Ethnic minority workers face significant 'pay penalties' in hospitality sector

Saleha Riaz
·3 min read
Hospitality is one of the lowest paying sectors in the economy, with a typical hourly pay of just £8.72 and almost a quarter (23%) of workers paid at or below the national living wage. Photo: Getty Images
Hospitality is one of the lowest paying sectors in the economy, with a typical hourly pay of just £8.72 and almost a quarter (23%) of workers paid at or below the national living wage. Photo: Getty Images

Workers from Black, Asian and Minority Ethnic (BAME) backgrounds are disproportionately likely to work in the hospitality sector when compared with White British workers, but face significant “pay penalties” in these jobs, a new study revealed.

The report by Resolution Foundation notes that one in 12 (8%) BAME workers are employed in hospitality, compared with just one in 20 White British workers (5%). Overall, 300,000 people from BAME backgrounds work in hospitality.

The report said that hospitality is one of the lowest paying sectors in the economy, with a typical hourly pay of just £8.72 ($11.75) and almost a quarter (23%) of workers paid at or below the National Living Wage.

The study found that BAME workers within the sector suffer ‘pay penalties’ – pay gaps that account for workers’ age, qualifications, experience, and the kinds of jobs they do – relative to White British workers.

BAME men face the largest pay penalty compared with White British men of 7% – or 65 pence an hour. Pay penalties are also notable for BAME women (5%) and White British women (3%), equivalating to lower hourly pay of 45 pence and 28 pence respectively.

Crucially, these pay penalties are bigger than the raw pay gaps found in official earnings data, suggesting that the extent of disadvantage is bigger than previously thought, the study said.

The Foundation noted that the hospitality sector is one of the worst-hit by COVID-19 and its ability to weather the pandemic and recovery quickly will be crucial to the living standards of many BAME workers and their families.

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It added that looking beyond the pandemic, the industry also needs to explore why such significant pay penalties exist for its BAME workforce.

Nye Cominetti, senior economist at the Foundation, said “it is not just the pandemic that is affecting the pay of BAME workers in hospitality; they also experience significant pay penalties relative to White British workers in a sector that already has very low levels of pay.

“As workers from BAME backgrounds are disproportionately likely to work in hospitality, a significant number of workers risk moving into unemployment when the furlough scheme ends in the spring. The government should bear that in mind for the jobs support programmes it is providing,” he added.

The report also found that while hospitality as a whole disproportionately employs young people – over a third of its workforce are aged 16 to 24 years old – this is not always the case for BAME workers.

For example, the typical age of a Bangladeshi worker in hospitality is 42 – higher than the typical age for Bangladeshi workers across the whole economy (35), and higher than White British workers in hospitality (28).

The report also found no single ethnic group does better or worse than others across the board.

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