Disability and the Employment Gap: The next equality battle for business leaders

Kim Hoque, Professor of Human Resource Management at Warwick Business School, takes a look at how the disability employment gap in the UK has been left to widen and contends that pressure is building for companies to do something about it.

Kim Hoque, Professor of Human Resource Management at Warwick Business School, takes a look at how the disability employment gap in the UK has been left to widen and contends that pressure is building for companies to do something about it.

With kind acknowledgements to Core Insights at Warwick Business School for The Next Equality Battle for Business Leaders.

The disability disadvantage

Disabled people face a significant and enduring disadvantage in the labour market. They are over-represented in low-skilled and low-status jobs, are more likely to work in jobs for which they are overqualified, and have poorer access to career progression and training opportunities. They also report lower work-related wellbeing and lower job satisfaction than their non-disabled counterparts.

They also suffer a 15.5 per cent pay gap, which means that, on average, disabled people are paid about £3,000 less per year, based on a 35-hour working week. The Trades Union Congress has recently sought to establish a ‘Disability Pay Gap Day’. In 2019, this fell on November 4, this being the day of the year on which disabled people effectively stopped getting paid.

Equally worrying, if not more so, is the size of the disability employment gap. This has remained stubbornly high in the UK, and stands at around 29 percentage points, with only 53 per cent of working-age disabled employees being in work in comparison with about 82 per cent of the non-disabled working-age population. This does not compare well with other EU countries. Across the EU as a whole, the disability employment gap is around 20 per cent. Finland, France, Latvia and Sweden have gaps of around 10 per cent, while in Luxembourg it is less than three per cent.

The extent of disability disadvantage is, however, not just a matter of concern for the large numbers of working-age disabled people themselves (around a fifth of the working-age population is living with a long-term health condition or disability), but also for employers.

Why employers should worry

Disability and the employment gap

This is for a number of reasons. The first is a straightforward moral argument. Disability equality is a social justice issue; hence it is something that all progressive, socially responsible employers should seek to promote. This relates not only to job seekers, but also to the organisation’s existing workforce, given that most disabilities develop in adulthood once individuals are already in employment. Employers have a duty of care towards their employees as they age, enabling those who develop disabilities to stay in work. This requires significant investment in occupational health services to ensure the requisite adjustments are made and to facilitate reintegration after the onset of long-term health problems or permanent disability.

A second reason relates to the shifting focus of UK Government policy. Until recently, this has focused largely on supply-side labour market activation aimed at getting disabled people off benefits and into job-seeking activity (via Work Capability Assessments, for example). However, this approach has proved limited, as the persistently high disability employment gap demonstrates. As such, Government attention is now turning to the role of employers in helping boost employment opportunities for disabled people. One example of this is the introduction in November 2018 of the voluntary disability reporting framework. This calls on employers to report the percentage of individuals within their organisation who are disabled or have a long-term physical or mental health condition, and provide a narrative to outline their activities in the recruitment and retention of disabled people.

The Government believes this will help employers to workforce, better monitor internal progress in building a more inclusive environment, and enable them to access a wider pool of talent and skills, with consequent gains for performance and productivity. While it is currently up to employers to decide whether they wish to heed this call, it is certainly in their interests to do so.

The importance and challenges in disability reporting

The clamours for disability employment reporting to become mandatory (as has happened for gender pay gap reporting) will inevitably increase should significant numbers of employers fail to engage on a voluntary basis. Disability employment reporting is, however, far from straightforward, and remarkably few employers collect accurate data on the number of disabled people they employ.

Where they do collect data on employees’ disability status, this typically happens when they apply for jobs. However, this does not provide a reliable estimate of their total number of disabled employees, as it does not account for fluctuating conditions or for the emergence of disability once people are in employment. Also, disabled people are often unwilling to disclose their status given they fear that doing so will lead to discrimination.

While better data can be collected via periodic anonymous staff surveys, even here assurances need to be given that the data will be treated entirely anonymously, and the purpose of the data collection exercise needs to be made clear in order to allay fears surrounding disclosure. Nevertheless, while disability employment reporting may be difficult, it is far from impossible. The civil service already tracks the number of disabled employees at different hierarchical levels, and the National Health Service (NHS) has recently introduced its Workforce Disability Equality Standard, which requires all NHS Trusts to track specified metrics on the employment of disabled people. This shows it can be done. Hence the difficulties involved are not an excuse for inaction.

Government and companies

Also indicating the Government’s increased focus on the role of employers are its greater efforts to encourage sign-up to its Disability Confident campaign. Disability Confident was launched in 2016 as the successor to the Two Ticks ‘Positive About Disabled People’ scheme. It has three levels: ‘committed’, ‘employer’ and ‘leader’. Employers signing up to the campaign are expected to make commitments regarding how they recruit, support and retain disabled people, with the commitments increasing at higher levels. At level three (‘leader’), for example, employers are expected to encourage and mentor firms in their supply chain to become Disability Confident. However, the Government has become increasingly aware, given the process-orientated nature of the scheme, that it is possible for employers, even at level three, to secure accreditation without employing a single disabled person.

Indeed, my own research with Nick Bacon, of The Business School (formerly Cass), and David Allen, of Warwick Business School, suggests that neither disability employment rates nor disabled people’s experiences of work are likely to be better in organisations that sign up than in those that do not, indicating that Disability Confident is largely toothless in encouraging employers to raise their game.

Reflecting this, it is increasingly anticipated that changes to Disability Confident are on the horizon that will shift the focus from process to outcomes. Indeed, in November 2019, the Government announced a requirement for Disability Confident level three employers to report publicly on their disability employment. This is a positive step. However, only 263 of the 15,124 Disability Confident firms are at

level three. As such, it is possible this requirement will be extended in future to all Disability Confident employers, and also for employers to develop action plans (as they are encouraged to do where gender pay gap reporting is concerned) that lay out how they intend to increase their percentage of disabled employees.

A further indication of the Government’s focus on the role of employers relates to changes to the Public Services (Social Value) Act. David Lidington, as Minister for the Cabinet Office, announced that all Government departments must take social value into account within procurement decisions. This has major implications, not least given total Government procurement expenditure was £284 billion in 2017/18. While the scheme’s details are yet to be unveiled, it is likely that one of the ways companies will be able to demonstrate social value is via their positive treatment of disabled job seekers and employees. As such, the ability of employers to win Government contracts may, in future, be dependent on the manner in which they treat disabled people.

There are, therefore, clear signs of an increased Government focus on initiatives that promote employers’ role in addressing disability disadvantage, and it is in employers’ own self-interest to engage with these initiatives. This is not only because it may determine their success in winning Government contracts, but because it may also enable them to influence initiatives before they are implemented.

Brexit and perhaps a hidden gift

On their own, these are important reasons for employers to increase their focus on the employment of disabled people, but they are not the only reasons. Employers’ bodies, including the Confederation of British Industry, the Federation of Small Businesses and the Institute of Directors, have unanimously

expressed alarm that the Government’s post-Brexit immigration plans and the curtailment of the free movement of people will exacerbate labour supply problems and skills shortages. However, one way in which these problems might be addressed is if employers think creatively about how to make their workplaces more accommodating to disabled people, thus enabling them to draw on the large pool of disabled people who are willing to work but are currently not in employment.

This is no doubt one reason why the Government is taking the disability employment agenda more seriously. It is increasingly aware that a failure to solve labour supply problems in the post-Brexit era will have severe economic consequences. However, employers often argue that making the necessary adjustments will be dauntingly expensive and they lack the necessary expertise. This may in part be due to a lack of awareness of the available Government assistance. The Centre for Social Justice’s research suggests only 25 per cent of employers have even heard of the Government’s Access to Work scheme, which offers advice and financial help to employers.

In addition, many of the adjustments disabled people often need are, in reality, relatively low cost or cost-neutral. These include time off for medical appointments, greater flexibility in working patterns,

opportunities to work remotely, and flexibility regarding the start and end time to the working day and in the design of jobs. These should, of course, not be viewed as disability-specific practices, but instead as progressive employment practices that employers should seek to apply to their whole workforce. By doing so, they would likely gain not only from having fewer unfilled vacancies and happier disabled employees (as studies from the US demonstrate), but also from happier non-disabled employees, thus leading to greater employee retention of both disabled and non-disabled employees, and a more motivated and productive workforce.

However, while the implementation of such practices may sound like a positive idea in addressing disability disadvantage, it is debatable whether they will gain much traction in the absence of leadership at the very top of the organisation. There is now considerable research showing that only when equality is led from, and championed by, the boardroom does it turn into genuine action across the organisation. It is therefore incumbent on business leaders to develop a climate in which disabled people are viewed as an asset, and their contribution to organisational effectiveness is genuinely valued. As research by Susanne Bruyére and her Cornell University colleagues shows, this involves making the employment of disabled people the responsibility of a senior board member (thus establishing it as a clear priority), placing disabled people in leadership positions, and incorporating disability goals into middle managers’ performance plans. This is clearly the right thing to do to improve the working lives of disabled people.

As such, by developing a climate in which disabled people are able to thrive, businesses will also gain from greater employee retention, smaller skills gaps, a more motivated workforce and ultimately a more effective and profitable organisation.

Sources: Connolly, P., Bacon, N., Wass, V., Hoque, K. and Jones, M., 2016 . Ahead of the arc – a contribution to halving the disability employment gap. [pdf] The All Party Parliamentary Group for Disability. Available at: <https:// www.disabilityatwork.co.uk/wp-content/uploads/2016/11/All-Party-Parliamentary-Group-on-Disability-Ahead-of-the-Arc-Report.pdf>. Hoque, K., Bacon, N., Wass, V. and Jones, M., 2018. Are high-performance work practices (HPWPs) enabling or disabling? Exploring the relationship between selected HPWPs and work-related disability disadvantage. Human Resource Management, 57(2), pp.499–513.

Professor Kim Hoque, Warwick Business School
Kim Hoque

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