A study published today by Skills for Business reveals employers pay ethnic minority workers less money than their white counterparts. The report shows the average hourly earnings for white men to be £9.03, but this falls to £6.74 for Pakistani men. And this isn't entirely arising from differences in personal characteristics or education. UK employers are potentially wasting millions of pounds by not making the most of the skills available throughout the entire workforce - across all backgrounds.

The study, undertaken by the Sector Skills Development Agency, found that large sections of the UK workforce are under-utilised, with many people having skills and qualifications that are not put to good use by employers. For example, 29% of refugees were working in September 2001 compared to 60% of ethnic minorities in the general population. The work they do and seek is often not commensurate with their skills.

Professor Mike Campbell, Director of Strategy and Research at the Sector Skills Development Agency, said:"We know that many employers suffer from skills gaps and skills shortages which affect their profits and productivity. This research shows that the skills they need might well be out there - we just need to look in the right place, or think a bit more creatively about how we can get people in to the labour market.

"Skills for Business, the new network of employer-led Sector Skills Councils, has been tasked by the government with informing and influencing policy on training and skills development relating to productivity. Sector Skills Councils have a key role to play by gathering labour market intelligence and understanding future skills needs, employment patterns and demographic trends and making the business case to employers so they can ensure their policies and practices are sufficient to deal with potential labour shortfalls.

"Through the establishment of the network, we are not only working to ensure that the UK workforce has all the skills needed by employers, but also that the skills of the existing UK workforce are effectively utilised."

The study also revealed that a high proportion of people who are currently economically inactive would be able to work if certain barriers were removed. Some two million people in this group do want to work - a potentially huge supply of labour if circumstances could be created to meet their desire to move into work.

The UK Workforce: Realising our Potential'" was published on 13 December 2004. Copies can be downloaded from www.skillsforbusiness.org.uk