UK business and union leaders have urged government to introduce mandatory reporting of the pay gap between staff of different ethnicities, calling it an “obvious first step” to tackle racial inequality in the workplace.

The coalition said compulsory disclosure of data on employee salaries, following the framework already in place for gender, would “transform our understanding of race inequality at work” and drive action to address it.

In a joint letter to No 10 last week, the CBI business lobby, Trades Union Congress and Equality and Human Rights Commission, an independent watchdog, called on ministers to go beyond the recommendations made in April of the Commission on Race and Ethnic Disparities, which drew heavy criticism when it concluded that “very few” ethnic disparities in the UK were linked to racism.

The Commission on Race and Ethnic Disparities endorsed the voluntary approach to ethnicity pay reporting already taken by some large employers, but held back from recommending a statutory obligation, arguing there were statistical “pitfalls” in trying to impose the framework used for gender pay.

One issue is patchy data, as there is no obligation on employees to disclose their ethnicity and some are reluctant to do so. The commission argued that companies recruiting in predominantly white areas do not always have enough staff from ethnic minority backgrounds for a median salary comparison to be meaningful.

The CBI, TUC and EHRC said these hurdles could be overcome and that mandatory disclosure was required to increase the number of employers reporting ethnicity pay figures and drive the changes that are needed.

They want the government’s long-delayed employment bill to include a requirement for organisations to report key data on pay and a narrative to explain any disparities and plans for how to address them.

“Companies want to see the introduction of mandatory ethnicity pay gap reporting, in the same way as they do for gender,” said Matthew Fell, CBI chief UK policy director.

As more groups move towards transparency and publish data on staff salaries, along with plans to tackle disparities, businesses would “better understand the concerted and meaningful action they need to take . . . improving how they attract, hire and promote ethnically diverse employees all the way to the boardroom”, he added.

“The sad reality is that even today race still plays a significant role in determining people’s pay and career progression,” said Frances O’Grady, TUC general secretary.

The commission’s report said there had been a “broadly positive story” on ethnic minorities’ place in the labour market over the past 25 years, with “a gradual convergence on the white average in employment, pay and entry into the middle class”.

But a headline gap of 2.3 per cent between the hourly median pay of all minorities and white British employees hides a bigger gap for certain groups — with those of Bangladeshi and Pakistani ethnicity at particular disadvantage, and black men suffering a far bigger shortfall than black women.

“This problem isn’t going to magic itself away,” said O’Grady.