Dimensions of diversity beyond gender: socioeconomic background
Dimensions of diversity beyond gender
Diversity, equity and inclusion (DEI) has been a focal point on the investor agenda for many years but the scope of diversity is evolving. Although gender continues to be a central and critical theme for DEI progress, investors can broaden the areas of diversity they can engage on. ‘Gender and Beyond: Diversity, Equity and Inclusion’, published by the First Sentier MUFG Sustainable Investment Institute highlights four broader dimensions of diversity: disability and neurodiversity; LGBTQ+; Ethnicity; and Socioeconomic background. These dimensions have been underexplored but are increasingly attracting stakeholder attention, alongside gender.
Investors have an opportunity to address DEI concerns through engagement and voting among investee companies. To support investors in deepening their understanding in this important area, we provide an overview of disability and neurodiversity in the workplace context, including actionable insights and engagement questions.
Socioeconomic background
Socioeconomic background can be a key factor in the workplace context. Higher socioeconomic status is linked to better workplace outcomes such as higher pay, recruitment, or promotion opportunities however these may be barriers for individuals with lower socioeconomic status.
While socioeconomic background is an underrepresented aspect of DEI, it can be considered a central factor for developing successful DEI strategies. There is much potential for businesses to integrate social mobility into their human capital strategies to address equality and inclusion barriers. Nuanced consideration of socioeconomic context within the corporate approach to DEI is likely to maximise cognitive diversity in the workplace, cultivate a workforce that better reflects a business’ customer base, which can result in the economic benefits in terms of improved productivity, social impact, and business performance.
Workplace challenges
Lower socioeconomic background is often linked to poorer education, lower standards of living, fewer job opportunities, higher income inequality and limited connections or professional networks. In the workforce, during periods of economic downtown, socioeconomic disadvantage can be further amplified. For example, vulnerable employee segments like minimum wage ‘gig’ workers can experience outsized impacts from layoffs and pay rate volatility.
Disadvantages can also be further exacerbated when socioeconomic status intersects with other diversity characteristics. For example, an individual with disabilities from a lower socioeconomic background is more likely to experience greater disadvantages in the workplace and beyond compared to a person with disabilities from a more privileged socioeconomic background.
Social mobility outcomes at a national level can vary greatly: depending on a country’s support for education, health, housing and childcare, employers may need to work harder to bridge social gaps and inherent inequalities.
Studies have shown that boosting upward social mobility correlates to national economic benefits. The World Economic Forum cites significant increases in GDP across countries globally linked to improvements in social mobility.
Cumulative additional GDP growth by 2030 (million US$)
Source: SII, World Economic Forum Global Social Mobility Report, 2020
While some jurisdictions require gender pay gap reporting, disclosure on pay gaps linked to other aspects of diversity, such as socioeconomic background, tends to be poor. One overall 2023 estimate1 of the UK’s socioeconomic pay gap is 12%, capturing the difference in earnings from employees in the same occupation from upper-middle and working-class backgrounds. For comparison, the headline 2023 UK mean gender pay gap was reported to be at 7.8%.2
Further, when considering the intersection of socioeconomic background and gender in the pay gap context, the figure increases by approximately 16%.
Best practice
Employers have an opportunity to foster social mobility by placing socioeconomic inclusion considerations at the centre of their approach to DEI and human capital. Areas of focus include eliminating unpaid internships, compensating financial expenses incurred during the interview process, and contextual recruitment (top grades from a state-funded school in an economically disadvantaged area will be more difficult to achieve than a top fee-paying school), and potential based (rather than experience based) recruiting. Targeting candidates from non-traditional backgrounds and expanding the breadth of schools and universities where talent is sought is also important.
Finally, facilitating an inclusive workplace culture that encourages conversation and openness surrounding social mobility and socioeconomic status is likely to increase the retention of employees from disadvantaged backgrounds. Integration of socioeconomic background as part of broader DEI and human capital strategies, provisioning of mentoring, equal training opportunities and leadership training are all among the key measures businesses can take to cultivate an inclusive culture for all.
Company engagement questions on socio economic background:
- How is socioeconomic diversity integrated into the organisational approach to DEI? (e.g. data collection via employee surveys and progress tracking)
- Is impact of intersectionality of socioeconomic background with other diversity characteristics measured over time?
- Are contextual recruitment practices in place? (e.g. looking at applicants’ academic abilities in the context of their socioeconomic background)
- Are internships paid and targeted publicly at a diverse range of applicants?
- Are non-graduate career routes given the same potential opportunities for successful performance as graduate intake?
- Are key training opportunities made clear and broadly available so that employees may request access themselves?
Dimensions of diversity beyond gender series
1 Social Mobility Research, The Class Pay Gap 2023 . See also Sam Friedman and Daniel Laurison,The Class Ceiling: Why it pays to be privileged, 2019, Great Britain: Policy Press
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