Three solutions to the challenges faced by ethnic minorities in the labour market

28th Sep 2017

The Government’s forthcoming industrial strategy offers a real opportunity to tackle the high working age poverty rate that many Black and Minority Ethnic (BME) groups experience in the UK today.

To achieve this, it should focus on delivering three genuine place-based solutions to some of the significant barriers to progression out of low pay.

The Government has set a target of reducing the ethnicity employment gap by 2020 and will publish its industrial strategy white paper later this year. JRF’s new review outlines how issues facing ethnic minorities in the labour market can be tackled.

In the UK today, BME groups face particular barriers both in accessing and progressing at work. In fact, a recent review by Baroness McGregor-Smith found that supporting BME workers to progress out of low-paid work would boost people’s prospects and could add £24 billion a year to the UK economy.

There’s not only an economic imperative for improving BME prospects in the labour market – there’s also a political one. In the 2017 general election, the Conservative vote declined by 0.5 points in the 20 most ethnically diverse seats, while Labour’s vote increased by 10 points. Just 25% of the ethnic-minority communities voted Conservative compared to 61% who voted Labour.

JRF’s research has found that the poverty rate among BME groups is twice as high as it is for White British groups. Some individuals and families have a particularly high poverty risk – for example half of all Bangladeshi individuals in the UK are living in poverty.

Despite the UK experiencing its highest rates of employment since the 1970s, there are ethnic minority groups where unemployment and economic inactivity remain particularly high and racism and discrimination are real barriers to work. A high proportion of people in these groups who are in work find themselves stuck in low-paid sectors, in insecure, part-time jobs.

The experiences of BME workers also vary significantly depending on where in the country they live. In the West Midlands, 54% of BME people are in work, compared to a national average of 74%. In Scotland, half of Pakistani workers are employed in low-paid sectors such as restaurants or hotels. This is important, as households including adults with low earnings, high rates of unemployment and high housing costs are more likely to be living in poverty.

Tackling the high rates of poverty among people and families from minority ethnic backgrounds must form a crucial part of a national mission to solve UK poverty. To achieve this, policy makers should take into account factors such as where people live, the nature of local labour markets and the types of sector people are likely to work in. We recommend the Government’s industrial strategy puts ‘place’ at its heart, which would harness the role of cities in reducing high poverty rates among BME groups and addresses many of the barriers to labour market success.

Three key solutions are:

  • Skills: Helping BME groups to progress out of low pay needs a national focus on improving access to training and skills development, and a local focus to identify where skills gaps exist. The establishment of metro mayors in regions with large BME populations offers an opportunity to show what can be achieved. JRF’s inclusive growth work outlines how metro and city mayors can use devolved decision-making powers to address severe shortages of adult skills and training. We also recommend the Government reintroduces funding for ESOL (English for Speakers of Other Languages) courses in areas of high demand, given that having a poor level of English can prevent access to jobs and progression.
  • Employment Support: BME workers need better support and advice to progress out of low pay. The government should devolve responsibility for employment support to local areas which will help to shift the national focus away from simply moving people off benefits and towards access to good jobs and progression. Similarly, drawing on the local expertise of community based organisations providing employment support services is essential.
  • Productivity in low paid sectors: Low-paid sectors such as retail and hospitality account for a third of the productivity gap between the UK and other European countries, and BME workers are concentrated in jobs here. We recommend that the Government’s industrial strategy white paper include plans to seek out deals with low-paid sectors to ensure productivity rises faster here. Improving management quality, skills, training and new technologies would benefit those employed in these sectors and address in-work poverty across ethnic groups.