Why Black, Asian and Minority Ethnic (BAME) Workers Need More Than a Minimum Wage Increase







Blog by Sandra Kerr OBE,  Director,  Race for Opportunity

Earlier this week Ed Miliband announced that a future Labour government would increase the minimum wage in line with earnings. This is good news for Black Asian and Minority Ethnic (BAME) employees, as they are more likely to be employed in low-paid jobs – but as well as boosting their pay packets, we must also make sure they do not become trapped at the bottom of the career ladder.

Race for Opportunity’s research ‘Race to Progress’ found that BAME workers make up a disproportionate number of people in low-paid jobs, with almost a quarter (23%) of Pakistani employees and a fifth of Bangladeshi, Chinese and Black Caribbean workers  earning less than £25,000 per year. Figures from the Low Pay Commission also found that 15.3 per cent of Pakistani/Bangladeshi workers earned the minimum wage – more than twice the number of white workers in minimum wage jobs.

Increasing the minimum wage would be particularly beneficial to BAME workers, especially as the UK’s BAME population is expected to rise in the coming decades, with Policy Exchange recently projecting that a third of people in the UK will come from a BAME background by 2050. That is a potentially huge amount of spending power that businesses may miss out on. A rise in the minimum wage would potentially give BAME people more money to spend, increasing their power as consumers, and could be the source of a new market for many businesses.

But as well as helping BAME people contribute more to the UK economy by putting extra money in their pockets, we must also remember what a rise in the minimum wage could do in terms of tackling poverty, which disproportionately affects BAME communities. According to the Joseph Rowntree Foundation, 23% of BAME households are in poverty compared to 15% of white British households, and more working households are now living in poverty than non-working households. Whilst increasing the minimum wage would not be a ‘magic bullet’ to tackle this complex issue, it could certainly make a significant difference to many BAME workers and any children or dependents they may have.

Finally, whilst increasing the minimum wage could benefit BAME workers in lower-paid jobs, we must make sure they do not get stuck there. Next month Race for Opportunity will be publishing ‘Race at the Top’, a report on BAME representation at management and senior levels and how this has changed in the last five years. I don’t want to give too much away ahead of publication, but the report shows that there is a serious need for government and businesses to take action on this agenda now. By doing so, they will create modern workplaces that reflect multicultural Britain and the communities they serve, and increasing the minimum wage would be a step in the right direction. Moving towards a living wage is even better – this is something that would benefit both white and BAME low-paid workers and has received support from both Labour and the Conservatives. The living wage is an ongoing discussion I have as part of my role on the Department for Work and Pensions’ Ethnic Minority Employment Stakeholder Group and I will keep you updated on these discussions.