Business Minister Margot James has written to the chief executives of all FTSE 350 companies urging them to improve diversity and inclusion in the workplace.

This follows the publication of the findings of a review led by Baroness McGregor-Smith last month. This review found that there were still barriers for people from ethnic minorities (BME) wanting to enter the labour market in the UK.

The review also found that employment rates for people from BME backgrounds are 12% lower than their white counterparts at 62.8%, with just 6% reaching top level management positions. It was estimated that this was costing the UK economy the equivalent of 1.3% in GDP a year.

Business Minister Margot James said: "It simply makes no business sense for people to be left behind because of their ethnic background and I am asking FTSE 350 companies to play their part in driving the agenda for greater diversity in the workplace.

"Genuine and lasting change must come from within the business community and I encourage companies to take forward Baroness McGregor-Smith’s recommendations."

In her letter, James called on the UK’s largest companies to take up key recommendations from the review including: publishing a breakdown of their workforce by race and pay; setting aspirational target and nominating a board member to deliver on those targets.

McGregor-Smith, said: "I’m delighted to see the government playing its part in calling on the UK’s largest businesses to improve diversity and inclusion in the workplace.

"FTSE 350 companies must help to bring about change by committing to greater transparency and accountability on this vitally important issue as set out in the recommendations in my review."

In the coming months, James will chair the first meeting of the Business Diversity and Inclusion Group set up following the publication of the McGregor-Smith Review. The government said the group will bring together business leaders and organisations to coordinate action to remove barriers in the workplace. Participants will include McGregor-Smith, Sir Philip Hampton and Dame Helen Alexander, who are leading a review aimed at increasing female leadership in FTSE companies and Sir John Parker, who has concluded a consultation on recommendations to increase BME representation in the boardroom.

Separately the Guardian newspaper has published research in the Directory of Social Change which shows that female representation on the companies on 399 companies analysed stands at 22%, however this is higher than similar research in 2013, when the overall percentage of women on boards was just 13%.

The Guardian found that  16% of companies in the 2017 research sample had no female board members at all. While this compares with just 33% in 2013, the Guardian said it ws astonishing that so many boards continued to exclude women entirely.