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Study shows that discriminatory workplace practices is costing Britain £127 billion annually

New research has shown that the UK economic output could increase by up to £127 billion if discrimination in pay practices was eliminated

A major new study conducted by the charity and think-tank, INvolve, in collaboration with the Centre for Economics and Business Research (CEBR), looked into the value of diversity and has delivered some sobering findings regarding diversity strategies in UK business.

Researchers collected data on payment practices from more than 500 workplaces. When analysing the figures, they assumed that discrimination resulted in lowered output per hour and so workers were paid at a reduced rate.

The findings were applied to the UK economy as a whole to calculate the total cost to the country. Overall, the findings suggest that the UK GDP is reduced by 7% annually because of discrimination by gender, ethnicity or sexual orientation. Gender-based workplace discrimination alone makes up the greatest portion of lost output and stands at £123bn per year.

The findings indicate that diversity is good for business. Organisations that were in the top quarter in terms of diversity were also 12 percentage points more likely to outperform the national average turnover per capita compared to the least diverse businesses.

There was a clear correlation between having a well-developed diversity strategy and increased industry performance.

Organisations that had active strategies in place to monitor and measure diversity in their recruitment and promotion activities benefitted from an increase of 15 percentage points in terms of output.

The findings are supported by data collected globally by McKinsey & Company. Its study reported that the top 25% of employers in terms of ethnic diversity were 33% more likely to have above average profit margins, when compared to the least diverse companies.

Sukhi Sandhu, founder and CEO of INvolve, called on all businesses to tackle all forms of discrimination in the workplace. Sandhu argues that businesses can play a crucial role in driving societal changes to make sure that everyone has equal opportunities to thrive irrespective of their gender, their heritage or their sexual orientation.

According to the study’s findings, an individual’s sexual orientation determines how much they will earn. On average, a heterosexual aged between 16-21 years earns £336 per month which is less than the £372 average earnings for people who identify as either gay or lesbian. However, those who identify as bisexual earn £208 per week and individuals with other sexual identities earn less than that (£194). In total, this impacts the UK economy as a loss of £2 billion annually.

The research reports that white workers take home between £67-£209 more per week than workers of a different ethnic background who have similar qualifications. The UK economy loses out on £2.6 billion annually because of discrimination against black, Asian and minority ethnic (BAME) workers. However, the figures also showed that workers from a mixed ethnic background take home £152 a week more than white employees.

Several recommendations for business practice come out of the report. Organisations are encouraged to appoint diversity champions to advise their executive teams, together with role models and employee-led networks. Employees should be provided with bespoke learning and development opportunities and mentoring.

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