Jessica Fino 22 Feb 2018 10:48am

Workplace discrimination costs UK £127bn per year

Discrimination based on gender, ethnicity and sexual orientation leads to £127bn in lost output

The average 20% gender pay gap in favour of men alone costs the UK £123bn in lost output, a Centre for Economics and Business Research (Cebr) report, commissioned by workplace wellbeing organisation INvovle has found.

Moreover, £2.6bn is being lost as a result of discrimination against ethnic minorities. The report found white people earn on average £67-£209 more per week than similarly qualified individuals of a different ethnic background. While £2bn is lost to discrimination over sexual orientation.

Cebr said that the most diverse workplaces, in terms of gender, ethnicity and sexual orientation, are 12% more likely to outperform industry averages than the least diverse businesses.

They found that companies with a well-developed diversity policy outperformed the national industry average by 15%.

After analysing 517 businesses, the research found a strong correlation between diversity and financial performance.

Christian Jaccarini, economist at Cebr, said, “Firms seeking a competitive advantage ought to consider both how they can achieve a more diverse workforce and what pro-diversity policies they can put in place, as our research shows that the most diverse firms and the most pro-diversity firms are more likely to be top performers in their industries.

“Similarly, although the UK is more diverse than ever, discrimination is still costing the economy enormously. In fact, our upper-bound estimate finds that UK GDP would be around 7% higher if workplace discrimination based on gender, sexual orientation and ethnicity was eliminated. At the economy’s current rate, that growth would take just under four years to achieve.”

Cebr said the main economic problem resulting from discrimination in the workplace is an underutilisation of human resource, through lower productivity and wages.