From education to employment

UK ethnic minorities seeing sharp progress in education, but wages and wealth lag behind

two people walking away from camera

However, big differences remain between ethnic minority groups, new IFS Deaton Review of Inequalities chapter shows

A new study for the IFS Deaton Review of Inequalities, funded by the Nuffield Foundation, provides a comprehensive assessment of ethnic inequalities in the UK.

Educational performance among most ethnic minority groups in the UK has improved remarkably relative to the White majority over recent decades, with those from Black Caribbean backgrounds the major exception. However, most groups continue to earn less than their White British counterparts, and all groups earn less on average than we would expect given their education, background and occupation. Evidence of discrimination in the labour market is clear, and wealth inequalities are likely to prove especially hard to diminish.

But the study also finds greater diversity between different ethnic minority groups than between the White population and all ethnic minorities grouped together. For example, nearly one in four people of Indian ethnicity are among the highest income fifth of the population – more than is the case for White British. Meanwhile, fewer than one in 20 of those from Pakistani and Bangladeshi backgrounds are in this top income quintile. This provides further evidence that lumping all ethnic minority groups together can be uninformative.

This new report forms a central part of the review, not least because the ethnic minority population has grown rapidly. The fraction of the population in England and Wales from ethnic groups other than White more than doubled to 14% between 1991 and 2011. New figures from the 2021 Census are expected soon and will show a significant further increase.

The authors say the picture ‘is neither universally positive nor universally gloomy’, and point to a complex picture with big differences between different ethnic groups.  

There have been significant improvements in the educational attainment of almost all ethnic minority groups, though the extent of this improvement varies.

  • In England, most of the largest minority ethnic groups are at least as likely to obtain good English and Maths GCSEs as White British students. The rate of change in educational performance for some groups has been remarkable. Just 15 years ago, Bangladeshi pupils were 10 percentage points less likely than White British to obtain good Maths and English GCSEs. They are now 5 percentage points more likely to do so. Black African and Pakistani pupils have also largely closed the gap with White pupils, but Black Caribbean pupils have, if anything, fallen further behind.
  • Students from all of the large minority groups are more likely than White students to attend university. In 2019, Pakistani students were 19 percentage points, Bangladeshi students 27 percentage points, and Black African students 29 percentage points more likely to attend some form of higher education than were White British students.
  • However, for all three of these groups, the share of university students attending the most competitive institutions is substantially lower than among White British, and students from all minority ethnic groups are less likely to complete their degree or obtain good grades at university than their White counterparts.

Apparent educational success has not yet translated into better, or even equal, success when it comes to earnings.

  • Ethnic inequalities in pay are persistent, but vary hugely between ethnic groups. Median weekly earnings among employees for Black Caribbean men were 13% below White British men in 2019, with Pakistani and Bangladeshi pay 22% and 42% lower, respectively. Earnings among Indian men, however, were 13% higher than White British men. Indian men, both immigrant and UK born, have enjoyed rapid average wage growth. Black Caribbean men have not.
  • Differences in employment rates across ethnic groups are much smaller than they were. Working-age Black African and Bangladeshi men had employment rates close to 30 percentage points lower than White men in the mid-1990s; by 2019, those same gaps were just 2–3 percentage points. Among women, participation rates differ much more markedly. Bangladeshi and Pakistani women of working age are more than 30 percentage points less likely to be active in the labour market than White British women.

Although gaps have been closed significantly since the 1990s, poverty rates among minority ethnic groups remain substantially elevated compared with those of the majority White population.

  • In 2018–19, non-White children accounted for a fifth of children overall but nearly a third of children in poverty. Two-thirds of Bangladeshi children and nearly half of Black Caribbean children lived in households in poverty (after accounting for housing costs).

All ethnic minority groups are under-represented in the top 20% of the wealth distribution.

  • Only 2% of Black African households were in the wealthiest fifth of British households pre-pandemic, while more than half were in the least wealthy fifth. This partly reflects time spent in the UK and hence opportunities to accumulate wealth, but we can expect these gaps to be persistent.

Health outcomes were particularly bad during the Covid pandemic for some ethnic minority groups – especially Pakistanis and Bangladeshis.

Professor Heidi Safia Mirza (UCL LSE) said:

‘Understanding ethnic inequalities in the UK is a moral, political and economic priority. By carrying out fresh analysis of numerous primary datasets we have provided an objective description of the current situation and how it has developed over time. The picture is neither universally positive nor universally gloomy. Most ethnic minority groups in the UK are doing better than they were and are doing particularly well in education. On the other hand, most continue to earn less than their White British counterparts, and all earn less on average than we would expect given their education, background and occupation. Evidence of discrimination in the labour market is clear, and wealth inequalities are likely to prove especially hard to shift. Policymakers need to understand and acknowledge all these nuances and complexities if we are to make further progress in tackling remaining inequalities.’

Professor Imran Rasul (IFS and UCL) said:

‘This comprehensive description of ethnic inequalities shows not just the extent of differences between ethnic minority groups and the White majority, but also how different has been the experience of different ethnic groups. The differences between groups are greater than the differences between the White majority and the ethnic minority population taken as a whole. This understanding is a first step to an effective policy response. We also need to understand much more about what causes differences within and between ethnic minorities in the education and justice systems, and in the labour market.

We at the IFS are committed to getting a much better quantitative understanding of these causal mechanisms. It is our intention to follow this piece of work with new and substantial research aimed at understanding the causes of inequalities within and between different ethnic groups.’

Mark Franks (Nuffield Foundation) said:

‘There are large and persistent income and wealth gaps between different ethnic groups in the UK. Children from Bangladeshi, Pakistani and Black African and Caribbean heritage, are significantly more likely to grow up living in poverty than the white majority. Financial stress from not having an adequate income or work, reverberates through family life, with a range of consequences, including poorer mental health outcomes. Household income also affects children’s cognitive, social, emotional, behavioural and physical development in ways which can have impacts into adulthood. There is therefore a risk that current ethnic inequalities will continue to perpetuate and transmit to future generations.’

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