A square mile still obstinately white

The City has dramatically changed over the past two decades. The nostalgic image of the bowler-hatted gentleman sauntering to work is long gone. In its place reigns the slick-suited, BlackBerry-carrying guy or girl shouting across a crowded dealing room. However, there is one constant – the City is still overwhelmingly white.

Mention ethnic diversity in a City conference room and the ensuing awkward silence conveys a clear message: everyone knows it is an issue but no one wants to do anything about it. Some even deny it is an issue at all, with one senior partner of a City law firm reportedly claiming not to know the meaning of the term “diversity”.

Those of us who have worked in the City see few faces of colour in the glass palaces that populate the square mile, particularly in front office and senior roles. The facts are stark. Just 2.5 per cent of FTSE 100 board members are from ethnic minorities, according to Cranfield School of Management, and there is one non-white chief executive, Arun Sarin at Vodafone (an import from the US). Fewer than 3 per cent and 4 per cent respectively of the partners of most prestigious City law and accountancy firms are drawn from a non-white background, according to Legal Week and Accountancy Age. The investment banks cleverly give percentages based on global headcount rather than a City office breakdown – I wonder why? When one considers that almost one in three Londoners is from a non-white background, the figures are quite shocking.

“But there is a dearth of suitable candidates,” is the cry of City personnel departments. This argument does not hold up in 2006. Record numbers of ethnic minority students are entering higher education and they are more likely to go to university than their white counterparts. More of them are entering the professions than ever before, so why do disparities remain in the City? A recruitment agency, Talent! Recruitment, which specialises in hiring diverse workforces, was recently asked by a City accountancy outfit to find candidates for certain roles. Talent found diverse candidates with excellent degrees and from the “preferred” universities. The candidates were rejected on the grounds that they lacked “polish”. Herein lies the problem: culture and class.

It seems that senior managers are doomed to recruit in their own image. Above and beyond the required qualifications and skills, they look to recruit candidates they could have “a drink and a laugh” with and with whom they would feel comfortable working under severe pressure. Many of these mostly white, upper-middle class, middle-aged men have little experience of forging close relationships with people from another class, let alone from an ethnic minority.

The wine bar and the pub are the after-work venues of choice which, for example, excludes whole swaths of Muslim employees. Golf is often the corporate entertainment activity of choice – how many black people, other than wealthy footballers and Tiger Woods, does one see on a golf course?

Class determines access to the networks and mentors that provide careers advice and arrange work experience, which are important factors in helping young people choose their careers. More important, it determines which university you attend. African and Caribbean children who are largely drawn from the lower socioeconomic classes will gravitate towards universities close to their family home, primarily for financial reasons, rather than to the “preferred” universities. This means that City employers, who tend to focus resources on recruiting from the Russell Group of top universities, fail to reach these candidates.

So what is to be done? City recruiters who are serious about addressing ethnic diversity in the workplace must widen the pool of universities they focus on and they need to work with London’s ethnic minorities to improve access to work-experience programmes for youngsters. However, all of this will come to nothing if culture and class continue to be obstacles.

Those who buy the City’s services should use their purchasing power to force change. Barclays recently demanded diversity statistics from every City law firm it uses. There is evidence that this practice, which has been used in the US for some time, is beginning to spread but it is not enough. Action is needed from one of the biggest procurers of City services: the government.

If we are serious about building greater equality in Britain, we must tackle the rampant inequality in the City. In today’s world, money and power are inextricably linked. If ethnic minorities fail to progress in the City, their power and influence will continue to be compromised. In purchasing City services such as pension fund management, the government should invite tenders only from City businesses that publish diversity figures – that would be a start.

The next step would be to consider rejecting tenders from City businesses with workforces that do not reflect the society the government serves. The law may need to change to allow this, but it would certainly concentrate minds.

The writer is an employment lawyer and a member of the management committee of Compass, the left pressure group