The Government is being urged to introduce mandatory reporting on the ethnicity pay gap for all companies employing over 250 workers.
The Runnymede Trust and ShareAction, the charity campaigning for responsible investment, suggested legislation to end the “deep-rooted inequality” in pay identified over the last four years.
A policy document published by the two organisations said making it mandatory to publish ethnicity pay gap differentials was the first step to measuring and addressing the scale of racial disparities and tackling structural racism in companies.
Senior campaigns officer at ShareAction, Kohinoor Choudhury said: “The evidence is clear – there is a structural wage differential in far too many companies.
“Not only is this is bad for those who suffer from it, it is bad for our economy.
“Only 18 out of the FTSE 100 companies presently volunteer to report their pay gap.
“Mandatory transparency is the only way to begin to fix this.”
The two organisations also recommended legislation to require employers to publish an action plan to combat any disparities.
Dr Shabna Begum, interim co-chief executive of the Runnymede Trust said: “Mandatory ethnicity pay reporting should no longer be an issue for debate.
“The Government needs to catch-up with the shift in the business community, where the conversation is no longer about the merits of reporting, but instead revolves around to maximise the benefits of reporting to meet social justice obligations.
“The avoidance of statutory measures has relied on this idea that ethnicity pay gap reporting is a ‘burden’, and yet our research shows the real burden is the absence of consistency and guidance – this can only come from the Government.
“The UK’s labour market remains riddled with racialised pay gaps. Ethnicity pay gap reporting and, crucially, the related action plans that it necessitates, are a vital first step to disrupt and diminish the barriers faced by the UK’s ethnic minority workforce.”