Indians. We have chosen to illustrate the gap

unfiltered for simplicity.

NEP - Report 07 2/10/07 15:59 Page 9

genuine cultural differences in attitudes to work, which are to be respected.

But they should not be overstated. For example, work by the Equal Opportunities

Commission suggests that many women from Pakistani and Bangladeshi

communities are prevented from working outside the home by barriers related to

childcare and working hours.4 Moreover, people from ethnic minorities who do

choose to seek work face a harder challenge than the white population. The

ethnic minority unemployment rate is twice the rate for the country as a whole.

22. Ethnic minorities are concentrated in particular fields of work. These include

public administration, health, distribution and hospitality. Outside these sectors

they are under-represented in both private and public sectors. Across all sectors

many ethnic minority employees feel underemployed given their skills and

qualifications.5 Progress in improving ethnic minority employment rates is the

same for public and private sector, although in the public sector promotion

prospects are better for people from ethnic minorities.

A Persistent and Growing Problem23. This is not a problem that will solve itself. Since 1985 the ethnic minority

employment gap has fluctuated between 9% and 21%. The average for the

period is 17.0%. It currently stands at 15.9%. The reader can gain an

impression of the nature of the problem from the graph below. The most

optimistic conclusion one could draw is that the rate of improvement is slow.


25%

20%

15%

10%

5%

0%

White Employment Rate minus Ethnic Minority Employment Rate

E.M. Employment Gap Average Trend

1985

1987

1989

1991

1993

1995

1997

1999

2001

2003

2005

2007

10

4 'Moving on up? The Way Forward: Investigation into Bangladeshi, Pakistani and Black Caribbean

women and work, EOC. March 20075 Ethnic minority women (in work, under 35) were 3-4 times more likely than white British women to

have often taken a job at a lower level than that for which they were qualified. Ibid.

NEP - Report 07 2/10/07 15:59 Page 10

24. It is worth commenting on the shape of this graph. The large dip up to 1989 is

not a case of a successful government policy to reduce the gap. It is the result of

a sudden growth in employment rates across the board, resulting from the rapid

relaxation of the government’s fiscal stance in the preceding period. This created

a very high demand for labour which for a short period of time balanced some of

the barriers to getting work which people from ethnic minorities face. After the

economic correction that followed, this trend reversed, and in a period of

declining labour demand, the gap between the employment rates widened again.

25. The ethnic minority employment gap will become more important from an

economic point of view as the proportion of ethnic minorities in the population

increases. To give a flavour of this trend, ethnic minorities make up:

• eleven per cent of the working age population;

• fourteen per cent of the secondary school population; and

• seventeen per cent of the primary school population.6

At present 20% of children in poverty belong to ethnic minorities. Between two

thirds and three quarters of all children in the Pakistani and Bangladeshi

communities are in poverty. This poverty will only increase in extent if the ethnic

minority employment gap persists. And 70% of the growth in the working age

population between 2001 and 2020 will come from ethnic minorities.7 The graph

below shows the historic trend for the proportion of ethnic minorities in the

working age population.


36

35

34

33

32

31

30

29

EthnicMinorityWorkingAgePopulation(millions)

WhiteWorkingAgePopulation(millions)

1992 1994 1996 1998 2000 2002 2004 2006

11

6 Labour Force Survey, 2nd quarter 20077 'Moving on up? The Way Forward: Investigation into Bangladeshi, Pakistani and Black Caribbean

women and work, EOC. March 2007

NEP - Report 07 2/10/07 15:59 Page 11

Employer Discrimination26. Research for the National Employment Panel suggests that at least a quarter of

the ethnic minority employment gap, and possibly a good deal more, results

from discrimination in employment practices.8 This work builds on a large body

of existing research that suggests discrimination is a major cause of the gap.9

It is the view of DWP labour market economists that, taking the research as a

whole, between a third and a half of the gap results from discriminatory

employment practices.

27. Employer discrimination takes one of several different forms. It may be

straightforward racial prejudice at the level of individual managers. It may include

less specific kinds of harassment and victimisation that, without any formal

decision being made, drive people from ethnic minorities to resign, or prevent

them from applying in the first place. Or it may be the kind of workplace culture

which many would not perceive as discriminatory at all. For example word of

mouth recruitment from within a professional network often perpetuates

inequalities in that network. The intent is not racist, but the effect is

discriminatory.

28. It is difficult to quantify how discrimination works. The range of practices

through which it occurs are often cultural rather than institutional and hence

much harder to examine statistically. Moreover, the full picture of workplace race

equality must include not only the total level of employment for ethnic minorities,

but also the extent to which they can progress in work. Employers do not

currently collate data that would allow us to measure the scale of this issue.

29. The measures we propose in this report are intended to reduce this employer

discrimination. Without minimising the responsibility of employers, however, it is

also important to note that at least half of the ethnic minority employment gap

results from other factors. Some ethnic minority communities are less well

equipped than the population as a whole in:

• skills and training that meets the needs of the economy;

• access to capital for setting up businesses; and

• social networks for getting work or developing enterprises.

It is the responsibility of the State to help ethnic minorities overcome these

barriers. But it is the responsibility of employers to prevent discrimination and

promote equality in recruitment and progression so that people from ethnic

minorities compete on even terms.

12

8 Measuring the size of the employer contribution to the ethnic minority employment gap.

Unpublished research by Prof. Anthony Heath, University of Oxford (2006). 9 Department for Work and Pensions submission to NEP Business Commission on Race Equality in

the Workplace. 2007.

NEP - Report 07 2/10/07 15:59 Page 12

The Employer Response30. The Business Commission’s conclusion is that, to date, the employer response

to this problem has been inadequate. The current Workplace Employment

Relations Survey10, for example, found that only one in five employers took steps

to review the impact of their recruitment and selection procedures on race

equality. Four out of five employers in our own survey saw no need to improve

recruitment and progression for their ethnic minority staff. This is not an

accusation of racism. Indeed, since the Commission is itself made up of

employer representatives, it is not an accusation at all. But it is an

acknowledgement that the business community is not doing enough.

31. In the course of the Commission’s work, we surveyed over a thousand

businesses to find out their attitudes to race equality and what they were doing

to promote it. Our findings included:

• 42% could not articulate reasons for their company to take steps to promote

race equality;

• 61% did not recognise a connection between diversity and business

performance; and

• 83% did not believe they would face formal investigation of their employment

practices, or that an employee would ever take them to a tribunal.

32. In our work we heard a range of rationales for why companies did not take

action on race equality:

• race equality is not an issue because they don’t have any ethnic minority

employees;

• no suitably qualified people from ethnic minorities live in their area, so race

equality is purely a supply-side problem;

• promoting race equality is too expensive and they can’t afford the

information systems required;

• it is impossible to do ethnic monitoring because ethnic minority staff do not

want to answer the question;

• white staff resent measures to tackle race inequality;

• although they back race equality at the top of the company, it is impossible

to change the behaviour of middle management;

• they do not want to employ specific ethnic minorities because of a concern

that they will require too much time off for religious purposes;

• all they want to do is “hire the best” and in promoting race equality they are

being asked to lower standards.

13

10 Alpin, C et al (2005) Inside the Workplace: First Findings form the 2004 Workplace Employment

Relations Survey. DTI London pp25-27.

NEP - Report 07 2/10/07 15:59 Page 13

Each of these works as a rationale for inaction. But all are, to a greater or lesser

degree, founded on lack of information, mis-information or stereotyping. We set

out how Government should help businesses overcome these information gaps

at paragraph 126 et seq.

33. Many businesses, then, see no reason to take further action, and adhere to

mistaken ideas that encourage inertia. Yet without greater employer action the

ethnic minority employment gap will persist. This is the central challenge which

we seek to address in this report.

Summary34. Our summary conclusion is that overcoming employer discrimination is a shared

challenge for employers and for Government. Employers have to take actions at

the level of individual companies and employees. Government must take a

leadership role and give employers reasons to act. Government must articulate

the business case and the wider social and economic imperatives. It must offer

support and technical advice for those who want to change their practice. And

it must provide a framework for reporting progress.

35. But Government must also recognise that support, advice and persuasion

will not be enough to induce most businesses to act. In addition, therefore,

Government must provide practical incentives for businesses to change

their practices.

14

NEP - Report 07 2/10/07 15:59 Page 14

36. This section outlines the actions employers need to take to overcome

discrimination in recruitment and progression. There is a wealth of good practice

in this field. One of our recommendations (see paragraph 117) is to make this

body of knowledge more readily available to employers.

The Law and Official Guidance37. The first need is for compliance with the law. It is illegal in the UK11 to

discriminate against an employee on grounds of race, broadly understood to

include colour, ethnicity, nationality and national origin. The Commission for

Racial Equality (now the Commission for Equality and Human Rights) has

published a detailed code of practice12 which sets out what the law is and how

to comply with it. This is a helpful starting point for business in determining what

standards they need to meet. But at present many companies do not feel any

compelling pressure to adhere to these standards. In our survey 83% of

companies felt they were unlikely ever to face a formal investigation of their

employment practices, or to be taken to a tribunal by an employee.

Actions to Promote Workplace Race Equality38. The second thing businesses need to do is go beyond legal compliance and

take positive steps to combat inequality and promote diversity. The way we

would expect companies to do this depends on their size, sector and location.

We would expect a company employing large numbers of people in one of the

UK’s major cities to do more than a smaller business, or one in an area without

a significant ethnic minority population.

39. The remainder of this section sets out the main actions we would expect

companies to take if they are serious about eradicating workplace race inequality.

40. Although business as a whole is not taking enough action in this regard, there

are many instances of good practice. Some illustrative examples are shown in

boxes throughout this section: we would like to see many more companies

adopt practices of this sort. Promoting race equality in the workplace is not an

untried process. It is a matter of using well-understood processes that offer

proven results.

Policies and Leadership41. A pre-requisite for success is that businesses lead from the top. Diversity needs

to have the same priority as other outcomes on which the business places

value, the same amount of management attention and the same level of

accountability for poor performance.

Chapter 3: The Role of Business

15

11 The Race Relations (Amendment) Act 2000 applies to England, Scotland and Wales. It does not

apply to Northern Ireland, which is governed by the Fair Employment (Northern Ireland) Act 1976

c.25, and The Race Relations (Northern Ireland) Order 1997.12 Code of Practice on Racial Equality in Employment, CRE November 2005

NEP - Report 07 2/10/07 15:59 Page 15

42. Firms should also develop and articulate clear race equality policies. These

should cover:

• direct and indirect discrimination;

• harassment and victimisation; and

• staff training on how to tackle discrimination.

Benchmarking43. Companies will find it useful to benchmark their achievements against the labour

supply. Depending on the kind of company involved and where it operates, they

should look at the local labour supply; or the national labour supply for the

sector; or a combination of the two. They should aim to have an ethnic mix in

their workforce that reflects the make-up of the available labour supply.

44. If the skills a business needs do not exist in the communities where it operates,

of course, it is unreasonable to expect companies to get to this point. Where

workforce race inequality results from skills gaps, this is primarily a problem for

the State. But unless companies know what their workforce looks like relative to

the local labour market, they will not be able to decide whether they need to

take action.

MonitoringRoyal Bank of Scotland uses diversity monitoring with great success. Eighty

per cent of staff declare their ethnicity. The firm monitors representation at four

stages of the recruitment process and in experiences at work through the

Employee Opinion Survey. It compares data with local demographics, industry

benchmarks and business performance. RBS considers monitoring

fundamental to increasing representation of ethnic minorities.

BenchmarkingThe Interbank Diversity Forum is a good example of sectoral benchmarking.

The nine major investment banks in the group jointly look at developing

industry best practice to progress the diversity agenda within their institutions

and share knowledge and know-how to support these efforts.

Policies and LeadershipThe Chairman of the Board of Eversheds chairs the firm’s Diversity and

Inclusion Committee.

The CEO for Europe and Asia at Lehman Brothers meets with Divisional Heads

at mid-year and year-end to review progress against Divisional Diversity Plans.

The meetings are approached in the same way as all other financial and

business reviews.

16

NEP - Report 07 2/10/07 15:59 Page 16

Action Plans and Monitoring 45. As with any other business process or change programme, if businesses are

serious about promoting race equality in the workplace, they need time-bound

action plans. They also need to monitor progress against these plans and apply

effort where it is needed.

46. Where their resources allow, businesses should prepare and report against

plans for the ethnic content of their:

• recruitment;

• retention (measuring attrition and turnover rates);

• training and development; and

• promotion.

Recruitment47. To improve race equality in recruitment and retention, these plans should include:

• developing the employee brand to ensure that the company can attract the

full spectrum of potential staff;

• making the working environment one which does not reduce participation by

people from ethnic minorities by discriminating (even indirectly) against them;

• ensuring selection processes do not are not unjustly excluding ethnic

minority candidates; and

• working with recruitment agencies to increase applications by people from

ethnic minorities.

Recruitment and Retention ActionsFord carried out a baseline audit, the Diversity Equality Assessment Review,

in 2001 using the CRE's Equality Means Business standard as a template.

It established action plans with associated goals and timing. The Company

continues to use the DEAR process as a means to drive progress on diversity.

In 2003 Meadowhall, which employs 250 staff and serves retailers employing

over 5,000, established The Source with Sheffield City Council. The Source

acts as the base for a local recruitment programme including outreach,

training, coaching and job placements to increase ethnic minority employment.

O2 has a national Diversity and Inclusion strategy: managers are empowered to

make it locally relevant. In Bury, for example, O2’s shift patterns change during

Ramadan and the pension fund includes options compatible with Islamic Law.

The Co-operative Group has built diversity into the specification for each of its

employment agency contracts to ensure its agencies comply with its company

values. It supports delivery through coaching.

ITV established a one year pre-entry training programme offering placements in a

range of media roles for people from ethnic minority backgrounds. Sixty people

have joined the programme to date, of whom 72% are employed directly or on a

freelance basis and a further 10% are pursuing further media studies.

17

NEP - Report 07 2/10/07 15:59 Page 17

Retention and Progression48. It is also important that businesses support the career progression of people

from ethnic minorities. Closing the ethnic minority employment gap is important.

But if the gap narrowed to zero whilst senior roles remained the preserve of

white people, this would be a failure. It would perpetuate unfairness, and it

would prevent the UK economy making best use of the available talent.

Businesses need to have policies for race equality in retention and promotion that

are as challenging and thoroughgoing as those for recruitment. They need to:

• provide ways for staff to articulate concerns;

• put in place processes for their organisations to learn from these concerns

and identify good practice; and

• establish goals and processes for promoting people from ethnic minorities.

Smaller Companies49. We have often heard the argument that promoting equality may be too

burdensome for smaller businesses. We have not, however, seen concrete

evidence to support the view that achieving workforce race equality is easier for

large companies than for small ones. Of course, different companies will need to

tackle the problem in different ways, depending on their size, sector and

location. The right level of detail in race equality action plans, for example, is

relative to the size and complexity of a business.

50. We do not, therefore, think it reasonable to expect all companies to follow the

same processes. But we do hope that all companies will pursue the same goal,

of a workplace with equal opportunity for all. Companies will take different

approaches, but should be guided by two key principles:

• leadership and accountability – a senior person in the company needs to be

responsible for making change happen, with a mandate that everyone else

understands; and

• action tied to measurable, monitored goals – staff need to know what

success looks like, and whether they have achieved it.

Retention and ProgressionKPMG’s training and development programmes focus on individuals at different

stages of their career with the firm: new graduates, people management leaders

and partners, for example. Over half of UK partners have participated in a

programme called Daring to be Different, which:

• encourages partners to reflect on their beliefs and behaviours in relation to

diversity;

• develops an understanding of what it means to be a leader on diversity;

• raises awareness of difference and confidence in talking about difference; and

• shares the learning from partners’ own experiences around diversity and inclusion.

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51. Eradicating the ethnic minority employment gap is, as we have argued so far, a

shared endeavour. Many of the necessary actions are ones that only businesses

can take. But the State also has an essential role to play. It has to take actions

on the supply side (skills training, for example) that raise the economic potential

of ethnic minorities. These measures, though important, are outside the scope

of this report. NEP’s report Enterprising People, Enterprising Places13 discusses

them in detail.

Four Areas for Government Action52. Our recommendations for Government action, however, are on the essential role

it has to play in motivating and equipping employers to act. In very brief

summary we think that Government needs to offer

• measurement;

• incentives;

• support; and

• leadership.

These topics are the subjects of the next four chapters. In the remainder of this

chapter we set out a key over-arching principle for how Government should go

about implementing these recommendations.

National Leadership, Local Delivery53. It is worth re-iterating that, although Government has often expressed concern

about the ethnic minority employment gap, and although many initiatives have

tried in the past to eradicate it, at the present time the gap is only one

percentage point below the average level since 1985.

54. So far as we can discern, previous efforts have failed because of a lack of

priority and accountability. The aim is to effect a large scale change in culture.

Hence the proposed programme will only succeed if it enjoys leadership at the

very highest levels of Government. This is not a short term commitment. A pre-

requisite for success is the determination to see it through over the several

years which must elapse before it can be expected to show results.

Chapter 4: The Role of Government

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13 National Employment Panel, May 2005

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55. At the same time it is important to bear in mind that the places where change

most needs to happen, and where effort must therefore focus, are the small

number of cities where most of Britain’s ethnic minorities live, and where many

businesses are located. Thus what we are recommending is a programme of

change with strong national leadership, but with a focus on delivery in specific

locations.

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56. It is a truism, but nonetheless true, that “you get what you measure”. This is a

principal reason why the ethnic minority employment gap is still sixteen

percentage points. There is no over-arching goal towards which everyone can

progress. There are no interim milestones for which organisations can be held

accountable. And there is insufficient knowledge of the detail of discrimination to

support change.

A Clear Long Term Goal57. If Government is to effect a cultural change that will see employers eradicating

discrimination in hiring and promotion, it needs to set a clear and inspiring goal.

This is fundamental to making every other part of the programme work. We

think this goal needs to be about the ethnic minority employment gap. This

does not directly tackle barriers to promotion for ethnic minorities. But we think

it is the right problem to target because:

• it is easy to define and understand;

• the unfairness it deals with is beyond dispute; and

• if Government targets the ethnic minority employment gap, it will, by so

doing, promote action that tends to reduce other forms of workplace race

inequality, such as differences in pay and promotion.

58. Part of the ethnic minority employment gap stems from underdevelopment of

skills and social capital. Government can only hope to address these problems

over the long term. Many education policies will take a generation to bear fruit.

Government’s aim must have a date on it, to provide an imperative for action.

But the date should be a long one.

59. We recommend that Government adopts and publicises the long termpolicy ambition of eradicating the ethnic minority employment gap withintwenty-five years.

60. This ambition would have a similar status, for example, to its stated aim of an

eighty per cent employment rate. But realising this ambition must be a matter of

passing more specific milestones. We therefore also propose a challenging

interim milestone for which Government can hold itself and business responsible

in the short to medium term.

61. We recommend that Government sets the over-arching goal of narrowingthe ethnic minority employment gap to twelve percentage points by 2015.

Chapter 5: Measurement and Reporting

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Benchmarking and Measuring 62. The foregoing recommendations are for goals that relate to the ethnic minority

employment gap as a whole. But it is also important to create a climate of

accountability for that part of the gap that results from employer discrimination.

A pre-requisite is a clear understanding of where we are now, and a series of

graduated steps for change. The Business Commission believes Government

needs to do the following:

• Gather and publish baseline information on discrimination and race equality.

• Set and monitor detailed, time-bound targets for employers to improve

performance against this baseline.

63. Our first recommendation on monitoring and reporting concerns both

information gathering and the setting of targets.

64. We recommend that in 2015, Government measure the private sectorcontribution to reducing the ethnic minority employment gap against a2008 baseline. This baseline should be established from discriminationtesting commissioned by the Department for Work and Pensions and arace equality index generated from existing employer surveys.

65. It will be important to set targets and measure progress against them in a timely

fashion: our recommended timetable is at Annex 2. At a minimum measurement

should cover the seven cities on which the Commission recommends focusing

action.

Benchmark Discrimination Testing66. The first requirement is to measure the level of discrimination in the UK labour

market. DWP should work with the International Labour Organisation (ILO) to

achieve this. DWP should use ILO’s standard methodology to conduct

discrimination testing in the Commission’s seven proposed cities. These tests

will measure the rate of employer discrimination in recruitment and provide a

benchmark from which to measure progress.

67. The ILO’s methodology is internationally accepted. It has been applied in Spain,

Italy, Sweden, the United States and France. It includes “mystery shopper” CV

submissions and actor interviews. Although this research takes place at the

level of individual companies, the aim is not to highlight specific cases but to

gather a statistically relevant sample from which to judge overall levels of

discrimination.

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Benchmark Race Equality Index68. As well as measuring the level of active discrimination in the labour market, it is

also important to understand in detail how discrimination is happening, and the

level of commitment of businesses to dealing with it. Again, the headline

number is plain: an ethnic minority employment gap of sixteen percentage

points. But tackling this big problem involves breaking it down to understand

where, in which sectors and cities, race inequality exists.

69. In the course of its research the Commission surveyed over 1,100 employers in

six city-regions (West Yorkshire, Greater Manchester, West London, South

Yorkshire, Glasgow-Strathclyde, West Midlands). The Commission used this

survey to create a Race Equality Index classifying employers as high, medium,

or low performing on race equality. See Annex 9 for further detail on the Race

Equality Index.

70. This survey has been useful in guiding the Commission’s analysis and local level

activity. But it is not sufficient for carrying forward the Commission’s

recommendations, since:

• its geographical scope is not wide enough; and

• it does not (and could not) build on lessons learnt in the process of the

Commission’s research.

We therefore advise that Government should develop a Race Equality Index

drawing on, but expanding, that which we used in our work.

71. Where possible, Government should base this on existing surveys. However, the

DBERR Workplace Employment Relations Survey (WERS)14, the most obvious

starting point, is scheduled for 2010, reporting in 2012. The Commission

therefore suggests DWP commission a survey in the seven cities to set a

baseline. It should then work with other Departments to incorporate the Index

questions and geographical scope into existing surveys, to report on progress in

2015.

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14 Formerly conducted by the Department of Trade and Industry.

NEP - Report 07 2/10/07 15:59 Page 23

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The Need to Motivate Business72. Our survey, and the evidence of the persistent ethnic minority employment gap,

shows that business as a whole does not see a reason to improve its practices.

There are many examples of individual companies that have done admirable

work in this area, and reaped the economic and cultural rewards. But appeals

to social ideals do not work across the board. Likewise, the business case is

compelling in theory, but our experience is that in practice it seldom convinces

businesses.

73. Government therefore has a choice. It can agree that a gap between the ethnic

minority employment rate and the white employment rate is bearable. Or it can

motivate business to make the changes necessary to close that part of the gap

that is attributable to employer discrimination. The Business Commission

favours the latter. Business will accept a strong lead by Government. But that

lead has to be expressed in more than words, or very few businesses will follow.

Public Procurement74. The most direct way to motivate business to promote race equality would be

new legislation creating a private sector duty to promote race equality in the

workplace. The Commission considered, but does not favour, this step. Besides

legislation, Government does, however, have another effective way to influence

business behaviour: its purchasing power.

75. Central and local Government spend in excess of a hundred billion pounds on

goods and services every year. The public sector is a major customer of many

UK businesses, and has a network of strong relationships across the private

sector. And international experience15 shows that state purchasing power is an

effective medium for influencing the private sector.

76. We recommend that Government, through its position as the UK’s majorpurchaser, use its leverage over, and relationships with, private sectorcompanies to motivate the private sector to promote race equality.

77. Government can use its influence as a major buyer in two ways:

• contract conditions to ensure suppliers improve their practices; and

• a voluntary approach using its relationship with suppliers to influence their

HR practices.

Chapter 6: Incentives

25

15 Developing Positive Action Policies: Learning from the Experiences of Europe and North America,

Singh Dhami, R et al, DWP, 2006

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Contractual Approach78. The Commission’s view is that by far the most effective way to change supplier

behaviour is through provisions in contracts that require commitments to

promoting workplace race equality. The Commission’s advice to Government is

that if it wants to eradicate that part of the ethnic minority employment gap

attributable to employer discrimination, and if it wants to do this within a period

of years rather than decades, then it will need to use contract conditions in

public procurement.

79. Many businesses now face a plethora of equality provisions across a large

proportion of their public contracts. The Department for Communities and Local

Government, which has a remit to improve practice in local government

procurement, has noted an increase in the number of authorities requiring

diversity information from suppliers. Commission members cited experience in

their own businesses of having to meet a range of standards the variety of

which made them burdensome. Rather than deal with a range of ad hoc

equality requirements, the Commission believes business would prefer a single

regime covering the whole public sector.

80. We recommend that Government establish a public sector-wideprocurement policy to use more robust pre-qualification questions andcontract conditions to promote race equality in the workplace. It shoulddo this in a way that does not impose undue burdens on small companies.

81. In practice, Government should ensure that public bodies, when they enter into

new contracts with suppliers:

a) use contract conditions to ensure that suppliers promote equality in the

workplace; and in addition

b) extend the use of pre-qualification questionnaires to obtain information on

potential suppliers’ technical and managerial experience and systems for

promoting workplace race equality.

82. To the greatest extent possible, Government should seek to review existing

contracts (for example where break clauses in long term contracts permit) so

that they also come within this regime.

83. It will be important to apply this policy where it will provide the best return (in

terms of increase in race equality in the workplace) for the smallest cost, and to

ensure requirements are proportionate to the type and size of contract. We

therefore recommend an approach where:

a) for contracts below a certain threshold cost Government encourages but

does not require public procurement bodies to use the policy;

b) the requirement to promote race equality applies to the workforce involved in

delivering the contract, rather than to the work force of the contractor as a

whole; and

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c) the way a supplier meets the requirements of the contracts and pre-

qualification questionnaire can reflect the fact that a smaller firm needs a less

sophisticated approach than a large company to achieve equivalent race

equality goals.

84. The Office of Government Commerce (OGC), in consultation with the CBI,

should be responsible for developing detailed guidelines along these lines, to

determine where the policy is mandatory, where it is optional, and where it

should not apply. The aim should be to minimise the burden falling on small

companies whilst still drawing more than two thirds of contracts by value into

the regime.

Legal Issues85. Public bodies have a duty under the Race Relations (Amendment) Act 2000

(RRA) to promote race equality, which gives them the power to include

workplace race equality in the subject of the contract. Up to now, the

convention has been to limit the use of this power. The Commission is now

recommending that Government widens its use of this power to put workplace

race equality requirements in the body of the contract and include more

extensive pre-qualification questions.16

86. The Commission has heard it argued that the RRA obliges Government to do

this. We are certainly convinced that the RRA permits Government to act in this

way. We recognise, however, that this view is not universally shared. Owing to

this acknowledged controversy, the Commission took the unusual step of taking

formal legal advice on these points, which has confirmed its view of them.

We also commissioned sample clauses to show in detail how the proposed

provisions could be included in contracts, which are included as Annex 10.

Value for Money87. The Commission believes that these proposals are consistent with the need to

obtain value for money in public procurement. We have not seen convincing

evidence that companies would incur large costs in complying with these

proposals. Moreover, even if compliance with workplace race equality provisions

should, at least in the short term, increase the cost of performing some

contracts, it would be wrong to see this as a loss of value. If Government wishes

to improve race equality it may need to pay something to achieve this, just as it

must pay to achieve any other objective. But a contract by which it achieves this

is still one that can offer value for money. Promotion of race equality is not an

additional cost in delivering the contract: it is an additional item which the public

sector is using the contract to procure, in a cost effective manner.

27

16 Using pre-qualification questions to improve workplace race equality is not a new approach.

Since the 1980s local authorities have been permitted to ask six standard race equality questions

at the pre-qualification questionnaire stage. The Business Commission proposal expands on

this approach.

NEP - Report 07 2/10/07 15:59 Page 27

Voluntary Approach88. An alternative approach would be to work on a voluntary basis with suppliers

and providers once contracts have been let, building on Government’s

relationship as large-scale buyers. This approach alone would not, in the

Commission’s view, achieve large scale results in a timely fashion. But it does

have the advantage of being uncontroversially within the current policy and legal

framework.

89. Government should also look at how to apply this approach to those existing

contracts which cannot be brought into the new regime at once. Government

should commission an assessment of this voluntary approach, using similar

criteria to those for the contractual approach (see paragraph 97).

Support for Compliance90. Under the contractual approach, companies that want to supply goods or

services to the public bodies would need to meet the terms of pre-qualification

questionnaires. This would mean showing that they have policies and practices

that promote workplace race equality. They should receive support in putting

these policies and practices in place. But there should also be a simplified

system for them to demonstrate they have complied.

91. Most suppliers will find a publicly approved standard useful, which they can

meet once and then use repeatedly to meet the terms of different contracts.

Such a system would also be useful under a voluntary approach.

92. We recommend that Government develops and endorses publiclyapproved standards by which companies may demonstrate that their HRpractices promote race equality.

93. Linking these standards to procurement would promote the spread of good

practice. To get the award a company would have to make a significant one-off

investment in new processes and policies. This is a much better use of

resources than repeatedly making the minimum effort to comply with a range of

different requirements in a series of contracts.

94. The most obvious standard to use would be Investors in People (IiP).

This standard, sponsored by the Department for Innovation, Universities and

Skills, is currently being revised, at the recommendation of the Leitch Review.

We recommend adapting IiP so that suppliers can use it to evidence their

capacity to meet contract requirements to promote race equality in the workplace.

95. To ensure that the widest range of companies find it easy to use a publicly

awarded standard, however, a range of standards should be on offer. We

recommend that the Government commission a small range of additional

standards, in particular aiming to have some that meet the needs of SMEs.

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96. These standards should recognise the different capacities of small and larger

firms. They must also consider labour market conditions in the location where

the firm has to carry out the contract. And it will be important to make the

standards accessible to companies from other EU countries, and to recognise

equivalent standards that already exist in those countries.

Departmental Responsibility and Timetable97. Responsibility for implementing a cross-departmental policy should rest with

Treasury, supported by OGC. It should agree the detail of the policy

(considering findings from the Ethnic Minority Employment Task Force Pilots)

by Q1 2009. Government should commission evaluations of progress.

There should be an interim review in 2010-2011 and a final review in 2014.

The final review should assess:

• overall impact on of private sector progress in improving workplace race

equality;

• proportion of contracts affected (by value);

• cost of implementation;

• impact on employment behaviour;

• reaction of suppliers; and

• reaction of procurement practitioners.

The outcomes of this review should determine:

• whether the policy continues;

• whether it should expand to cover more contracts; and

• whether contract requirements could be stronger.

Thematic Reviews98. One measure which already exists, which can oblige companies to change their

practices, is that of a formal investigation by the CEHR. We do not, however,

think that this should be the normal route. It should be retained as a last resort.

But its adversarial nature means it is not in the majority of cases the most

constructive approach.

99. We favour instead a system of thematic reviews. This would involve a detailed

examination of processes in a sector (or even at the level of individual

companies) to find what the obstacles to progress are, and how the businesses

involved can overcome them.

100. We recommend that the Commission for Equality and Human Rights(CEHR) conduct two sector-based reviews each year, to result in agreedaction plans for improving performance in ethnic minority recruitment,retention and promotion. Reviews should begin in 2009. Wherecompanies or sectors who sign up to action plans do not take necessarysteps, then as a last resort the CEHR should use its powers to conductformal investigations.

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101. The main elements of a thematic review are:

• identifying sector-specific issues;

• agreeing sector- and company-specific action plans;

• monitoring progress over a three year period; and

• developing and disseminating sector-specific tools to help businesses tackle

discrimination and promote race equality.

The semi-public nature of the review creates a wholesome pressure to act, but

without the confrontational aspect of a formal investigation.

102. An essential element in thematic reviews is that technical support is available to

help employers understand the process and act on its findings. This makes the

thematic review a collaborative endeavour between the employer and the

CEHR, concentrating on practical measures to solve the problem. As a result it

can be used without creating a climate of resistance to the overall process.

Moreover, thematic reviews are a good way to find out what tools businesses

of different sizes can use to tackle discrimination and promote equality.

Implementation103. A pre-requisite for the success of thematic reviews is that business trusts the

process. Companies must have no reason to fear, for example, that CEHR may

use material revealed in the review in a subsequent formal investigation. To create

this climate of trust it is essential that CEHR works closely with the CBI in:

• developing terms of reference for thematic reviews;

• selecting sectors in which to carry them out; and

• communicating with business about what the reviews entail and why it is

carrying them out.

CEHR should also establish a team to carry out thematic reviews which is

entirely distinct and separate from its formal investigation team.

104. We suggest CEHR should aim to accomplish this preparation in 2008. From

2009, thematic reviews should commence, on the following cycle:

• In advance of review, baseline sector with a survey and qualitative interviews

(6-8 months process).

• Year 1: create tailored audit to baseline individual businesses and identify

areas of focus. This audit should include qualitative evidence and lead to an

action plan agreed with CEHR.

• Year 2: CEHR (or local city and sector bodies) support companies to

implement plan, leading to informal interim progress report.

• Year 3: continuing advice if required. Formal evaluation at year end, followed

by development of sector-specific tools for wider use.

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105. CEHR should, as a matter of course, carry out these reviews in a way that is

consistent with the Hampton principles on better regulation. In particular it

should “use comprehensive risk analysis to concentrate resources on areas that

need them most”. Sectors and companies undergoing thematic reviews should

be those in sectors or locations:

• with large ethnic minority populations;

• where ethnic minorities are under-represented; and

• where most job opportunities are likely to arise in the next decade.

LegislationNeed for a Credible Threat of Legislation106. Without unequivocal leadership from Government, business practice in race

equality will not change. This is the lesson of the research the Commission

carried out. And it is the lesson of history. We believe our recommendations will

have a powerful effect. But we think public procurement, thematic reviews and

focused support will work best if there is no doubt of Government’s

determination to ensure change happens. The final guarantor of change is

legislation. Government therefore needs to have that option publicly open to it.

107. This is not a new suggestion. The ippr Task Force recommended considering

new legislation if the private sector did not make progress towards eliminating

workforce race inequality. It made this recommendation in 2004.17 There was no

progress. But there has been no new legislation. This inaction resulted from two

problems. First, there was no clear plan for setting targets and measuring

progress. Second, Government did not signal its resolution to legislate if there

was no action, and signal it in a way that business would take seriously.

108. We believe business can, should, and will take the actions necessary to

eradicate race discrimination in employment, without having a legal duty to do

so. But the private sector is much more likely to act without being legally

obliged to do so, if it believes Government is serious about bringing in new

laws if there is no action in a measurable period.

109. We weighed carefully whether to recommend legislating at once, or at least

conditionally in the form of reserve powers. There is already a duty on public

sector employers to promote race equality, and it would have been simple,

though controversial, to recommend creating a private sector race equality

duty. But our preference is for a less confrontational approach.

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17 Race Equality: the benefits for a responsible business. Task Force on Race Equality and Diversity in

the Private Sector. ippr 2004.

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110. A clear statement now, saying what has to be done to avoid new legislation at

a specific future date, sends a strong message to business about

Government’s determination to see progress. This makes it more probable that

the consensual approach will succeed.

111. We recommend that Government assesses, in 2012, whether the privatesector has made enough progress in promoting race equality to supportthe goal of reducing the ethnic minority gap to twelve percentage pointsby 2015; reports its findings publicly; and, if it finds insufficient progresshas been made, brings in legislation that obliges private sector employersto promote workplace race equality. Legislation should recognise thedistinctive circumstances of small companies.

Implementation112. Proposals for assessing progress are set out in paragraphs 62 to 71. The

Commission suggests measuring progress by employers from a benchmark set

in 2008. The assessment should report on:

a) movements in both the specific progress measures:

• Discrimination testing

• Race Equality Index

b) outcomes from thematic reviews; and

c) progress in narrowing the ethnic minority employment gap consistent with

meeting the long term targets in our recommendations.

113. In light of this evidence Government should assess whether the private sector

is playing the part it needs to play in reducing the ethnic minority employment

gap. It should set out its conclusions in a public report. It should give evidence

to say whether the steps the private sector has taken are compatible with

reducing the ethnic minority employment gap to twelve percentage points by

2015. If it concludes that the private sector is not making enough progress, it

should bring forward new legislation. This legislation should oblige the private

sector to promote race equality in the workplace.

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114. Cities are home to most of Britain’s ethnic minorities. And cities are where the

concentration of business and public sector will and expertise exists to tackle

race inequality. Even large companies with national employment policies turn

these policies into action locally. On the supply side, it is more and more usual

for Government programmes to improve employment opportunities and skills to

operate at the level of individual cities.

115. For all these reasons, the battle to eradicate the ethnic minority employment

gap will be fought and won in a small number of specific urban areas. We use

the term “city” to refer to all these areas, although some of them are complex

conurbations including several towns and cities.

116. Previous efforts to improve representation of ethnic minorities in the private

sector have had a largely national flavour. This has contributed to their failure.

This is why the Commission concentrated its work at the level of individual

cities, and why we think this the right way to proceed in future. Action must

reflect local circumstances: local bodies must drive this action forward. But

race equality is only one of a number of competing priorities for any city. Hence

Government must give a national lead and, equally important, must offer

support to the city authorities it relies on to drive change.

117. We recommend that the Department for Work and Pensions develops acentre of expertise to help city-level employment and skills bodiespromote race equality. In the first instance it should work withBirmingham, Bradford, Glasgow, Greater Manchester, Leeds, London and Sheffield.

118. We discuss the rationale for selecting these cities in the chapter on the

Commission’s Approach (see paragraphs 57 to 71 above).

BirminghamThe City Strategy Board oversees skills and employment activity across the

West Midlands, supported by four sub-regional Employment and Skills Boards.

The Birmingham and Solihull ESB is employer-led, building on the Birmingham

Fair Cities Board and its approach to integrating employment and skills.

The public sector will lead by example in ethnic minority recruitment, retention

and progression, aiming to become a beacon for other priority sectors

including business and financial services, the leisure and retail industries.

Companies in business and financial services will continue to receive diversity

and equality advice from Birmingham Professional DiverCity.

Chapter 7: Support at the City Level

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Implementation119. Just as the definition of “city” varies from place to place, in different locations

different bodies should take the lead. Where there is a City Strategy Partnership

that covers the whole of a given area, we suggest that this should be the lead

body. In the case of London, the London Skills and Employment Board would

be the best organisation to take this forward. In other places, Employment and

Skills Boards, as recommended by the Leitch Review, could carry out this

function. As much as possible this decision should be made at the local level.

Plainly, however, it should build on existing institutions and good practice.

120. It is important that activities to promote race equality reflect the particular

challenges that different cities face, and draw on each city’s unique resources.

Therefore, whilst we want to see uniform monitoring of outcomes, we think that

each city should be free to adopt locally relevant plans to get to these

outcomes. These plans should start from the existing work currently being

carried on by different institutions in different places, including Regional

Development Agencies and City Strategy Partnerships.

121. The DWP centre of excellence should ensure all cities have access to the full

range of good practice available. Some good initiatives are already underway.

Illustrative examples are in the boxes in this section. The Commission would

like to see all these practices more widely adopted.

122. In the Business Commission’s work we trialled an “active research and support”

approach which was successful in galvanising and pulling together local efforts

on these lines. This experience confirmed our view that policy has to recognise

the diversity of the national experience. Different cities have different levels of

understanding and willingness to act. There is therefore no substitute for a

lengthy process of relationship building between the central agencies charged

with driving race equality at the strategic level, and the local bodies that have to

make it happen. It is vital to build up trust and openness, and this cannot be

done by diktat.

GlasgowThe City Strategy Consortium has established a dedicated BME sub-group

of public sector and BME organisations to address supply and demand

challenges. It advises the Consortium on priorities for action, addressing BME

employment at all levels of the labour market. The sub-group's action plan

feeds into the City Strategy implementation plan, aiming to improve race

equality and promote fair recruitment across Glasgow. The Scotland-wide

Equality Matters in Business project aims to help employers achieve a diverse

workforce by encouraging them to consider all equality strands, including race.

This supports work underway in the city to develop a single employer

engagement service.

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Supply Side Interventions at City Level123. Many of the actions these city-level bodies need to take are on the supply side.

These important activities are outside the Commission’s immediate scope, and

our recommendations in this area are relatively general in scope. The essential

requirement is that supply-side activities be linked to actions that raise business

demand to recruit, train and advance people from ethnic minorities. The key to

making this work is active leadership at the city level. This already happens to

some extent. DWP, for example, already asks cities bidding to become City

Strategy Partnerships to say how they would encourage employers to increase

workforce diversity. This leadership should be strengthened and extended.

124. We recommend that local employment and skills programmes haveworkplace equality objectives and performance indicators. The EthnicMinority Employment Task Force should review these objectives andindicators to ensure that they are sufficiently robust and challenging, andshould monitor performance against them.

125. The initiatives to which this requirement applies should include:

• Train to Gain;

• Apprenticeships;

• New Deal;

• Local Employer Partnerships; and

• Skills for Jobs.

Technical Support to Employers126. Our more detailed recommendations for support at the city level are in the area

of technical advice to employers. Our research showed that at present 30% of

businesses actively seek help in making their employment practices fairer. If

Government accepts our other recommendations, in particular those on public

procurement, this proportion will increase.

127. But race inequality is a complex problem, the best solutions are not always the

most obvious, and businesses very often do not know where to go for

technical advice.

Greater ManchesterThe City Strategy Consortium will implement an employer programme on race

equality, including business-led events to offer leadership on race equality and

practical support to HR practitioners. It will also roll out a programme to train

employer-facing staff in race equality issues. And it will provide cultural

awareness training for advisors and outreach workers in the Local Authorities

with the highest numbers of ethnic minority residents.

35

NEP - Report 07 2/10/07 15:59 Page 35

128. We recommend that the Commission for Equality and Human Rights workwith the Sector Skills Councils and appropriate city-level employment andskills bodies to commission technical support for employers who want toimprove the fairness of their recruitment and progression practices. Thissupport should be targeted in the first instance in Birmingham, Bradford,Glasgow, Greater Manchester, Leeds, London and Sheffield, and atcompanies and sectors engaged in thematic reviews.

129. The Commission for Equality and Human Rights (CEHR) should put this

support in place by April 2009. In delivering this support CEHR should ensure it

makes a clear distinction between support for business, and its investigatory

function. This will ensure companies can take up the support without laying

themselves open to suspicion that their existing practices are unsatisfactory.

130. It should provide this support not in a generic, national form, but at the local

level and sector by sector, for the following reasons:

• Sectors operate in distinctive ways and have widely varying recruitment

needs: they need to be able to take this into consideration in improving their

employment practices.

• The local background makes a difference to what is the right set of policies.

For example, a company recruiting in an area with a large Afro-Caribbean

population will need to do different things from one whose potential

employees are predominantly of Pakistani origin. In both cases the goal is

equality; but local circumstances mean the actions to get to the goal differ.

• Even large companies will need local support. Multi-nationals will tend to

have well-staffed HR departments that produce national or super-national

policies on equality, but even they will often not possess the local

knowledge needed to make these policies a working reality. Smaller

companies will tend to need support in both policy and practice.

131. To ensure its technical support has the necessary local specificity, CEHR should

seek the co-operation of local recruitment agencies, employment-related training

providers and other relevant bodies. We also recommend that CEHR supports

companies and sectors that need to effect longer term structural and cultural

change. It should deliver this support through the medium of thematic reviews.

Our detailed recommendations on thematic reviews are at paragraph 98 et seq.

SheffieldThe Business Commissioner will assume leadership in promoting race equality

on the City Strategy Partnership Board. The CSP will create a new post to help

employers in Sheffield diversify their workforce, with a focus on good race

equality practice. Building on success in the construction sector, it will link

employers into existing and new sector employment training programmes with

strong connections to ethnic minority communities.

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NEP - Report 07 2/10/07 15:59 Page 36

Top Level Leadership132. Our recommended policy programme will only succeed if it enjoys leadership

from the top. This is not just a truism about change: it is the lesson of history.

Previous attempts to promote workplace race equality have failed in large part

because effort was diffused. In recent years the Ethnic Minority Employment

Task Force has done important work in identifying the issues and laying the

foundations for addressing them. But these are complex problems; solving

them takes a long time, and involves many different people and organisations;

the solution will not always be popular. It will take top level leadership to make

this challenging piece of work a priority for everyone involved.

133. We recommend that the organisations charged with eradicating the ethnicminority employment gap be directly accountable for doing so to theChancellor of the Exchequer.

134. Three factors, taken together, make the Chancellor of Exchequer the best office

of State to lead this effort:

• the programme needs sponsorship at the highest levels in government;

• the proposed programme calls for concerted action across several

departments, and the Treasury already has cross-departmental role; and

• leadership should sit with a Minister with a specific remit in relation to business.

135. All senior Ministers, however, need to have a responsibility for promoting the

importance of workplace race equality and creating a culture in which

employment discrimination has a high profile. This is essential to support the

specific local-level actions we outline further below.

136. We recommend that the Chancellor asks a single body to take responsibility for

driving the programme across Government. This should be either:

• Commission for Equality and Human Rights – the lead body for race equality; or

• Ethnic Minority Employment Task Force – a Ministerial cross-departmental body.

Government should determine, by the end of Q1 2008, which of these bodies

is the right one to develop and push forward the programme, and how the

Chancellor should hold it accountable.

Communication137. As with any programme of change, the first requirement is for communication.

This must be the primary function of the national leadership. Our research

suggests employers are not well-informed about workplace race equality. This

is born out by the reception of recent research on similar lines by the Joseph

Rowntree Foundation18. There is no alternative, therefore, to an extensive

programme of communication.

Chapter 8: Leadership andCommunication

37

18 Ethnic minorities in the labour market: Dynamics and diversity, Joseph Rowntree Foundation, 2007

NEP - Report 07 2/10/07 15:59 Page 37

138. We recommend that Government develops, with business, media experts,and appropriate city-level employment and skills bodies, a strategy tocommunicate its race equality goals, the required business action, andthe support available.

139. The Ethnic Minority Employment Task Force should lead this communications

strategy. Since the EMETF is chaired by the Minister for Employment and

Welfare Reform this will mean in practice that much of the work is done by the

Department for Work and Pensions. It should collaborate with the Department

for Innovation, Universities and Skills, and consult:

• the Department for Communities and Local Government;

• the Department for Business, Enterprise and Regulatory Reform;

• the Commission for Equality and Human Rights; and

• the Commission on Employment and Skills.

140. The core messages that Government needs to get across to support this

programme of action are:

• workplace race inequality is a serious moral, social and economic problem

for Britain;

• the ethnic minority employment gap is sixteen percentage points and has

not changed significantly this century;

• Government is committed in the long term to overcoming this problem and

has set a target of reducing the gap by a quarter by 2015; and

• private sector employers have an important role to play in helping

Government meet this goal, by improving their recruitment and retention

practices.

These messages would be most powerfully articulated in top-level Ministerial

speeches.

141. DWP should also lead a communication programme based on a series of fact

sheets to inform employers about the issues, what they can do, and why they

should act. Work along similar lines is currently underway following the

recommendations of the Equal Opportunities Commission into ethnic minority

women in employment.

142. This programme of communication, like every other part of our proposed

programme, needs top level leadership with a long term view. Eradicating the

ethnic minority employment gap in a generation is a big vision; making it

happen requires a change of culture. Communication is one part of the

process; strong leadership is the sine qua non.

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NEP - Report 07 2/10/07 15:59 Page 38

143. The Business Commission does not want to have to meet again. It believes the

continuation of the ethnic minority employment gap is not consistent with this

country’s prosperity, contentment or traditions of fairness. And it believes that

the solution to this problem is in Government’s hands.

144. This report answers the question of how to eradicate that part of the gap which

results from employer discrimination. In light of current good practice it is very

clear what steps business has to take in eradicating discrimination. The

measures Government has at its disposal to motivate and equip the private

sector to take these steps are equally well understood.

145. The Commission urges Government to work with the private sector in these

ways to close the ethnic minority employment gap. This will take courage and

strength of will. The reward will be that the generation of UK workers now being

born will be the first in history undivided by race inequality in the workplace.

Conclusion

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NEP - Report 07 2/10/07 15:59 Page 39

40

NEP - Report 07 2/10/07 15:59 Page 40

Recommendation 1We recommend that Government adopts and publicises the long term policy

ambition of eradicating the ethnic minority employment gap within twenty-five years.

Recommendation 2We recommend that Government sets the over-arching goal of narrowing the ethnic

minority employment gap to twelve percentage points by 2015.

Recommendation 3We recommend that in 2015, Government measure the private sector contribution

to reducing the ethnic minority employment gap against a 2008 baseline. This

baseline should be established from discrimination testing commissioned by the

Department for Work and Pensions and a race equality index generated from

existing employer surveys.

Recommendation 4We recommend that Government, through its position as the UK’s major purchaser,

use its leverage over, and relationships with, private sector companies to motivate

the private sector to promote race equality.

Recommendation 5We recommend that Government establish a public sector-wide procurement policy

to use more robust pre-qualification questions and contract conditions to promote

race equality in the workplace. It should do this in a way that does not impose

undue burdens on small companies.

Recommendation 6We recommend that Government develops and endorses publicly approved

standards by which companies may demonstrate that their HR practices promote

race equality.

Recommendation 7We recommend that the Commission for Equality and Human Rights (CEHR)

conduct two sector-based reviews each year, to result in agreed action plans for

improving performance in ethnic minority recruitment, retention and promotion.

Reviews should begin in 2009. Where companies or sectors who sign up to action

plans do not take necessary steps, then as a last resort the CEHR should use its

powers to conduct formal investigations.

Annex 1: Summary ofRecommendations

41

NEP - Report 07 2/10/07 15:59 Page 41

Recommendation 8We recommend that Government assesses, in 2012, whether the private sector has

made enough progress in promoting race equality to support the goal of reducing

the ethnic minority gap to twelve percentage points by 2015; reports its findings

publicly; and, if it finds insufficient progress has been made, brings in legislation that

obliges private sector employers to promote workplace race equality. Legislation

should recognise the distinctive circumstances of small companies.

Recommendation 9We recommend that the Department for Work and Pensions develops a centre of

expertise to help city-level employment and skills bodies promote race equality. In

the first instance it should work with Birmingham, Bradford, Glasgow, Greater

Manchester, Leeds, London and Sheffield.

Recommendation 10We recommend that local employment and skills programmes have workplace

equality objectives and performance indicators. The Ethnic Minority Employment

Task Force should review these objectives and indicators to ensure that they are

sufficiently robust and challenging, and should monitor performance against them.

Recommendation 11We recommend that the Commission for Equality and Human Rights work with the

Sector Skills Councils and appropriate city-level employment and skills bodies to

commission technical support for employers who want to improve the fairness of

their recruitment and progression practices. This support should be targeted in the

first instance in Birmingham, Bradford, Glasgow, Greater Manchester, Leeds,

London and Sheffield, and at companies and sectors engaged in thematic reviews.

Recommendation 12We recommend that the organisations charged with eradicating the ethnic minority

employment gap be directly accountable for doing so to the Chancellor of the

Exchequer.

Recommendation 13We recommend that Government develops, with business, media experts, and

appropriate city-level employment and skills bodies, a strategy to communicate its

race equality goals, the required business action, and the support available.

42

NEP - Report 07 2/10/07 15:59 Page 42

43

Annex 2

: Im

ple

menta

tion T

imeta

ble

2007

2008

2009

2010

2011

2012

2013

2014

2015

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

NEP

Busi

ness

Com

mis

sion

, CEH

R, C

ESR

ecom

men

datio

ns S

ubm

itted

to C

hanc

ello

r

Bud

get

Ann

ounc

ed

Det

aile

d Fi

nal R

epor

t

Form

al r

espo

nse

from

Tre

asur

y

CE

HR

com

men

ces

CE

S c

omm

ence

s

Mea

sure

men

tR

ace

Equ

ality

Inde

x

Dis

crim

inat

ion

Test

ing

Them

atic

Rev

iew

sN

o: 1

&2

(6 m

onth

s ea

ch o

ver

cour

se o

f yea

r)

No:

3&

4 (6

mon

ths

each

ove

r co

urse

of y

ear)

No:

5&

6 (6

mon

ths

each

ove

r co

urse

of y

ear)

Proc

urem

ent

Det

aile

d po

licy

deve

lope

d

EM

E T

ask

Forc

e pi

lots

rev

iew

ed

Bas

elin

e ke

y su

pplie

r sec

tor E

M p

erfo

rman

ce

Pro

cure

men

t po

licy

take

s ef

fect

IiP S

ched

uled

Rev

iew

and

cha

nges

IiP R

evis

ed –

up a

nd r

unni

ng

Inte

rim R

evie

w o

f im

plem

enta

tion

Fina

l Rev

iew

of o

utco

mes

Legi

slat

ion

Rev

iew

pro

gres

s on

dis

crim

inat

ion

Legi

slat

e if

prog

ress

insu

ffici

ent

Revi

ewRe

view

Revi

ew

Supp

ort

Supp

ort

Supp

ort

Mon

itorin

gM

onito

ring

Mon

itorin

g

Ong

oing

impl

emen

tatio

n

Ong

oing

impl

emen

tatio

n

Key

P

olic

y w

ork

Impl

emen

tatio

n be

gins

O

ngoi

ng a

ctio

nC

EHR

: C

omm

issi

on fo

r Eq

ualit

y an

d H

uman

Rig

hts

CES

: C

omm

issi

on fo

r Em

ploy

men

t an

d S

kills

NEP - Report 07 2/10/07 15:59 Page 43

Name Organisation

Gordon Pell (Chair) Chief Executive Retail Markets, RBS

Jeremy Anderson Head of Financial Services, KPMG LLP

Martin Beaumont Chief Executive, Co-operative Group

Richard Christou Executive Chairman, Fujitsu Services UK

Keith Clarke Chief Executive, WS Atkins

Mohammed Dajani Centre Director, Meadowhall

David Fison Chief Executive, Skanska UK Plc

Christine Green Chief Executive, Tameside and Glossop Acute Services

NHS Trust

Jim McColl Chairman and Chief Executive, Clyde Blowers

Mark Neale Managing Director, Budget, Tax and Welfare, HM Treasury

Frances O’Grady Deputy General Secretary, TUC

Christopher Patrick Managing Director, Mortgage Capital Division,

Lehman Brothers

Ian Squires Managing Director, ITV Central

Kate Swann Chief Executive, WH Smith

Sharon White Director, Welfare to Work, DWP

Rashna Writer Head of Global Risk, Merchant International Group

Annex 3: Business CommissionMembers

44

NEP - Report 07 2/10/07 15:59 Page 44

Project Team MembersName Organisation

John Bell Policy and Development team, NEP

Siobhan Clifford Policy and Development team, NEP

Wendela Currie Policy and Development team, NEP

Vicki Godfrey Deputy Director, Manchester Employer Coalition

Joshua Rey Executive Director, London Employer Coalition

Cay Stratton Director, NEP

Veena Vasista Director of the Business Commission, NEP

Maddie Woods Director of Policy and Development, NEP

Commissioned Researchers and Legal AdvisorsName Organisation

Barbara Cohen Special Advisor

Mark Cook Solicitor, Anthony Collins LLP

Professor Anthony Heath University of Oxford

Richard McFarlane Special Advisor

Rhodri Williams Barrister, Henderson Chambers

Peter Ramsden Director, Inclusion

Annex 4: Project Team andResearch Team Members

45

NEP - Report 07 2/10/07 15:59 Page 45

Henry AbrahamHead of Economic

Development

Greater London Authority

Shaheen AkramHead of Diversity

Ford UK

The Rt Hon BaronessAshton of UphollandLeader

House of Lords

Sue AyresInvestment Manager

Rochdale Development

Agency

Kirsty BakerDirector of Development

Investors in People

Mike BarberHR Business Partner

O2

Chris BarnhamDeputy Director

Social Inclusion and

Offenders, Department for

Innovation, Universities

and Skills

Pauline BerryDirector

Diversity Works, London

Naeem BhattiWorkforce Plus Team

The Scottish Government

Julie BilottiWorkforce Plus Team


Kim BishopSenior HR Manager

Atkins Global

Jon Bloor Corporate Policy Team

Oldham Metropolitan

Council

Adrian BrittenHead of Colleague

Engagement

The Co-operative Group

Lynne BurnsDirector of HR,

Group Functions

Royal Bank of Scotland

Ann CadmanHead of HR and

Director of The Source

Meadowhall

Bruce CalderwoodDirector, Office for

Disability Issues

Department for Work

and Pensions

Frank CarsonLabour Market Policy

Team

HM Treasury

Mo ChoudhuryPolicy Development

National Audit Office

Alan ChristieDirector of Private Sector

Commission for Racial

Equality

Brian ClimieEquality Executive

Scottish Enterprise

Emma ColeEqualities Review Team

Cabinet Office

John CridlandDeputy Director-General

Confederation of British

Industry

Ibrar Dar Diversity Manager

KPMG

James DalgleishHead of HR

London Fire Brigade

StJohn DeakinDirector

Sheffield City Strategy

Consortium

Bina DesaiPeople Support/

Diversity Advisor

West Bromwich Building

Society

Dee DesgrangesStrategic Support

Manager

Sheffield City Council

Patrick DiamondGroup Director, Strategy

Commission for Equality

and Human Rights

Tanith DodgeGroup HR Director

WH Smith

Jim DonnellyPartnership Manager

Jobcentre Plus

Tony DurrantDirector

Positive Action North West

Mike FaireyDeputy Group

Chief Executive

Lloyds TSB

Annex 5: Individuals ConsultedDuring the Project

46

NEP - Report 07 2/10/07 15:59 Page 46

Grant FitznerDirector

Employment Market

Analysis and Research,

Department for Trade and

Industry

Caroline Flint MPMinister for Employment

and Welfare Reform

Department for Work

and Pensions

Barbara Follett MPMinister for Equalities

Department for Work

and Pensions

Tim FryPolicy Development


Nick GerrardDeputy Chief Executive

Manchester Enterprises

Kay GreenbankDirector

Fair Cities, Birmingham

Frances GoodwinEthnic Minority

Employment Team

Department for Work

and Pensions

Sara HansonDiversity and Development

Project Manager

ITV plc

Tom HartLabour Market Policy Team

HM Treasury

Peter HousdenPermanent Secretary

Department for

Communities and Local

Government

Kobina HughesHead of Legal and

Procurement, London

Development Agency

Chris HulsePartnership Manager

Jobcentre Plus

Farzana HussainEmployment Engagement

Team

Jobcentre Plus

Lorraine IrvingBusiness Manager

Glasgow City Strategy

Consortium

Bushra JamilEconomic Development

Unit

Manchester City Council

Alan JenkinsChairman and Head of

International Development

Eversheds

Amanda JonesHead of Diversity

Co-operative Group

Simon JonesActing Chief Executive

Investors in People

Helen JudgeCommunities Group

Home Office

Muhammad KarimProcurement Manager

Greater Manchester

Passenger Transport

Executive

Sandra KerrNational Director

Race for Opportunity

Davinder KhairaConsultant

Birmingham Professional

DiverCity

Katya KlassonHead of Employee

Relations

Confederation of

British Industry

Janet LakhaniChief Executive

Committed2Equality

Richard LambertDirector-General

Confederation of

British Industry

John LastDirector of Diversity


Shamsa LatifRotherham Partnership

Manager

Jobcentre Plus

Nahid MajidDivisional Director

Area Initiatives and

Communities Division,

Department for Work

and Pensions

Zoff MakdaForecasting & Scheduling

Manager

O2

Heather MartinEthnic Minority

Employment Team

Department for Work

and Pensions

Louise MartinRecruitment Consultant

O2

47

NEP - Report 07 2/10/07 15:59 Page 47

Angela MasonDirector

Women and Equality Unit,

Department for Work

and Pensions

Andrea McLeishProject Manager

Equality Matters in

Business, The Scottish

Government

David McPheeAnalytical Services Division


David McVeanDeputy Director

Employer and Learner

Demand Unit, Department

for Innovation, Universities

and Skills

Sally MilneHead of Resourcing

and Diversity

ITV plc

Dan MonzaniHead of Ethnic Minority

Employment Team

Department for Work

and Pensions

Joe MontgomeryDirector General

Places and Communities,

Department for

Communities and Local

Government

Janice MundayDirector

Employer Relations,

Department for Business,

Enterprise and Regulatory

Reform

Jim MurphyMinister for Europe

Foreign and

Commonwealth Office

Suky NahalProject Officer


Clive NewtonManaging Director

Emmanuel Whittakers

Ian Nichol Director

West London Alliance

Matthew NicholasDirector of External

Relations and

Communications

Jobcentre Plus

Ayyub PatelHead of Business

Competitiveness

Business Bolton

Bhavna PatelConsultant

Commission for

Race Equality

Stan PattersonDirector

Glasgow Employer

Coalition

Jonathan PortesDirector, Child and

Poverty Directorate

Department for Work

and Pensions

Trevor PhilipsChair

Commission for Equality

and Human Rights

Jackie PummellDiversity and HR Policy

Director

ABN AMRO

Raj RayDirector of Diversity

and Inclusion

Lehman Brothers

Giovanni RazzuEqualities Review Team

Cabinet Office

Aaron ReidDirector

Birmingham Professional

DiverCity

Helen RippinCity Strategy Liaison

Manager

Jobcentre Plus

Marica RobertsFormer Chief Executive

The Recruitment and

Employment

Confederation

Julie Robson Regional Skills Director

Learning and Skills

Council

Christine RosePolicy Development


Ann Marie SalamyHuman Resources

Lehman Brothers

Alison ScottDirector, Health, Work and

Wellbeing Directorate

Department for Work and

Pensions

48

NEP - Report 07 2/10/07 15:59 Page 48

David SeersHead of Workforce Plus

Team


Marion Seguret Senior Policy Advisor

Employee and

Employment Relations

Group, Confederation of

British Industry

Rosie SeymourEqualities Review Team

Cabinet Office

Rebecca ShepheardProject Executive

London Development

Agency

Bhadar SinghConstruction JobMatch


Annie SmithCity Strategy Policy Officer

Manchester Enterprises

David SmithCommercial Director

Work, Welfare and Equality

Group, Department for

Work and Pensions

Wilf SullivanRace Equality Officer

TUC

Patrick TaranSenior Migration Specialist

International Labour

Organisation

The Rt Hon StephenTimms MPMinister for

Competitiveness

Department for Business,

Enterprise and Regulatory

Reform

Lee TribeDirector of Commercial

Strategy and Development

Department for Work and

Pensions

Tony TweedySenior Manager


Saj UmarjiSenior Operations

Manager, Prepay

O2

Sarah VealeHead of Equality and

Employment Rights

TUC

Eve WaiteSheffield Work and Skills

Board Manager


Jenny WatsonChair

Equal Opportunities

Commission

Ann WattsChair

Appointments Commission

Matthew WestEthnic Minority

Employment Team

Department for Work

and Pensions

Tony WilliamsHead of Group HR


Philip WhiteHead of Construction

Division

Health and Safety

Executive

Helen WollastonDirector of Campaigns

Equal Opportunities

Commission

Louise WoodfordHead of Service Delivery,

City Strategy

London Development

Agency

David WoodwardDirector


Patrick YuExecutive Director

The Northern Ireland

Council for Ethnic

Minorities

49

NEP - Report 07 2/10/07 15:59 Page 49

ACAS (2006) Annual Report 2005-06

Ann Claytor (2002) Review of research and evaluation of IIP Labour Market Trends

Better Regulation Task Force (1999) Review of anti-discrimination legislation

Business in the Community (2006) Ford Motor Company Ltd. Case study for the

Morgan Stanley Diversity Award

Business in the Community (2005) Annual Report and Accounts

Business in the Community (2005) Impact Review 2005

Cabinet Office (2005) Delivering a Diverse Civil Service – A 10 point plan

Cabinet Office (2003) Ethnic Minorities in the Labour Market

Centre for Economic and Social Inclusion (CESI) (2006) A research review to

improve the knowledge base on workplace diversity. Not Published

Chartered Institute of Personnel and Development (2006) 2005-2006 Annual Report

Commission for Racial Equality (2005) Statutory code of practice on racial equality in

employment

Commission for Racial Equality (2005) Race equality and procurement in local

government: A guide for authorities and contractors

Commission for Racial Equality (2005) Towards racial equality: An evaluation of the

public duty to promote race equality and good race relations in England and Wales

Commission for Racial Equality (2003) Race equality and procurement in local

government: A guide for authorities and contractors

Committed2Equality (2007) Review of accredited organisations

Department for Communities and Local Government (2007) Fairness and Freedom:

The final report of the Equalities Review

Department for Trade and Industry (2004) Fairness for All: A New Commission for

Equality and Human Rights White Paper

Department for Trade and Industry (2003) Accounting for People: The final report of

the Accounting for People Task Force

Department for Trade and Industry (2006) Fair treatment at work survey 2005

Department for Trade and Industry (2006) Findings from the Survey of Claimants in

Race Discrimination Employment Tribunal Cases (SETA RRA)

Department for Trade and Industry (2006) Review of judgments in race

discrimination Employment Tribunal cases

Annex 6: Bibliography

50

NEP - Report 07 2/10/07 15:59 Page 50

Department for Trade and Industry (2006) The experience of claimants in race

discrimination Employment Tribunal cases

Department for Work and Pensions (2007) Ethnic minority intelligence brief no. 7

Department for Work and Pensions (2006) Disability and Gender Equality Schemes

and Race Equality Scheme Progress Report

Department for Work and Pensions (2006) Developing Positive Action Policies:

Learning from the Experiences of Europe and North America.

Dr Ravinder Singh Dhami, Professor Judith Squires and Professor Tariq Modood

Department for Work and Pensions (2006) Ethnic Penalties in the Labour Market:

Employers and Discrimination. Professor Anthony Heath and Dr Sin Yi Cheung

Department for Work and Pensions (2006) Ethnic Minority Outreach: An evaluation

Department for Work and Pensions (2005) Ethnic Minority Employment Task Force

2nd annual report

Department for Work and Pensions (2005) Ethnic minority employment in the UK:

The evidence base

Department of Finance and Personnel (Northern Ireland) (2006) Pilot project on

utilising the unemployed in public contracts

Disability Rights Commission (2006) Equal Treatment: Closing the Gap

Diversity Research Network (2002) The effects of diversity on business performance

Employment Tribunal Service (2005) Annual Report 2005

Equality and Diversity Forum (2004) Taking equal opportunities seriously. Colm

O’Cinneide

Equal Opportunities Commission (2007) Moving on Up? The Way Forward

Equal Opportunities Commission (2006) Moving on Up? Bangladeshi, Pakistani and

Black Caribbean woman and work – early findings from the EOC’s investigation in

England

Equal Opportunities Commission (2005) Parliamentary Briefing: The Equality Bill

European Commission (2003) Study for the Use of Equality and Diversity

Considerations in Public Procurement

Global Reporting Initiative (2002) Sustainability Reporting Guidelines

Greater London Authority (2007) The construction industry in London and diversity

performance

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NEP - Report 07 2/10/07 15:59 Page 51

Greater London Authority (2003) Report on the Mayor’s Procurement and Fair

Employment Seminar

Greenall, D. and R. Yachnin (2001) Reporting on Corporate Social Responsibility

Hepple, B (2000) Equality: A New Framework – Report of the Independent Review of

the Enforcement of UK Anti-discrimination Legislation

Home Secretary (2005) Race Equality: Home Secretary’s Targets

HM Treasury (2006) Leitch review of Skills: Prosperity for all in the global economy

HM Treasury (2007) Transforming Government Procurement

International Labour Organisation (2004) Labour market discrimination against

migrant workers in Italy

Investors in People (2006) Recruitment and selection of a diverse workforce

Investors in People (2005) Company Report 2004-2005

Investors in People (2003) “Recruitment” in Raising the Standard October Issue 5

IPPR (2007) The reception and integration of new migrant communities

IPPR (2004) Race Equality: The benefits for responsible business

Joseph Rowntree Foundation (2007) Ethnic minorities in the labour market:

Dynamics and diversity

Kersley, Alpin, Forth, Bryson, Bewlet, Dix and Oxenbridge (2006) Inside the

workplace: Findings from the 2004 workplace employment relations study

KMPG and UN Environment Programme (2006). Carrots and Sticks for Starters:

Current trends and approaches in Voluntary and Mandatory Standards for

Sustainability Reporting.

KMPG Global Sustainability Services (2005) KPGM International Survey of Corporate

Responsibility Reporting

Lea, Ruth (2006) ‘Why positive discrimination is not the way forward’ The Telegraph

14 August 2006

Learning and Skills Council (2004) Equality and Diversity Annual Report 2003-04

Metropolitan Police (2004) Metropolitan Police Race Equality Strategy 2005-2008

National Employment Panel (2007) Buying smarter: Using public procurement to

promote race equality in the workplace

National Employment Panel (2005) Enterprising People, Enterprising Places

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NHS Purchasing and Supply Agency (2006) Annual Report and Accounts

2005/2006

Office for National Statistics (2006) Available at www.statistics.gov.uk

Race for Opportunity (2005) Business Case for Race Handbook

Race for Opportunity (2005) Support and information on race equality and diversity

issues: Meeting the needs of SMEs

Race for Opportunity (2001) Race: Where are we now? Benchmarking Report

Singh Dhami, R et al (2006) Developing Positive Action Policies: Learning from the

Experiences of Europe and North America. DWP

Welsh Local Government Association (2006) Revising the Equality Standard for

Local Government in Wales

West Yorkshire Employer Coalition (2006) Diversity into action: A how-to guide for

employers

Wrench, J. and Hassan, E. (1996) Ambition and Marginalisation: A Qualitative Study

of Underachieving Young Men of Afro-Caribbean Origin

WS Atkins plc (2006) Corporate Responsibility Report 2006

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Source: Labour Force Survey fourth quarter 2006, except for the Earnings data which is from the

Households Below Average Income dataset, three year rolling average to 2005/06.

Annex 7: Baseline Statistics forthe City-Regions

54

Row Percentages

Baseline Observed Gap

Overall White Ethnic EM vs EM vs Population Minorities White Overall

Employment Rate 69.4 74.0 60.5 -13.5 -8.9

ILO Unemployment Rate 8.0 5.8 12.9 7.0 4.8

Inactivity Rate 24.6 21.4 30.6 9.2 6.0

Career Progression 34.4 37.0 28.0 -9.0 -6.4

Earnings £423 £506 £295 -£211 -£128

London

Row Percentages



Employment Rate 68.3 73.6 53.2 -20.4 -15.1


Inactivity Rate 25.2 21.3 36.3 15.0 11.1


Earnings - - - - -

West Midlands

Row Percentages



Employment Rate 74.1 77.6 51.5 -26.1 -22.6


Inactivity Rate 21.2 18.3 39.8 21.5 18.6


Earnings - - - - -

West Yorkshire

NEP - Report 07 2/10/07 15:59 Page 54

55

Row Percentages



Employment Rate 73.5 75.9 54.5 -21.4 -19.1


Inactivity Rate 22.3 20.4 38.3 17.9 15.9

Career Progression 26.8 26.8 26.8 0.0 0.0

Earnings - - - - -

Greater Manchester

Row Percentages



Employment Rate 70.0 71.2 51.3 -19.9 -18.7


Inactivity Rate 25.0 23.8 44.3 20.5 19.3


Earnings - - - - -

South Yorkshire

Row Percentages



Employment Rate 74.7 75.2 60.5 -14.7 -14.2


Inactivity Rate 20.9 20.5 31.7 11.2 10.8

Career Progression 24.1 23.8 35.8 12.0 11.7

Earnings - - - - -

Strathclyde

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The charts in this annex are drawn from two submissions from the Department for Work and

Pensions to the Business Commission, which were helpful to the Commission in gaining a broad

understanding of the nature of the challenge which workplace race equality represents.

Annex 8: DWP Submissions tothe Business Commission

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NEP commissioned Ipsos-MORI to conduct an employer survey during the period

11 December 2006 – 5 January 2007, with a supplement in April 2007. The survey

was telephone based and reached 1,108 private sector firms, employing 1.09 million

employees, or 5% of the UK private sector workforce.

The survey questions focused on organisations’ equal opportunities practices, with

particular respect to ethnic minority employment. The purpose of the survey was to

gauge the current and potential impact of the primary levers and tools often

recommended for use to push forward race equality in the private sector.

NEP designed a Race Equality Index from the survey, to draw general conclusions

on how pro-active businesses are to promoting race equality in recruitment,

retention and promotion. The Index uses the answers from eight survey questions

to classify whether businesses are ‘high performing’, ‘medium performing’ or

‘low performing.’

• Employers are classified as a low performing if they score positively only in 2 or

less questions

• Employers are classified as a medium performing if they score positively in 3 or 4

questions

• Employers are classified as a high performing if they score positively in 5+ questions.

The questions used to create the Index were:

1. Written Equal Opportunities Policy – Does this organisation have a formal

written policy on equal opportunities or diversity?

2. Employment of Ethnic Minorities – Does this organisation currently have any

ethnic minority employees?

3. Active Awareness of Local Ethnic Composition – Do you have any data on the

ethnic composition of your local area?

4. Employment in line with local labour composition – And is the proportion of

ethnic minorities in your workforce in line with that of the local areas in which you

operate?

5. Equal Opportunities Training – Are any staff given training in Equal

Opportunities?

6. Active Internal Monitoring – Does your organisation collect and monitor ethnic

minority employment statistics?

7. Public Reporting of Ethnic Monitoring – Does your organisation report publicly

employment statistics and performance on employment of ethnic minorities

/equal opportunities practices?

8. Using Positive Action – Does your organisation currently use positive action to

increase the recruitment, retention and promotion of ethnic minorities?

Annex 9: The Race Equality Index

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SAMPLE CLAUSES FOR REFERENCE ONLY

The Business Commission commends the following clauses as a standard approach

for incorporating workplace race equality requirements in the procurement process.

If these are used without variation this will help avoid a range of different schemes

evolving and allow companies to develop appropriate skills and systems for meeting

the requirements of the standard scheme. These clauses have been supported by

the Counsel engaged by the Commission.

OJEU NoticeUnder this [procurement/project] the [contractor/developer/supplier] is required to

demonstrate that they operate an effective equal opportunities policy with a specific

race component. Accordingly contract performance conditions may relate to the

effective implementation of equal opportunities policies with a race component.

Pre-qualification Questionnaire1 Is it your policy as an employer to comply with your statutory obligations under

the Race Relations Act 1976, or equivalent legislation that applies in other

jurisdictions in which you employ staff? Accordingly is it your practice not to

discriminate directly or indirectly on racial grounds in relation to decisions to

recruit, remunerate, train, transfer and promote employees? Please provide

evidence to support your answer to this question.

2 In the last three years has any finding of unlawful racial discrimination in relation to

employment matters been made against your organisation or against a contractor

or subcontractor that you would intend to use in the delivery of the

[procurement/project/supplies] by any UK court or tribunal, or in comparable

proceedings in any other jurisdiction?

3 In the last three years have you been served with a Notice of Breach of a contract

condition relating to workplace equal opportunities requirements, and this has not

been withdrawn, by a UK public body?

4 If your answer to [..2] and/or [..3] is yes, what remedial measures have you taken

as a result of such finding, Notice or termination?

5. If you are awarded this contract you will be expected to comply with the following

condition of contract: [insert contract condition- see 4.4. below]. Accordingly

please provide the following information to demonstrate your capacity to comply

with this condition:

5.1 Existing or proposed management arrangements relating to both employees

and sub-contractors;

5.2 Existing or proposed training for managers and staff on the employment

provisions of the Race Relations Act;

5.3 Compliance with the Commission for Racial Equality’s Statutory Code of

Practice as it relates to responsibilities of employers and in particular its

provisions relating to reducing workforce racial inequalities;

5.4 Evidence of the economic operator’s experience and reliability.

Annex 10: Sample Clauses forProcurement Contracts

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Any contractor providing details of the accredited race equality kitemark or an

equivalent scheme will be deemed to have provided all the information required

under this question 5.

Invitation to Tender/Participate in Competitive Dialogue/NegotiateTenderers will be aware that the contractor will be required to provide annual Race

Equality Plans which, in relation to the workforce to be deployed on the contract

(including subcontractors) seeks to eliminate unlawful racial discrimination and racial

harassment and promote equality of opportunity. The Plan should take into account

“The Responsibilities of Employers” in the Commission for Racial Equality`s Statutory

Code of Practice on Race Equality in Employment (see www.CRE.gov.uk). Tenderers

with a Race Equality Plan for their organisation will be required to explain how it will

be applied in relation to the workforce engaged in the contract. Tenderers without a

Race Equality Plan will be required to set out their plans, proportionate to the size

and scope of the contract.

The contractor will also be required to provide annual Race Equality Progress

Reports setting out actions taken, progress achieved and actions to be taken in the

following year, and to undertake reasonable specific measures to implement the

Race Equality Plans when requested by the purchaser. A failure to provide the Plans

or Progress Reports or undertake reasonable actions requested to implement the

Plans may lead to the issuing of a Notice of Breach of Race Equality Requirements

that may be taken into account in the selection for forthcoming contracts.

Contract ConditionsRace Equality1 In relation to the workforce engaged in the performance of the Contract the

Contractor shall have due regard to the need to eliminate unlawful racial

discrimination and to promote equality of opportunity and to promote good

relations between people from different racial groups.

2 The Contractor shall not unlawfully discriminate on racial grounds within the meaning

and scope of any law, enactment, order or regulation relating to employment.

3 Within 30 days of award of the contract and each 12 months thereafter to

provide to the Purchaser a Race Equality Plan, taking into account” The

Responsibilities of Employers” in the Commission for Racial Equality’s Statutory

Code of Practice on Racial Equality in Employment (see www.CRE.gov.uk) that

includes, for the workforce involved in the delivery of the contract:

3.1 measures to improve the representation of ethnic minority groups in each

type of job and at each level of the organisation;

3.2 measures to ensure equality of opportunity for persons of all racial groups in

recruitment pay, training, transfer and promotion within the organisation;

3.3 measures to eliminate racial harassment.

3.4 measures to ensure that 3.1 to 3.3 are implemented by sub-contractors

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4 Within 12 months of the submission of each Race Equality Plan to the Purchaser

the Contractor shall provide to the Purchaser a fully completed Race Equality

Progress Report that provides information on the actions taken to implement the

measures under 3.1 to 3.4 and their impact.

5 The Contractor shall comply with all reasonable requests by the Purchaser that

additional specific measures be taken for the delivery of the Contractor’s Race

Equality Plan.

6 A failure to provide or fully to implement a Race Equality Plan or a failure to

provide a Race Equality Progress Report, will be a breach of a condition of the

Contract and may lead to the issuing of a Notice of Breach of Race Equality

Requirements. This Notice may be referred to by contracting authorities in the

selection of tenderers for future work for a period of three years from the date of

issue.

7 The Contractor may, within 6 months of the date of issue of a Notice of Breach of

Race Equality Requirements submit a request that the Notice be withdrawn on

the basis of a Race Equality Progress Report demonstrating the effective

implementation of the Race Equality Plan. Any decision by the Purchaser to

withdraw a Notice shall be determined at its sole discretion, taking into account

all evidence submitted by the Contractor in support of its request.

8 Disputes relating to the Race Equality requirements and the Notice of Breach shall

be dealt with through the procedures set out in ….. .

9 The Contractor shall take all reasonable steps to secure the observance of Clause

1 to 5 above by all servants, employees or agents of the Contractor and all sub-

contractors employed in the performance of the contract.

Policy on enforcementThe Commission recommends that during the early years of use the aim should be

to work with suppliers to ensure that they take action to improve race equality in the

workplace through changes to company culture and practice. However, the above

approach will give purchasers the information and tools to tighten the regime over

time – either in new contracts or on long-running contracts – if necessary.

It is therefore recommended that in the early period of mandatory use (2–3 years)

Breach Notices are only used when there is flagrant disregard for the requirements.

Otherwise the intention is to encourage contractors to improve their race equality

performance. If better performance is subsequently required then the use of Breach

Notices can be encouraged.

It is not proposed that a purchaser take steps to terminate a contract because of

breach of the workplace race equality contract conditions. However, a Breach

Notice that had not been withdrawn could be a factor that is taken into account in

the pre-qualification process for new public sector contracts.

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Lord Victor Adebowale CBE Chief Executive, Turning Point

Jeremy Anderson CBE Head of Financial Services, KPMG LLP

Lis Astall Managing Director, Accenture UK

Jonathan Austin Managing Director, Best Companies Ltd

Chris Banks CBE Chief Executive, Bigthoughts

Mike Beasley CBE Chairman, CBI West Midlands

Catherine Bell Deputy Secretary, Department for Employment

and Learning (NI)

Lord Karan Bilimoria DL CBE Founder and Chief Executive, Cobra Beer Ltd

Mike Clasper Director, ITV

Keith Clarke Chief Executive, WS Atkins

David Fillingham Chief Executive, Bolton Hospitals NHS Trust

Phil Friend OBE Partner and Director, Churchill, Minty & Friend

Sir Roy Gardner Chairman, Compass Group plc

Kate Green OBE Chief Executive, Child Poverty Action Group

Dr Binna Kandola Senior Partner, Pearn Kandola

Sir Bob Kerslake Chief Executive, Sheffield City Council

Ruth Marks Director, RNIB Cymru

Frances O’Grady Deputy General Secretary, TUC

Gordon Pell Chief Executive, Retail Markets, RBS

Mark Thompson Director General, BBC

National Employment Panel Members

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National Employment Panel

Richmond House

79 Whitehall

London SW1A 2NS

Telephone: 020 7238 0694

Fax: 020 7238 0844

Email: [email protected]

NEP - Report 07 2/10/07 15:59 Page 101

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