Rapid increase in BAME graduates still leave big gaps when it comes to their jobs and pay packets

The proportion of BAME workers with degrees has increased rapidly over the last two decades, but they still face a jobs gap and pay penalty compared to white graduates in the workforce, according to a new analysis published today (Saturday) by the Resolution Foundation.

The Foundation says that the disparities facing BAME groups shows why the government is right to be undertaking its race disparity audit, which is due to be published next week. It adds that these labour market disadvantages for BAME households are a big living standards concern, and that fully understanding why they’re happening is an important step towards tackling them.

The Foundation’s analysis shows that the proportion of working age people with degrees has increased across all ethnic groups in recent decades, from 12 per cent in 1996-99 to 30 per cent in 2014-17. This growth has been particularly rapid among BAME groups.

The proportion of working age Indian, Pakistani and Bangladeshi people with degrees has more than trebled since the end of the 1990s to their current levels of 50, 30 and 25 per cent respectively. Over the same period, the proportion of white people with degrees has also increased but less rapidly, rising from 12 to 28 per cent. Chinese people are the most likely to have degrees at 60 per cent.

However, the Foundation warns that there is a long way to go before this impressive progress on educational attainment fully feeds through into the labour market, with graduates of all BAME groups facing a jobs gap compared to white people with degrees.

The analysis shows that despite strong employment growth in recent years, Bangladeshi and Pakistani graduates are around 12 per cent less likely to be in work than white British graduates, and that Indian and Black Caribbean graduates have a jobs gap of around five per cent.

Furthermore, the jobs gap for BAME graduates is actually bigger for young people (16-34 year olds) – 15 per cent compared to 10.3 per cent for all working age adults – who still start out on a disadvantaged footing, despite their progress on educational attainment.

BAME graduates are also more likely to work in low-paid occupations such as caring, leisure and sales jobs, and elementary occupations such as cleaners and security staff. The report finds that Black African (25.2 per cent) and Bangladeshi (21.8 per cent) graduates are twice as likely to work in these low-paying occupations as Indian (12.6 per cent), white (10.6 per cent) and Chinese (8.7 per cent) graduates.

The higher likelihood of BAME graduates working in low-paying sectors is a key cause of the pay gap that affects almost all BAME groups. The report finds that Chinese and Indian male graduates are the only groups to earn more than white male counterparts (whose median hourly pay is £18.57). The biggest graduate pay gaps – of around 28 per cent – are between white men and Black African women, Pakistani women, and Pakistani men.

Kathleen Henehan, Policy Analyst at the Resolution Foundation, said:

“The rising share of people going to university is a well know British success story of recent decades. The progress made by black and ethnic minority groups is astounding, with the share of Indian, Pakistani and Bangladeshi graduates trebling in less than 20 years.

“But despite this success, graduates from a black and ethnic minority background still face significant employment and pay penalties in the workforce. These labour market disadvantages are a big living standards concern and mean we risk failing to make the most of the investment made in their education.

“The government is right to be exploring these and other significant race disparities. Understanding the extent and root causes of these disadvantages is an important step towards the far bigger challenge of tackling them.”