20  All speeches are available online at www.bankofengland.co.uk/speeches  20  Chart 17: Ethnicity pay gaps by gender  Gender  Female  Male  ‐15  ‐10  ‐5  0  5  10  15  Ethnicity pay gap, per cent Sample average  2018  Source: ONS Labour Force Survey and Bank of England calculations. Note: A positive pay gap in this chart indicates that ethnic minorities of this gender earn less than their white counterparts of this gender, whereas a negative pay gap indicates that ethnic minorities of this gender earn more than their white counterparts of this gender. Section 4: Explaining Pay Gaps In this section, we explore the factors contributing to gender and ethnicity pay gaps. Accounting for individual and job characteristics helps us to estimate conditional gender and ethnicity pay gaps. Can pay gaps be explained by characteristics of the individuals (such as their level of education or location) or the jobs they are doing (such as the sector or occupation)? How much of the pay gap remains “unexplained” once these characteristics are accounted for? As well as providing a greater understanding of the drivers of pay gaps, this approach helps resolve some of the puzzles otherwise apparent in the unconditional pay gap data. The ability to “explain” pay gaps in terms of worker or job characteristics does not necessarily imply these pay gaps are justified or are not therefore a policy problem.
Perhaps surprisingly given the significant share of ethnic minorities in the workforce, ethnicity pay gaps are larger in London than outside London, for all qualifications (Chart 12). These gaps are larger for those with higher levels of qualification, such as a degree. This presents a second puzzle in the unconditional pay gap data. Recent data do not change this picture. In the latest calendar year (2018), ethnicity pay gaps are positive across all qualifications, averaging 8%. They remain larger in London than elsewhere, with the highest ethnicity pay gaps in degree and A-level qualification categories. Unconditional ethnicity pay gaps are still consistently smaller than unconditional gender pay gaps. 15  All speeches are available online at www.bankofengland.co.uk/speeches  15  Chart 12: Median ethnicity pay gap by qualification, sample average Ethnicity pay gap, per cent  London  20  Other 15  10  5  0  ‐5 Degree or equivalent  Higher educ  GCE A Level or equiv  GCSE grades A‐C or Other qualifications No qualification equiv  Ethnicminority minority ethnic  White white  Source: ONS Labour Force Survey and Bank of England calculations. Note: A positive ethnicity pay gap in this chart indicates that ethnic minorities earn less than their white counterparts, whereas a negative ethnicity pay gap indicates that ethnic minorities earn more than their white counterparts. Ethnicity pay gaps differ significantly by occupation and sector.