Why do UK Chinese out-earn British counterparts?

Experts reveal reasons behind surprise results

Chinese and Indian workers in the United Kingdom are earning more than their British counterparts, according to a new report.

Pundits advise that the findings may be volatile because of being from a small sample, but say that the outcome is mainly due to the fact that families from those ethnic groups tend to invest heavily on higher education.

The study by the UK's Office for National Statistics, also known as ONS, reveals that expatriate workers from China and India consistently had the highest median hourly pay of any ethnic group from 2012 to 2018.

The new report is the first of its kind to comprehensively analyze the ethnicity pay gaps in the UK, which found that in 2018, employees from the Chinese diaspora on average earned 30.9 percent more than white British employees.

Carol Woodhams, professor of Human Resource Management at the University of Surrey, said: "It is likely that Chinese families prioritize investment in education and tertiary qualifications.

"They may make well-informed choices relative to which subject majors to pursue, that lead to highly paid occupations. The evidence shows that Chinese workers commence their UK careers at a much higher hourly pay rate."

Hamish Anderson, public policy analyst at the ONS, said: "One of the main reasons the Chinese ethnic group may see higher wages than other ethnic groups could be due to visa restrictions.

"For example migrants from China are likely to have higher qualifications or skills needed to enable them to get a visa in the first place. Although there is a difference between nationality and ethnicity so this obviously wouldn't apply to everyone."

The study found three ethnic groups were shown to have a higher median hourly pay than white British in the UK last year, with those with a Chinese background earning 15.75 pounds ($19.65) an hour, while the average Indian worker earned 13.47 pounds, and workers from the mixed/multiple ethnicity group earned 12.33 pounds an hour. White British workers earned 12.03 pounds an hour.

When looking at the findings, Woodhams said the first point to note is that this reflection is based on a relatively small sample of Chinese employees.

"This makes it statistically unstable," she said. "Small changes to the fortunes of this limited population could have large implications for the pay gap. There are also other influences that might not be immediately obvious. For example, there will be unequal geographic distribution of Chinese employees — there is likely to be a higher density of Chinese workers in cities where pay is higher, especially in London. This will raise the median Chinese wage."

Woodhams pointed out there are other possible differences in ways that Chinese women engage in the labor market compared to their UK counterparts, adding "they may have less time out of the labor market and greater familial support for childcare responsibilities, lowering their incidence of part-time working and keeping careers on track."

Geraldine Healy, professor of employment relations at Queen Mary University of London, said: "This is certainly an eye-catching headline. However, we do need some caution in taking the figure at face-value."

In the report analysis, the white British contingent was estimated to account for 79.5 percent of the working population, followed by white other (7.9 percent) and black African, Caribbean or black British (3.2 percent). The ethnic groups that make up the smallest proportions of those employed within Great Britain are the Bangladeshi and Chinese ethnic groups, at 0.7 percent and 0.5 percent respectively.

"The Chinese make up the smallest proportion of Britain's migrant groups at 0.5 percent," said Healy. "Such a small sample means that estimates of average hourly pay are likely to be more volatile and inaccurate."

The study also showed the two ethnic groups with the highest median hourly pay, Chinese and Indian, had a larger difference in hourly earnings between men and women.

Chinese men on average earned 19.1 percent more per hour than Chinese women, and Indian men earned 23.3 percent more per hour than Indian women. Similar to the Bangladeshi ethnic group, the Chinese ethnic group has a smaller sample size than the other ethnic groups.

Healy said: "We should recognize that these figures do not represent the full Chinese population in Britain … Nevertheless, this report is important as it draws attention to the Chinese, a growing ethnic group in Britain, who merit more research so that we can garner a more complete understanding of their employment experiences."

In 2016, the British government set out to examine the barriers faced in the workplace by people from ethnic minority groups and to consider what could be done to address them.

Woodhams said that based on the ONS analysis, race still plays a role in determining pay, with some of the patterns in pay determined by differences in the way that different racial groups are socialized to engage with work, careers and lifestyle.

"Some of it is also related to recent immigration patterns," she added. "First-generation Chinese immigrants are still paid less than their UK-born counterparts and much less than second-generation Chinese."

To help improve employment and career prospects for those from ethnic minority backgrounds, Woodhams said, the government should work to ensure that everyone can fairly access career opportunities and realize their labor market potential.

"Government interventions to confront inequality on the grounds of race, therefore, need to commence with ensuring equality in health, housing and education so that all racial groups are in a good position to compete for the opportunities that the UK labor market brings, including self-employment," she said.