Employment and the 'ethnic penalty'

Matt Ford, Research and Policy Assistant, gives a brief overview of how people from ethnic minorities are discriminated against in the labour market.

Matt Ford
Thursday, 02 October, 2014

In my last blog I wrote about how people from black and minority ethnic groups are let down by further and higher education. Here I describe how racial discimination in the labour market is related to a range of poor outcomes in employment.

Disadvantages in employment

We can see from the graph below that people from all ethnic groups are far more likely than white people to be unemployed six months after graduation. Black African, Bangladeshi and Pakistani graduates have the highest rates of unemployment, well over double those of white people.

These figures aren't, however, a very good indicator of an ethnic penalty per se. Other factors may influence the probability of unemployment, such as social class, choice of university subject, or degree classification. 

Ethnic penalties in employment

We can work out the degree to which ethnicity affects disadvantages in employment, or in other words, how much people are discriminated against in employment due to their ethnicity. To do this we match people of different ethnicities according to their demographic and academic backgrounds. This means that the people in any one of these groups will be equal in terms of all the factors that influence their position in the labour market, except ethnic background. We then compare how people in these groups fare across a range of employment outcomes, using white people as the baseline.

The adjacent table is derived using this method and indicates the percentage by which different ethnic groups are over-represented in unemployment compared to equivalent white UK-born graduates. 

The results show that after we remove the possibility that other factors like social class are causing differences between ethnic groups, some ethnicities still confer a penalty. Black African, Pakistani and Bangladeshi men and women are penalised the most, followed by Black Caribbean men.  

Research has shown that attending elite universities in the UK is not enough to protect people from racial discrimination in the labour market. After controlling for subject choice and attainment, people from all ethnic minority groups who attend Russell Group universities are more likely than white people to be unemployed six months after graduation.

Even within employment discrimination is apparent. The table opposite looks at whether graduates from different ethnic backgrounds end up in non-graduate occupations. This gives us an indication of the level of over-education in employment according to ethnicity.

The results suggest that if you are from an ethnic minority, even if you achieve similar results in a similar course to a white person, you are more likely to be in a job where you do not need a degree at all. The penalty is greatest for Black African men and women, followed by Pakistani and Bangladeshi people.

Wage dfferences offer a very stark illustration of discrimination, with Black African and Caribbean men earning a staggering £5.89 an hour less than their equivalent white counterparts. 

If we move our focus beyond graduates to the wider youth population we see similar inequalities. The graph below shows unemployment rates for 16-24 year old males from different ethnic groups between 2006 and 2013. All ethnic groups have much higher rates of unemployment compared to white male youth. Young black men fare the worst up until 2013 when Pakistani and Bangladeshi men faced a steep rise in unemployment. Joblessness for young black males peaked at 50 per cent in 2012, up 15.2 per cent since 2009. This means that young black men not only had more than double the rate of unemployment of white people, but they also experienced a much steeper rise during the recession.

This summary points to a large degree of racial discrimination in the labour market, particularly for black people. Research has shown that all ethnic minority job applicants are more likely than white people to be turned down. There were 14% more Black African people than white people refused a job in 2011. Black Caribbean people are most likely to think that they are turned down for a job due to racial discrimination.

This series of blogs has so far highlighted how people from ethnic minority groups, especially black people, experience vulnerability in income, education and employment. In the next few comment pieces I will uncover the financial, environmental and health hazards experienced by ethnic minorities.

To read more about the ethnic penalty click here. If you would like to discuss the reasons behind the criminalisation of young black men please come to our event on Wednesday 28 January.