Study shows discrimination costs the UK £127bn each year

According to diversity and inclusion champion INvolve and the Centre for Economics and Business Research (CEBR) discriminatory pay issues cost the UK economy around £127bn in lost output every year.

Studies of more than 500 companies and their practices showed that the estimated GDP would be in the region of 7% higher if ethnic, sexual, and gender discriminations were eliminated.

The report showed that of all the companies it reviewed, the top quarter of employers when factoring in discriminations, were likely to out-perform the national average by 12% above the least diverse companies.

Companies which had been actively monitored in their diversity recruitment and promotion ethics were found to have a well-developed strategy for diversity. These companies out-performed industry averages by 15%.

The report produced these figures based on the assumption of workers being paid a lower rate based on lowered output per hour caused by discrimination. The report then scaled these figures up to estimate the cost to the economy of the country.

Founder and CEO of INvolve, Sukhi Sandhu stated that in the current climate, where equality and balanced representation is being fought on many fronts on a daily basis, businesses need to step up and work for change in workplaces and society. This needs to be done to ensure that everyone, regardless of heritage, gender, or sexuality, receives an equal opportunity to reach their full potential, and thrive in the workplace.

The report went on to suggest that discrimination in the workplace was – in terms of output – costing the UK at least £123bn a year.

With white people earning between £67 - £209 more per week than workers of different ethnic backgrounds, discrimination against Asian, black and minority ethnic workers cost the country £2.6bn a year. The report showed however, that workers with a mixed ethnic background earned on average £152 a week more than their white colleagues.

Every year sexual discrimination represented a loss of £2bn to the UK economy. The report showed that the average heterosexual person aged between 16-21 earned £336 per week, compared with £372 for gay or lesbians, £208 for bisexual employees, and £194 for people of other sexual identities.

The report concluded by recommending that employers consider the following points:

  • Appoint diversity champions on every executive team
  • Give minority groups the backing they need from the majority
  • Provide learning opportunities which are tailored to specific needs
  • Set up employee-led support groups
  • Introduce support staff to mentors
  • Provide role models suitable for people from a diverse range of backgrounds 

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