£7,000 a year – it hits your salary if you come from a working class family | Alan Milburn

Mone of Britain’s professional workplaces shared an embarrassing secret. Working-class employees are paid an average of £6,718 a year less than those from better-off backgrounds even when they do the same job.

Those who receive this class wage gap are hit with a double whammy as the cost of living crisis also eats into their income. Employers and governments must take swift action to stop hundreds of thousands of workers from being undervalued and underpaid.

The data could not be clearer. Research sponsored by the Social Mobility Foundation, which I chair, has revisited the academic work Sam Friedman and Daniel Laurison are calculating the pay gap in the class at 13%. In other words, people from underprivileged backgrounds who have made it into professional work may well be working 13% of the year for nothing. That’s almost one day for every seven days of the week.

Putting it another way, it means from tomorrow, the Class Pay Gap Day, working class professionals effectively stop earning for a year. The gap is even wider – more than £8,000 – for CEOs, financial managers, management consultants and lawyers.

Depressingly, the research found that if gender and ethnic differences are taken into account, those from the working class face a “double disadvantage”. Working-class women are paid £9,450 less than their male colleagues, despite both working in top professional-managerial positions. The study also found that Bangladeshis and black Caribbean heritage were paid £10,432 and £8,770 respectively more than white people in the same job.

This class wage gap is not the only indictment of professional employers. It is morally unjust and economically illiterate. The British profession is the foundation of the modern economy. In 2021, The service industry contributed £1.7tn in gross value added (GVA) to the UK economy, 80% of the total figure. Britain’s success in the global economy relies on the best people, regardless of background, being attracted, not deterred, from working in the profession.

A fair day’s pay for a fair day’s work is the least anyone should expect. When these progressive principles are undermined, people feel their efforts are not rewarded, resentment grows and the risk of greater social isolation.

Fortunately, some entrepreneurs are taking pre-emptive action. Who likes Clifford chance, KPMG and PwC all now publish their classroom pay gap data. Some set targets to drive their progress, recognizing the positive impact that reducing class inequality has on their company culture and, ultimately, their business performance. But for now, they are in the minority. Many more efforts should follow. This is where the government can help.

The introduction of gender pay gap recognition into UK law is a historic and impactful moment in women’s struggle for gender equality. As of April 2017, the organization has 250 or more employees in England, Scotland and Wales is mandatory to publish their annual gender pay gap figures.

The publication of this data has highlighted the alarming, unacceptable chasm between the average earnings of men and women. It has put the issue on the corporate agenda and the worst entrepreneurs in the spotlight. Regulations seem to have a positive effect. Among all the workers, the gender pay gap decreased to 14.9% in 2021 from 17.4% in 2019.

It’s time for a similar approach to closing the classroom pay gap. As it did for the gender pay gap, the government should launch a consultation on creating a legally based register to report the gender pay gap. The fact that gender and racial inequality remain huge problems should not blind either employers or governments to the need for action to close the class pay gap.

At a time when income is being squeezed, changes in the law for example can be part of the solution to combat the cost of living crisis. It will be an important step towards creating a better playing field for people from disadvantaged backgrounds. The class wage gap is a major barrier to inequality and social mobility. It’s time to close.

Alan Milburn is chairman of the Social Mobility Foundation

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