Connect with us

Analysis

Why a private league is a ‘dangerous game’ for Europe’s football elites

Published

on


Towards the end of his resignation speech, Josep Maria Bartomeu, president of FC Barcelona, the world’s highest-earning football club, hurled a bombshell.

“I can announce something that will change in an extraordinary way the future revenue of the club for years to come,” he said in October. “The board of directors have approved the acceptance of requirements to take part in a future European super league of clubs, a project put forward by the biggest clubs in Europe.”

Though providing few details, Mr Bartomeu became the first senior football executive to publicly confirm the existence of a radical project — one that, for months, had been discussed only in fevered WhatsApp messages and clandestine meetings between the sport’s power brokers as the coronavirus crisis threatened their revenue model.

The richest clubs were contemplating a breakaway competition that would supersede the existing structure of the world’s favourite sport. The motivation was clear: to secure more frequent matches between heavyweight European teams, believing this will draw higher broadcasting and sponsorship income and create a better spectacle on the pitch.

Josep Maria Bartomeu, front right, at Camp Nou. The outgoing president of FC Barcelona said in October that his club's 'board of directors have approved the acceptance of requirements to take part in a future European super league'
Josep Maria Bartomeu, front right, at Camp Nou. The outgoing president of FC Barcelona said in October that his club’s ‘board of directors have approved the acceptance of requirements to take part in a future European super league’ © Albert Gea/Reuters
Gianni Infantino, president of Fifa, world football’s governing body, says agreeing the new 10-year calendar of competitions 'is crucial for the future' of the sport and should be settled next year
Gianni Infantino, president of Fifa, world football’s governing body, says agreeing the new 10-year calendar of competitions ‘is crucial for the future’ of the sport and should be settled next year © Leonhard Foeger/Reuters

Although such a move risks the ire of loyal supporters — who remain energised by local rivalries — club owners are running increasingly international brands, with fan bases in the US, China and beyond. And with the globalisation of football came a sense of entitlement. The biggest sides drew the largest worldwide audiences and so therefore should gain an even greater share of the financial rewards.

Yet a super league also risks devaluing or even destroying the very thing that has transformed top clubs into multibillion-euro companies: existing national and continental contests that have built followings over decades.

It is not a new idea. In the early 1990s, a group led by Silvio Berlusconi, the former Italian prime minister, media mogul and one-time owner of AC Milan, considered a breakaway European competition. Again, in 2016, some of the continent’s biggest clubs, including Germany’s Bayern Munich, discussed joining a new tournament backed by US billionaire Stephen Ross, according to leaked documents revealed by Der Spiegel magazine.

On each occasion, the game’s governing bodies avoided a revolt by ensuring more money from existing competitions flowed to the wealthiest clubs. This has exacerbated the imbalances within the sport. Revenues at the 10 richest clubs in Europe were €6.3bn last season, up from €2.6bn a decade earlier, according to the consultancy Deloitte.

These increases reflect gains from broadcasting and sponsorship deals across football. But a handful of top clubs in each of the “big five” leagues of England, Spain, Germany, Italy and France have pulled away from their national peers, partly through regular appearances in the elite Champions League, where every year €2bn in prize money and TV contracts is distributed between participating clubs.

Qualification for that tournament stems from performing well in national leagues, ensuring domestic competitions have remained vibrant. Some of the wealth from European competitions is shared through “solidarity” payments worth €130m last season to clubs in smaller countries.

A breakaway that does not depend on qualification via a domestic league would create an unbreachable chasm between the biggest teams and the rest of the game. If the rupture occurs, “this fairytale of being in the same football family comes to an end”, says the head of a top national league, referring to the interconnected nature of the sport at all levels. “But it depends if the clubs have the courage. I’m not sure they will really dare to do so.”

Can clubs in Europe’s top leagues recover lost revenues this season?

Using Covid ‘to prove a point’

Interviews with more than 20 leading club, league, media and financial executives — some speaking on the condition of anonymity — suggest a breakaway league is more likely than ever before. They highlight three main factors: a new “international match calendar”, which dictates the timing of club and national team competitions, expires in 2024 and is set to be renegotiated; the financial impact of the pandemic; and a new generation of institutional investors, particularly from the US, driven more by financial returns than emotional ties.

Gianni Infantino, president of Fifa, world football’s governing body, says agreeing the new 10-year calendar “is crucial for the future” of the sport and should be settled next year. Some football executives suggest the disclosure of the super league talks are a bargaining chip to force Uefa, European football’s governing body, to cram more lucrative Champions League ties into this busy schedule.

“History repeats itself,” says Andrea Agnelli, president of Juventus, champions in Italy for the past nine years, and chair of the powerful European Club Association, which represents more than 200 top teams. He is, instead, spearheading efforts to reform existing continental competitions. “Go back and look at what happened 25 years ago when changes were first introduced to the Champions League,” he says. “Everyone was against it. Now, everybody loves it.”

Juventus coach Andrea Pirlo, back right, with club president Andrea Agnelli, who is spearheading efforts to reform existing continental competitions
Juventus coach Andrea Pirlo, back right, with club president Andrea Agnelli, who is spearheading efforts to reform existing continental competitions © Massimo Pinca/Reuters
Liverpool FC owner John W Henry with his wife after last year's Champions League final. The US billionaire is in talks over a stock market listing of his sports holdings, valued at $8bn
Liverpool FC owner John W Henry with his wife after last year’s Champions League final. The US billionaire is in talks over a stock market listing of his sports holdings, valued at $8bn © Carl Recine/Reuters

The talks are happening against a backdrop of financial anxiety. Across Europe, lost match-day income because of empty stadiums, as well as discounts demanded by broadcasters and sponsors for postponed games during lockdowns, will result in €3.6bn in lost revenues over the next two years, according to the ECA.

Barcelona has reported a coronavirus-induced shortfall of over €200m, leading to a pre-tax loss of €100m last season, which has accelerated the breakaway discussions, according to people briefed on the talks.

“It’s essentially using Covid and the existing chaos . . . to prove a point,” says one club owner. “Small clubs in certain countries can’t survive the crisis and [the super league] is the way to protect football.” 

The other major factor is the arrival of owners and investors seeking a return on investment from the game. This includes billionaire US moguls, such as John W Henry, who bought English Premier League champions Liverpool in 2010, and is in talks over a stock market listing of his sports holdings — which also includes baseball’s Boston Red Sox — valued at $8bn.

US investment banks have helped England’s Tottenham Hotspur and Italy’s Inter Milan tap bond markets. Hedge funds are lending to clubs and, in the case of Elliott Management at AC Milan, acquiring them.

“The mindset of the Americans when it comes to capital is the thing that’s really different this time,” says a top European football official. “You have the Glazers [the family which owns Manchester United] and John Henry who have spent time understanding the game. You have money from private equity pouring into Italian football.

“You have Wall Street,” he says. “It’s pretty relentless and they will come again and again.”

Chart shows number of match dates in 15 leading associations, 2018-19 showing teams in Europe play a lot of football

$6bn debt financing package

Mr Bartomeu’s resignation was forced by an impending vote of no confidence from Barcelona’s members. His parting shot was an attempt to establish a legacy beyond being the man who fell out so badly with Lionel Messi — the club’s greatest ever player — that the Argentine forward threatened to leave.

He discussed going public with the true mastermind of the super league: Florentino Pérez, Mr Bartomeu’s counterpart at bitter Spanish rivals Real Madrid, according to people familiar with the discussions. 

For more than a year, Mr Pérez has sought private backing for his plan. It would involve up to 20 clubs in a “closed” division from which teams cannot be relegated, playing midweek games to allow clubs to continue to participate in their domestic leagues at weekends. It is viewed as a replacement for the Champions League, rather than threatening the primacy of domestic leagues.

Chart shows revenues by type (€bn) showing the English Premier League tops the table for revenue

Mr Perez initially approached private equity groups, such as CVC Capital Partners, before a plan was developed with investment bank JPMorgan, which is assembling a $6bn debt financing package to launch a European Premier League, according to those with knowledge of the talks.

As first reported by Sky News, the money would be paid back against future media rights sales, will cover start-up costs and guarantee prize money to clubs. Real Madrid, Barcelona, CVC and JPMorgan all declined to comment for this article.

The structure follows the model of US sports such as the National Basketball Association, and is designed to provide more consistent revenues by guaranteeing an increased number of European matches.

It also envisages governance reforms relatively uncommon in football, such as the introduction of player salary caps, which could boost profitability if it can rein in spiralling wages and transfer fees that make up the biggest cost at most clubs. In the 2018-19 season, player salaries in clubs in the big five national leagues increased by €1bn to €10.6bn.

“The point of the European super league project is to create a monopolist employer of players,” says François Godard from research group Enders Analysis. “Cost control is where they must take action.”

Captain Sergio Ramos of Real Madrid shakes hands with club president Florentino Perez, the true mastermind of the super league
Captain Sergio Ramos of Real Madrid shakes hands with club president Florentino Perez, the mastermind of the super league © Denis Doyle/Getty
Lars-Christer Olsson, chair of European Leagues, says “we don’t want anything to be established to make the Champions League closer to a private league at the top of the European pyramid'
Lars-Christer Olsson, chair of European Leagues, says “we don’t want anything to be established to make the Champions League closer to a private league’ © Gualter Fatia/Getty

Domestic repercussions

The super league discussions are having repercussions across the sport. In February, a group of key figures in English football, including Mr Henry and Joel Glazer, co-chairman of Manchester United, began discussing “a reset of the economics and governance” of the game in England dubbed “Project Big Picture”.

Among the proposals was reducing the number of teams in the Premier League from 20 to 18, and eliminating one of the domestic knockout competitions. This would make room for more European matches. When the plans leaked in October it caused a furore, with critics accusing bigger clubs of a power grab.

One leading European club executive, however, says the subsequent collapse of the talks could work to the benefit of the leading English teams: “The Project Big Picture discussions with Liverpool and United is a way to justify their future decision [to join the super league],” they say.

Weekly newsletter

Scoreboard is the Financial Times’ new must-read weekly briefing on the business of sport, where you’ll find the best analysis of financial issues affecting clubs, franchises, owners, investors and media groups across the global industry. Sign up here.

Liverpool and Manchester United declined to comment for this story.

Separately, plans put forward by a mixture of clubs and investors to create a new competition featuring top clubs in Scotland, Sweden, Norway, Denmark and Ireland — discussed with JPMorgan and other private equity groups — broke down in recent weeks, according to people with knowledge of the talks.

The talks ended, they say, when Celtic, the Scottish club that would have been its biggest participant, backed out. The Glasgow-based club, declined to comment.

A €1.6bn deal for CVC and Advent International to take a 10 per cent stake in Serie A, Italy’s top league, has also been disrupted by the rumblings around a rival super league. The private equity groups want a “breakaway clause” to be inserted in the agreement, fearing that if it goes ahead it could damage the value of the Serie A media rights.

Paolo Dal Pino, Serie A’s president, rejects the idea, saying: “There is absolutely no way we accept clauses like this.” The other option for the private equity groups, according to people close to their deliberations, is to invest in the super league itself.

Chart shows wage bill as % of revenues showing clubs in Europe’s top leagues face an onerous wage burden

Big clubs getting bigger

The super league discussions are filling a vacuum created by the breakdown in talks over radical changes to the continent’s existing club competitions. Last year, Uefa and the ECA proposed reforms which envisaged a promotion and relegation system, with the top 24 teams in the Champions League gaining automatic qualification for the following year’s competition.

Those plans were shelved amid a fierce fightback from smaller clubs, national leagues and fan groups. Mr Agnelli maintains that changes to the Uefa competitions are needed to retain enthusiasm among younger audiences. “It’s not about today or next cycle,” he says. “It’s about 15-20 years from now . . . what I would like is that football remains, if not increases, it’s premium position as the best sport in the world.”

These reform talks — paused due to the pandemic — have been given new urgency. The idea gaining the most traction is to replace the opening Champions League group stage — in which groups of four teams play each other home and away — with a so-called “Swiss model” based on chess competitions.

Each team would play 10 matches against 10 different opponents. Those with the best records would qualify for the knockout rounds.

This Swiss model is generating excitement because “for the first time in history, these Champions League teams would be ranked together on the same table”, says a person with knowledge of the plans. Another possibility is slimming down the latter stages, replacing home and away legs with one-off ties — a format instituted last season due to the pandemic.

These tortuous discussions may stall again, as smaller clubs and leagues worry that altering the status quo cuts them further adrift from the game’s financial giants.

Lars-Christer Olsson, chair of European Leagues, the body which represents national competitions, insists there are “red lines” in any format changes. This includes maintaining the link between performance in domestic leagues in order to qualify for European contests.

“We don’t want anything to be established to make the Champions League closer to a private league at the top of the European pyramid,” says Mr Olsson.

Many football executives don’t believe that top clubs will really join a breakaway. English teams, in particular, risk devaluing the Premier League, which has multiyear broadcasting contracts worth £9.2bn — more than any other domestic league competition.

Others ask whether the game’s superstars would even want to play in it. Without Fifa’s explicit approval, players could be prevented from featuring for their national teams. That would mean missing the World Cup, the quadrennial tournament that many footballers consider the sport’s true pinnacle.

Whether through an enhanced Champions League or a breakaway, many are convinced of the final result: more money-spinning ties between Europe’s biggest clubs, further cementing their places in the sport’s hierarchy.

“Financial power is transforming sporting power,” says a top European football administrator. “This is a very dangerous game.”



Source link

Continue Reading
Click to comment

Leave a Reply

Your email address will not be published. Required fields are marked *

Analysis

Taiwan seizes chance to host foreign reporters kicked out of China

Published

on

By


Taiwan is courting journalists fleeing China, spotting an opportunity to boost its visibility and build international support as concerns mount that Beijing is flirting with the idea of invading the country.

Last year, more than 20 journalists made the journey across the Taiwan Strait from China. Many had published articles critical of human rights abuses against the Uyghur Muslim minority in Xinjiang and the government’s early handling of the coronavirus outbreak in Wuhan.

They came at the invitation of the Taiwanese government, a move that has infuriated China, which claims the island as part of its territory.

Jojje Olsson, a freelance journalist living in Taipei since being denied re-entry to Beijing in 2016, said that Beijing’s reaction to critical reporting carried risks for the regime.

“China is shooting itself in the foot by expelling lots of journalists,” he said. When reporters come to Taiwan, he argued, “they are exposed to views that don’t reflect well on China”.

Steven Butler, the Asian head at the New York-based Committee to Protect Journalists, said that “Beijing is surely very unhappy about journalists moving to Taiwan”.

China, he added, was sensitive to the foreign media being in Taiwan, citing a case two years ago involving a prominent newspaper that was warned against setting up a regional headquarters in Taipei. 

Beijing said the newspaper’s offices in the Chinese capital would be forced to close if it went ahead with its expansion plans.

Michael Smith of the Australian Financial Review, who was forced to leave China in September after being questioned by state security officials, said Taiwan’s consulate officials in Sydney “made it very clear that we [journalists] were welcome”.

He declined the invitation but many others accepted.

Last year, journalists from The New York Times, The Wall Street Journal and The Washington Post arrived in Taiwan after being expelled from China, which Beijing said was a response to Washington’s blacklisting of its state media reporters.

They were joined three weeks ago by RTÉ’s Yvonne Murray and her husband John Sudworth of the BBC following threats of legal actions over his reporting on Xinjiang. 

Taiwan’s Ministry of Foreign Affairs and China’s Ministry of Foreign Affairs did not respond to requests for comment from the Financial Times.

Hong Kong had been the city of choice for journalists covering the Chinese state from afar. Western journalists booted out of China after Mao Zedong came to power in 1949 decamped to the British colony, leaving behind reporters from the Soviet bloc.

Veteran BBC correspondent John Sudworth left China late last month after facing an ‘intensifying propaganda campaign’ targeting the broadcaster and him personally © BBC

Seventy years later, Olsson said Taiwan was assuming Hong Kong’s former role. The introduction of China’s sweeping national security law on Hong Kong last year meant that the territory no longer afforded protection from Beijing. 

“There is no other place in the world that follows developments in China as closely as Taiwan,” argued Olsson, adding that finding out what the Chinese Communist party was up to was a matter of existential concern for the Taiwanese.

Taipei’s early detection of the pandemic is a case in point. Taiwanese officials were alerted to the novel coronavirus circulating in Wuhan through close monitoring of Chinese social media and introduced containment measures before any other foreign government. 

Taiwan boasts expertise in China across its government and private sector, and shares a language and timezone. But reporting from across the Taiwan Strait has its limitations. Journalists have experienced difficulties securing interviews and personal stories that present a more nuanced picture of China.

Their jobs have been additionally complicated by the absence of news assistants — China-based journalists and researchers employed by international media — who face more severe legal consequences and lack the privileges of a foreign passport.

Reporters have also been forced to operate without the support of a bureau, as media executives are wary of provoking China by opening offices in Taiwan. Deutsche Welle, the German broadcaster, was the last foreign media outlet to do so in 2018. Tokyo and Seoul are viewed as alternative east Asian headquarters, industry insiders said. 

The size of Taiwan’s economy is another factor that has given foreign outlets pause. Despite being home to some of the world’s most important technology companies, only a handful of news organisations provide consistent coverage of the Taiwanese market, which is often overlooked by foreign investors.

But China’s escalating military posturing towards Taiwan has kept the island in global headlines, as the two sides battle to dominate the international narrative around its contested status.

Beijing has used its economic and political might to entice Taipei’s few remaining diplomatic allies to switch recognition, undermining Taiwan’s sovereignty with promises of investment deals.

But by welcoming foreign journalists, the Taiwanese government has also exposed itself to critical coverage of the marginalisation of its aboriginal communities and migrant workers as well as a sluggish vaccination rollout. Journalists, after all, as one Taiwanese politician joked to the FT, “are hard to control”.



Source link

Continue Reading

Analysis

Defund the police: how a protest slogan triggered a policy debate

Published

on

By


Eleven months ago “Defund the police” was a slogan that appeared on placards at protests; now it is being debated by American city councils.

Polls show only a small portion of Americans support the idea of defunding the police, a flexible phrase that can mean redirecting funds to social services or outright elimination of the department. Yet as lawyers prepare to deliver closing arguments on Monday in the trial of the officer accused of murdering George Floyd in Minneapolis, and in the wake of yet more deaths at the hands of police, what was previously a fringe concept has become part of mainstream US political discussion.

Minneapolis has three proposals to diminish the police department’s power that supporters are attempting to place on the ballot in November. Two would replace the police department with a department of public safety, with the police as one division of it. The third would place the police department under the control of a 13-member civilian commission, with the power to hire the police chief and discipline officers for misconduct.

Austin, Texas cut its police budget in August by 35 per cent, with 5 per cent taking immediate effect. Seattle cut the police budget by 20 per cent in December. City councils have cut police budgets in nearly two dozen other cities, although mostly because the pandemic has battered municipal finances.

“People will look back at this year and say this was a real turning point,” said Alexander Weiss, a consultant who has advised police departments in Chicago and New Orleans, in reference to police accountability.

People march near the Colorado State Capitol to protest the deaths of Daunte Wright and Adam Toledo © Michael Ciaglo/Getty Images

Floyd’s death last May set off protests around the world at the disproportionate number of people of colour killed by police. A key demand for many activists was to abolish police departments entirely, or cut their funding and redirect it to social services. In Minneapolis, nine city council members stood on a stage and pledged to defund the police. When Washington, DC Mayor Muriel Bowser ordered that the words “Black Lives Matter” be painted on a city street blocks from the White House, demonstrators used the same yellow paint to add: “Defund the Police”.

With more people killed by police in the past three weeks, the demands to defund have escalated. Chicago community organiser Rey Wences told non-profit news outlet Democracy Now! that following the killing of 13-year-old Adam Toledo last month by a Chicago police officer: “What we’re asking for is the same thing we’ve been asking for years . . . Defund the police and invest in our communities.”

In 2017, state and local governments around the US spent $115bn on police — some 4 per cent of state and local direct general expenditures — according to the Urban Institute. That share has stayed constant for the past four decades, even as the rising cost of healthcare means other big-ticket items, such as elementary education, now constitute a smaller portion of municipal budgets.

Most of the money is used to pay salaries and benefits to police officers, so cutting more than 15 per cent of a department’s budget often means cutting the size of the force, Weiss said.

Police officer pay has increased as police unions have grown in power and unions are some of the defunding movement’s most dedicated opponents. After Austin City Council in August voted to cut the police budget by $150m, the Texas Municipal Police Association put up a billboard outside the city, saying, “Warning!!! Austin Police Defunded Enter at Your Own Risk”.

Critics have warned that crime will rise if police budgets are cut. The number of homicides did rise in most US cities last year. Although the reasons are unclear, that increase seems to be unrelated to police budget cuts, which in most cases had not yet taken effect.

Some Democrats have been critical too. President Joe Biden said in a meeting with civil rights leaders that talk of defunding the police was how Republicans “beat the living hell out of us across the country” in the November elections.

An Ipsos/USA Today poll released last month found that 18 per cent of Americans support defunding the police, and only 11 per cent support abolition. About 57 per cent support fully funding their own local police department, while 43 per cent support redirecting some of that money to social services.

Richard Auxier, a tax and budget expert at the Urban-Brookings Tax Policy Center, said that since police budgets were set by local governments: “there are literally thousands of them across the country, . . . and they all have their own politics”.

The politics have been particularly intense in Minneapolis. Three of the councillors who took the pledge in June backed away from it. The Minneapolis Charter Commission, a previously obscure body, killed an attempt last year by council members to place a proposal on the ballot that would replace the police department with a new public safety agency. The Minneapolis City Council launched a second attempt in January.

Activist Antonio Williams is a canvas director for the Yes 4 Minneapolis coalition, which is trying to land an initiative on the ballot that is similar to the city council’s. (A third group, Twin Cities Coalition for Justice 4 Jamar, also is pursuing a ballot initiative.) So far more than 20,000 residents have signed the Yes 4 Minneapolis petition.

A demonstrator holds Daunte Wright’s portrait during the seventh night of protests over his shooting by a police officer in Brooklyn Center, Minnesota on Saturday © Chandan Khanna/AFP/Getty Images

Williams said some of the residents he had spoken to thought the petition’s language went too far, while others thought it did too little. He sees all those conversations as a first step in the process of persuading someone to sign, then to show up at the polls in November to support the initiative.

For him and other activists, the killings of Daunte Wright by a Brooklyn Center police officer, or of Toledo in Chicago, add no urgency to their cause, because it has always been urgent. But perhaps for some, the fact that Wright’s death occurred while former police officer Derek Chauvin is being tried for Floyd’s death, when the world is watching Minneapolis, underlines “a dire need for some change”.

“It’s going to continue to happen all over the country until policing as we know it and see it is done away with,” said Williams.

Certainly Floyd’s death “galvanised” the city’s residents on the issue of police misconduct, Williams said. He doubts the signature drive could have succeeded 11 months ago. “The conversation could have been had for sure, but the next step, the commitment, the action part of it?” he said. “I don’t see it happening.”





Source link

Continue Reading

Analysis

UK business groups call for mandatory reporting of ethnicity pay gap

Published

on

By


A duty for large companies to publish the pay gap between staff of different ethnicities would be a straightforward step to tackle racial inequality in the workplace, according to UK business groups and economists who accuse the government-commissioned race report of downplaying the extent of problems in the labour market.

A storm of criticism greeted the report by the Commission on Race and Ethnic Disparities (Cred), after it concluded last month that the UK was not “rigged” against minorities and that “very few” disparities were linked to racism. But the main complaint from business groups was its failure to recommend a statutory reporting obligation of the kind in place since 2017 for gender pay disclosure.

The report said there had been a “broadly positive story” on ethnic minorities’ place in the labour market over the past 25 years, with “a gradual convergence on the white average in employment, pay and entry into the middle class”.

But Jonathan Portes, professor at King’s College London, said Cred had relied on “crude sleight of hand” in presenting statistics to back up its narrative.

Ethnic pay gaps have not improved over time in the UK, gap in mean wages (%), 9-year rolling average*

A headline gap of 2.3 per cent between the hourly median pay of all minorities and white British employees hides a much bigger gap for certain groups — with those of Bangladeshi and Pakistani ethnicity at particular disadvantage, and black men suffering a far bigger shortfall than black women.

Alan Manning, a professor at the London School of Economics, said that after adjusting the data for personal characteristics such as age, qualifications and family status, there was “no evidence for pay gaps being smaller . . . than they were 25 years ago”, and that while the ethnic penalties for some groups had improved over time, “the overriding impression is of stasis”.

These persistent pay disparities partly reflect occupational segregation, with many ethnic minorities clustered in low-paid jobs with little chance of progression. Andrea Barry, an analyst at the Joseph Rowntree Foundation, notes Bangladeshi men are three times as likely as white British men to work as chefs and waiters, while Pakistani men are more than 10 times as likely to work as taxi drivers.

But they also reflect the barriers to career progression in professional life. Ethnicity pay gaps are largest in managerial, professional and skilled occupations — and when employers examine pay differentials within their organisations, they generally find ethnic minority employees are concentrated in frontline roles, and under-represented at senior level.

The new rise in youth unemployment has been much worse for those from black and Asian backgrounds,  unemployment rate for those aged 16-24 in the UK (%)

A growing number of employers — from law and accountancy firms to local authorities and large companies such as Sainsbury and Network Rail — now report ethnicity pay gaps on a voluntary basis.

Cred endorsed this voluntary approach, arguing that there were statistical “pitfalls” in trying to impose the framework used for gender pay to report outcomes for many ethnic groups.

However, business groups have repeatedly urged the government to introduce a mandatory reporting requirement, modelled on gender pay disclosure, arguing that practical difficulties can be overcome.

Matthew Fell, CBI chief UK policy director, said pay gap disclosure was “one of the most transformative steps a company can take to address race inequality at work”.

Peter Cheese, chief executive of the Chartered Institute of Personnel and Development, criticised Cred for a “missed opportunity” to press for mandatory disclosure, adding: “Racial equality at work is not just about participation in employment but also about progression into more senior roles. Pay reporting can highlight organisations and sectors where this is not happening.”

Sandra Kerr, of Business in the Community, campaigns for mandatory reporting © S Meddle/ITV/Shutterstock

Sandra Kerr, race director at the charity Business in the Community, which has campaigned for mandatory reporting, said that while disclosure was not a “silver bullet”, it prompted companies to examine where people were sitting in their organisation, and was a way of “ensuring that the conversation is had at the top table”.

BITC has found that barely one in 10 large companies reports on its ethnicity pay gap voluntarily, and points to a sharp drop-off in gender pay reporting last year, when the pandemic led to a suspension of the usual requirement to disclose the pay gap between male and female staff.

The government consulted in 2018 on options to introduce a mandatory requirement, and has tested possible approaches to reporting with various businesses, but it has not yet taken further action. The Department for Business, Energy and Industrial Strategy said that it would respond to the consultation “in due course”.

Ethnicity pay reporting is more complicated than for gender. One issue is disclosure: many companies hold only patchy data because employees do not have to disclose their ethnicity and some are reluctant to do so — or unable to find a box to tick that matches their heritage.

A bigger issue is sample sizes. Ideally, employers would give a detailed breakdown of outcomes for different ethnic groups, but it is not always possible to do this while preserving anonymity. Cred argued that many employers recruiting from predominantly white areas do not have enough ethnic minority staff for a median pay comparison to be meaningful.

But business groups say these issues are manageable, if companies also put the headline figures in context and explain how they plan to close pay gaps.

Network Rail has published figures showing the pay gap for black employees is much bigger than for Asian colleagues © Alamy Stock Photo

Network Rail, for example, has published figures showing the pay gap for black employees is much bigger than for Asian colleagues, based on disclosure by 90 per cent of staff. With more than 100 nationalities among its staff, it collects more granular data to inform internal policy but does not publish figures where the sample size is too small to be reliable.

Sainsbury, meanwhile, has published figures showing that median pay for black employees is higher than for white colleagues — explaining that more black staff work in London stores with a higher pay weighting. Mean pay for black employees, who are under-represented at senior level, still lags.

Without an accompanying narrative of this kind, a pay report is “not worth the paper it’s printed on”, Kerr said.

The complexity of reporting ethnicity pay data is no reason not to report it, as Andy Haldane, the Bank of England’s chief economist, has argued.

“Published pay gaps are a starting point for corporate and national accountability and explanation, not an end point,” he said in 2019. “No single metric can perfectly summarise all dimensions of diversity. But publication of a single metric can, and has, served as the catalyst for an explanation and action.”



Source link

Continue Reading

Trending