BAME workers are disproportionately likely to work in the hospitality sector – but face significant pay penalties in those jobs

Around 1 in 12 workers from Black, Asian and Minority Ethnic (BAME) backgrounds work in the hospitality sector, but many of these workers face significant pay penalties compared to White British men, according to new Resolution Foundation research published today (Thursday).

Ethnic minorities in the hospitality sector, authored by Sharon Mai, explores the experiences of BAME workers in hospitality – a sector that was one of the fastest growing areas of the labour market over the last decade, but has been hit hardest by the pandemic.

The report notes that BAME workers are disproportionately likely to work in hospitality – with 1 in 12 (8 per cent) employed in the sector, compared to just 1 in 20 White British workers (5 per cent). Overall, 300,000 people from BAME backgrounds work in hospitality.

The report finds that while hospitality as a whole disproportionately employs young people – over a third of its workforce are aged 16 to 24 years old – this is not always the case for BAME workers.

For example, the typical age of a Bangladeshi worker in hospitality is 42 – higher than the typical age for Bangladeshi workers across the whole economy (35), and higher than White British workers in hospitality (28).

The report notes that hospitality is one of the lowest paying sectors in the economy, with a typical hourly pay of just £8.72 and almost a quarter (23 per cent) of workers paid at or below National Living Wage.

Furthermore, BAME workers within the sector also suffer ‘pay penalties’ – pay gaps that account for workers’ age, qualifications, experience, and the kinds of jobs they do – relative to White British workers. Crucially, these pay penalties are bigger than the raw pay gaps found in official earnings data – suggesting that the extent of disadvantage is bigger than previously thought.

BAME men face the largest pay penalty compared to White British men of 7 per cent – or 65 pence an hour. Pay penalties are also notable for BAME women (5 per cent) and White British women (3 per cent), equivalating to lower hourly pay of 45 pence and 28 pence respectively.

However, disaggregating the ethnic groups which comprise ‘BAME’ gives a more complex picture of experiences of working in the hospitality sector, and shows that no single ethnic group does better or worse than others across the board.

Indian workers in hospitality are among the highest paid ethnic group per hour (£8.96) and among the most likely to be in high paying occupations (28 per cent), such as hotel and restaurant managers. This corresponds with two in five Indian hospitality workers holding a degree (41 per cent) – the ethnic group with the highest proportion holding degrees.

In comparison, one in four Bangladeshi hospitality workers have no qualifications (26 per cent) and typically earn 12 per cent less than Indian hospitality workers at £7.85 per hour.

The Foundation says that the ability of the hospitality sector to weather the pandemic and recovery quickly will be crucial to the living standards of many BAME workers and their families.

It adds that looking beyond the pandemic, the industry also needs to explore more closely why such significant pay penalties exist for its BAME workforce.

Nye Cominetti, Senior Economist at the Resolution Foundation, said:

“Around one in twelve Black, Asian and Minority Ethnic workers are employed in hospitality, and the hits to the sector during the pandemic are having a huge impact on their living standards.

“But it is not just the pandemic that is affecting the pay of BAME workers in hospitality; they also experience significant pay penalties relative to White British workers in a sector that already has very low levels of pay.

“As workers from BAME backgrounds are disproportionately likely to work in hospitality, a significant number of workers risk moving into unemployment when the furlough scheme ends in the Spring. The Government should bear that in mind for the jobs support programmes it is providing.”