BME Number - Publication Version For Gov

BEIS analysis to estimate the potential benefit from full
of Black and Minority Ethnic (BME) individuals across th

February 2017
Contact
Harry Ravi
Labour Market
1 Victoria Street
London
SW1H 0ET
Email: harry.ravi@beis.gov.uk
Tel: 02072154884
Contents
Summary and methodology
Caveats
Calculations
Progression calculations
Employment by occupation
Salary by occupation
benefit from full representation
viduals across the workforce
Summary
The potential benefit to the UK economy from full representation of Black and Minority Ethnic (BME) individuals across the
market through improved participation and progression is estimated to be £24 billion per annum, which represents 1.3% o
the year to June 2016. This is the estimate of the direct economic benefit if BME individuals were immediately fully represe
across the workforce in the same proportions as White individuals. This assumes no displacement effects, meaning if the
employment levels and progression of BME individuals increases then this would not impact upon the employment levels a
the White population. It does not capture the second order impacts (for example, impacts on pay and hours worked, reduc
benefit payments), the additional benefits of diversity in the workplace and wider social impacts.
Methodology
This section sets out the methodology and assumptions to monetise the potential benefits if BME individuals were fully rep
across the workforce, for the working age population (aged 16-64). The figure is made up of two elements, participation an
progression, which together represent the economic value to the economy:
1. Participation:
If BME individuals were fully represented across the workforce, each ethnic group would have the same employment rate a
individuals. Taking the total working age population in each BME group and the employment rate for the White group gives
estimate of the total number of people in employment if the employment rates were the same across all ethnic groups.
Using the total working age population (ages 16-64), multiplied by the proportion of the working age population in each et
group, multiplied by the employment rate for each ethnic group gives an estimate of the current number of individuals in
employment for each ethnic group.
The difference between the estimate for the current number of individuals in employment and the estimate if BME individ
fully represented in employment gives the lost potential in terms of numbers of people in employment. This number is mu
the median salary for all employees (this includes both full time and part time, for ages 16-64) to calculate the monetary be
total benefit through closing the employment rate gap for ethnic minorities is £16.8 billion per annum.
2. Progression:
A) Progression is defined using standard occupational classification codes and comparing the proportions of different ethn
across the standard occupation groupings. Overall, BME individuals are less likely to be in jobs in the higher occupation gro
even after controlling for education. Controlling for differences in education, we construct a scenario in which BME individu
the same distribution in occupation groups as White individuals and compare this scenario to the actual distribution for BM
individuals.
B) We have a breakdown of the composition of education levels for White and BME groups. These are categorised by: degr
equivalent, higher education [1], A-level, GCSE, other qualifications, no qualifications. The composition of education levels
between BME and White groups. A higher proportion of BME individuals have degrees than White individuals, though a hig
proportion of BME individuals also have no qualifications. Using this breakdown we can estimate the number of BME peop
each level of education.
C) For each education level, there is a breakdown of the proportions of people in employment for each occupation code fo
White and BME groups. For example, the distribution of employed people by occupation group for White individuals with d
and BME individuals with degrees. Overall, there tends to be higher proportions of White individuals in more senior occupa
lower proportions in lower skilled occupations compared to BME individuals after controlling for differences in education.
D) Multiplying the number of BME people in each education level by the proportion in each occupation groups gives an esti
equivalent, higher education [1], A-level, GCSE, other qualifications, no qualifications. The composition of education levels
between BME and White groups. A higher proportion of BME individuals have degrees than White individuals, though a hig
proportion of BME individuals also have no qualifications. Using this breakdown we can estimate the number of BME peop
each level of education.
C) For each education level, there is a breakdown of the proportions of people in employment for each occupation code fo
White and BME groups. For example, the distribution of employed people by occupation group for White individuals with d
and BME individuals with degrees. Overall, there tends to be higher proportions of White individuals in more senior occupa
lower proportions in lower skilled occupations compared to BME individuals after controlling for differences in education.
D) Multiplying the number of BME people in each education level by the proportion in each occupation groups gives an esti
the number of BME people in employment for each occupation grouping. These are multiplied by the median salary (for ag
including full time and part time) for employees for the relevant occupation group to calculate the total salaries. This gives
estimate of the current total salaries for BME individuals.
E) If BME individuals were fully represented across the workforce, it is assumed that the proportions in each occupation gro
be the same as for White individuals. Applying the occupation distribution of White individuals to the BME population, con
the differences in composition of education levels, gives an estimate of the number of BME individuals in each occupation.
salary data for each occupation is used to estimate the total salaries. In this scenario the total salaries of BME individuals a
as there are generally more people in higher occupation groups who earn more, and fewer people in the lower skilled occu
groups who earn less.
F) The difference between the current estimate of salaries of BME individuals and the scenario in which BME individuals ar
represented gives the total monetary potential benefit. The total benefit if BME individuals had equal progression to White
individuals in the labour market is £7.1 billion per annum.
Footnotes
[1] “Higher education” is defined by the ONS. It includes qualifications above A level standard or equivalent, and qualificati
degree level.
Caveats and limitations
This methodology has the following assumptions and caveats:
· It assumes no displacement, meaning if the employment levels and progression of BME individuals increas
this will not impact upon the employment levels and pay of the White population.
· The number measures the potential benefits using salaries as a proxy for economic value. This could be
considered therefore to underestimate the full economic value of BME individuals.
· We control only for education, as controlling for any more variables (such as age – a commonly used proxy
experience, gender, industry or other common wage equation variables) would make the sample sizes in the
analysis too small to be robust.
· The employment rate and occupation composition of the White individuals is assumed to be the scenario
individuals were fully represented across the workforce. This is not necessarily the full potential of these
individuals, as there are many programmes underway to boost the participation and progression of all indivi
the UK above current levels.
· It does not include the second order effects (for example, impacts on pay, hours worked, reduction in bene
payments), wider social impacts and potential multiplier impacts on the economy. It also does not capture a
effects on productivity beyond the marginal increase from higher skilled work which is reflected in higher sa
· It has not included the opportunity cost for those moving in to work. This includes the activities that these
individuals would have been doing otherwise, for example, unpaid household work or child care. Additional
do not make any assumptions about preferences or well-being.
· It does not capture benefits of diversity in the workplace.
· Those aged 65 and above are not included in the analysis, as the size of the over 65 population will advers
affect the employment rates used in the analysis. However there will be BME individuals aged over 65 who h
the ability and skills to participate in, or progress through, the labour market.
· Those moving into work through increased participation are assumed to earn the current median salary an
progression uplift is not applied to these additional workers.
· The number is likely to be a slight underestimate as the median salary is based on the total population incl
BME individuals. If BME progression in the labour market increased then the median salary for all those of w
age would increase, leading to an increase in the benefits estimated from the increase in participation.
Calculations
Participation
Total working population, ages 16-64 [1] 41,407,599
Ethnic group Percentage of population, ages 16-64 [2]
White 86.2%
Mixed/Multiple ethnic groups 1.2%
Indian 2.8%
Pakistani 2.0%
Bangladeshi 0.8%
Chinese 0.7%
Any other Asian background 1.3%
Black/African/Caribbean/Black British 3.3%
Other ethnic group 1.8%
Change in number of BME individuals in

employment if fully represented compared to 739,751
current estimate
Average salary (£) [4] 22,764
Total increase in salaries from participation 16,839,689,417
Progression
Total salaries BME current 196,228,819,274

Total salaries BME at full potential 203,311,551,624
Total increase in salaries from progression 7,082,732,350
Total
Total increase in salaries from participation 23,922,421,767

and progression
Calculations
Sources and notes
[1] Source: ONS Population Projections, 2016. Available at:
https://www.ons.gov.uk/peoplepopulationandcommunity/populationandmigration/populationprojections/datasets
onuksummary
[2] BME includes those who identify as an ethnicity other than White. Source: BEIS analysis of ONS Annual Populatio
2016.
[3] Source: DWP Labour Market Status by Ethnic Group, 2015. Available at:
https://www.gov.uk/government/statistics/labour-market-status-by-ethnic-group-annual-data-to-2015
[4] Median gross annual pay for all employees, ages 16-64. Source: BEIS analysis of ONS Annual Survey of Hours and
Calculations
Estimated number in Difference between current
Employment rate, ages Current estimated
number in employment employment if fully and fully represented
16-64 [3] represented estimates
75.6% 26,974,782
64.6% 318,317 372,519 54,203
70.8% 812,069 867,125 55,056
54.9% 461,475 635,474 173,999
54.9% 181,862 250,433 68,571
56.5% 154,409 206,607 52,198
66.0% 366,209 419,476 53,267
63.9% 862,578 1,020,515 157,937
58.8% 435,823 560,344 124,521
Calculations
tion/populationprojections/datasets/tablea11principalprojecti
EIS analysis of ONS Annual Population Survey, Year to June
p-annual-data-to-2015
s of ONS Annual Survey of Hours and Earnings, 2015.
Calculations
Progression calculations
Total population, ages 16-64 [5] 41,407,599

Proportion of population who are BME, ages 16-64 [6] 13.8%
Breakdown by qualification level, ages 16-64 [7]

White
Degree or equivalent 27.9%
Higher education 9.1%
GCE, A-level or equivalent 23.9%
GCSE grades A*-C or equivalent 22.5%
Other qualifications 8.2%
No qualifications 8.3%
Current estim
Degree or equivalent Numbers in employment

White
1 'Managers, Directors And Senior Officials' 998,054
2 'Professional Occupations' 3,413,089
3 'Associate Professional And Technical Occupations' 1,495,953
4 'Administrative And Secretarial Occupations' 577,623
5 'Skilled Trades Occupations' 195,549
6 'Caring, Leisure And Other Service Occupations' 312,127
7 'Sales And Customer Service Occupations' 251,206
8 'Process, Plant And Machine Operatives' 84,237
9 'Elementary Occupations' 194,797
Higher education Numbers in employment

White
2 'Professional Occupations' 572,358
3 'Associate Professional And Technical Occupations' 430,497
GCE, A-level or equivalent Numbers in employment
White
5 'Skilled Trades Occupations' 1,242,216
GCSE grades A*-C or equivalent Numbers in employment

White
Other qualifications Numbers in employment

White
No qualifications Numbers in employment

White
Total
Sources and notes
[5] Source: ONS Population Projections, 2016. Available at:

https://www.ons.gov.uk/peoplepopulationandcommunity/populationandmigration/populationprojections/dataset
cipalprojectionuksummary
[6] Source: BEIS analysis of ONS Annual Population Survey, Year to June 2016.
[7] Excludes those who responded "Don't know". Source: BEIS analysis of ONS Annual Population Survey, Year to Ju
BME
37.0%
7.1%
16.3%
14.9%
13.9%
10.8%
Estimate if the BME population had the same occupational

Current estimate distribution as the White population
bers in employment Salaries Numbers in employment

BME White BME BME
134,684 38,377,588,775 5,178,919,534 176,258
581,372 116,842,586,749 19,902,501,460 602,757
223,012 44,494,675,274 6,633,128,349 264,188
128,840 10,537,283,381 2,350,355,848 102,009
30,018 4,830,061,747 741,450,599 34,534
78,101 4,112,889,753 1,029,131,198 55,122
76,772 2,954,425,636 902,919,185 44,363
25,768 1,877,405,051 574,296,455 14,876
49,809 2,530,957,973 647,158,834 34,401

BME White BME BME
23,564 11,117,712,275 906,101,263 29,829
61,079 19,593,904,821 2,090,968,132 59,050
33,761 12,804,444,766 1,004,166,141 44,414
21,713 5,274,436,984 396,091,447 29,829
14,788 5,896,576,146 365,260,029 24,630
43,628 3,858,442,917 574,885,928 30,210
16,462 1,425,525,079 193,609,005 12,505
16,640 1,753,441,512 370,849,808 8,117
21,966 1,897,461,450 285,402,203 15,067
BME White BME BME
41,819 23,214,188,340 1,608,039,012 55,034
36,239 16,388,252,096 1,240,599,668 43,640
62,200 27,097,537,037 1,850,031,162 83,051
68,132 14,022,163,736 1,242,897,327 70,070
48,926 30,682,695,844 1,208,465,235 113,240
105,781 11,232,229,445 1,393,870,766 77,706
105,605 6,850,183,058 1,242,012,906 53,096
38,001 8,386,098,457 846,942,770 34,301
80,584 8,153,635,205 1,047,005,845 57,207

BME White BME BME
44,900 20,773,272,218 1,726,506,347 47,632
14,574 8,238,122,521 498,910,879 21,218
44,525 20,225,521,769 1,324,316,167 59,956
63,170 17,493,263,091 1,152,387,777 84,549
34,023 18,131,872,571 840,369,842 64,724
81,227 9,192,576,417 1,070,324,758 61,510
79,298 8,569,237,280 932,622,116 64,242
68,153 11,904,885,519 1,518,953,465 47,097
105,927 12,514,422,853 1,376,287,728 84,924

BME White BME BME
206,613 5,458,085,613 7,944,762,269 239,671
244,930 2,147,823,959 8,384,858,192 105,936
184,449 4,618,932,161 5,486,131,400 262,210
164,915 3,088,623,697 3,008,454,272 285,877
474,834 9,182,663,870 11,728,375,537 627,727
419,987 2,377,566,804 5,534,166,611 304,660
324,194 2,116,839,937 3,812,842,331 303,909
688,960 9,436,080,781 15,355,032,686 714,880
1,047,339 7,012,758,267 13,607,846,253 911,350

BME White BME BME
157,927 5,434,174,580 6,072,683,919 182,649
50,025 1,109,344,270 1,712,534,004 41,881
72,711 2,530,068,264 2,162,655,541 109,938
109,938 2,746,380,699 2,005,549,219 194,573
411,832 8,737,738,784 10,172,241,758 457,204
231,510 2,229,892,840 3,050,606,031 218,713
304,512 3,022,455,260 3,581,354,923 332,142
638,980 8,024,668,905 14,241,118,534 465,347
931,276 9,107,735,327 12,099,866,602 905,973
196,228,819,274
/populationprojections/datasets/tablea11prin
ual Population Survey, Year to June 2016.

ulation had the same occupational
s the White population
Salaries
BME
6,777,540,653
20,634,578,850
7,857,827,449
1,860,900,301
852,996,264
726,342,597
521,756,069
331,552,592
446,971,034
Salaries
BME
1,147,013,009
2,021,500,752
1,321,032,993
544,163,015
608,349,036
398,075,082
147,071,247
180,902,345
195,760,865
Salaries
BME
2,116,197,408
1,493,947,413
2,470,202,137
1,278,255,613
2,797,023,978
1,023,926,165
624,460,327
764,473,845
743,282,575
Salaries
BME
1,831,580,122
726,355,545
1,783,284,947
1,542,381,605
1,598,687,825
810,509,777
755,549,944
1,049,654,164
1,103,397,091
Salaries
BME
9,215,924,232
3,626,579,770
7,799,021,827
5,215,110,937
15,504,838,230
4,014,498,320
3,574,263,553
15,932,730,208
11,840,973,820
Salaries
BME
7,023,288,216
1,433,749,399
3,269,935,178
3,549,503,777
11,292,912,460
2,881,979,567
3,906,310,719
10,371,319,825
11,771,106,954
203,311,551,624
Employment by occupation and highest qualification
Degree or equivalent [8]

White BME
1 'Managers, Directors And Senior Officials' 13.3% 10.1%
2 'Professional Occupations' 45.4% 43.8%
3 'Associate Professional And Technical Occupations' 19.9% 16.8%
4 'Administrative And Secretarial Occupations' 7.7% 9.7%
5 'Skilled Trades Occupations' 2.6% 2.3%
6 'Caring, Leisure And Other Service Occupations' 4.2% 5.9%
7 'Sales And Customer Service Occupations' 3.3% 5.8%
8 'Process, Plant And Machine Operatives' 1.1% 1.9%
9 'Elementary Occupations' 2.6% 3.8%
Higher education
White BME
GCE, A-level or equivalent

White BME
GCSE grades A*-C or equivalent

White BME
Other qualifications
White BME
No qualifications
White BME
Sources and notes
[8] Occupations are defined by Standard Occupational Classification codes.

Analysis is for those in employment aged 16-4. Source: BEIS analysis of ONS
Annual Population Survey, Year to June 2016.
Salary by occupation
Median Salary (£) [9]

All occupations 22,764
Sources and notes
[9] Median gross annual pay for all employees, ages 16-64. Source: BEIS analysis of ONS Annual Survey
of Hours and Earnings, 2015.
f ONS Annual Survey

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BEIS analysis to estimate the potential benefit from full

of Black and Minority Ethnic (BME) individuals across th

· It does not capture benefits of diversity in the workplace.

Total working population, ages 16-64 [1] 41,407,599

Ethnic group Percentage of population, ages 16-64 [2]

Change in number of BME individuals in

Average salary (£) [4] 22,764

Total increase in salaries from participation 16,839,689,417

Total salaries BME current 196,228,819,274

Total increase in salaries from progression 7,082,732,350

Total increase in salaries from participation 23,922,421,767

EIS analysis of ONS Annual Population Survey, Year to June

Total population, ages 16-64 [5] 41,407,599

Breakdown by qualification level, ages 16-64 [7]

Degree or equivalent Numbers in employment

Higher education Numbers in employment

GCSE grades A*-C or equivalent Numbers in employment

Other qualifications Numbers in employment

No qualifications Numbers in employment

[5] Source: ONS Population Projections, 2016. Available at:

Estimate if the BME population had the same occupational

bers in employment Salaries Numbers in employment

bers in employment Salaries Numbers in employment

bers in employment Salaries Numbers in employment

bers in employment Salaries Numbers in employment

bers in employment Salaries Numbers in employment

ual Population Survey, Year to June 2016.

Degree or equivalent [8]

GCE, A-level or equivalent

GCSE grades A*-C or equivalent

Sources and notes

[8] Occupations are defined by Standard Occupational Classification codes.

Median Salary (£) [9]

Sources and notes

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