Why Japan is One of the World’s Safest Countries
Mairi McLaren
Feminists and the #MeToo movement have been major forces in recent years in pushing for gender equality across all walks of life. What has been interesting and encouraging has been the way that this has penetrated boardrooms in a number of ways. One is the astonishing increase in cases of senior politicians, business leaders, film and other arts executives having to leave their posts due to accusations of sexual harassment in the workplace, some occurring a good long time ago, but only just, under pressure, beginning to come to light. The other is the increase in the number of women in boardrooms. In the UK, the percentage of female representation on FTSE 100 companies boards by the end of 2021 was 44%.
But is this enough? Ursula van der Leyen, the EU Commission’s President, who was once the Family Affairs, women, senior citizens and youth Minister for Germany, doesn’t think so. In January 2022, she expressed her hope that a ten-year dormant EU gender balance in the boardroom directive, which set quotas for board membership of 40% for women non-executive directors in listed EU firms, could now be pushed forward. France, which has taken the EU presidency for the next six months, seems to be supportive. Germany has been against it. Its stance so far has been that it should be left to individual states to decide and implement best practice in this area rather than making it an EU-wide obligation. Nevertheless, its own mandatory quotas established some five years ago meant that the German figure had reached the directive’s ambition. And the new German coalition which now includes the Greens may be prepared to soften their approach.
It remains to be seen whether that optimism proves correct. In any case, it is likely to be an uphill struggle for the Commission President. So far, only eight of the 27 EU countries have mandatory national targets. This will need to change if serious progress is to be made. And we still don’t know exactly what happened to women’s position during the pandemic. The EU gender equality index, which measures the distance from men, still shows a significant deficit, and has been stuck at roughly the same level since around 2015. The last year for which data is available, 2020, showed only a small upward tick. The average for the EU, where 100 indicates equality, was 67.9.
Progress will not happen without government intervention
Von der Leyen has come out strongly, saying, “I have learnt that, to have a critical threshold of women on boards, you need a legal [framework] nudging companies in the right direction.” She is, of course, right. The sad truth is that most of the progress made in women’s social, political, and economic position In the last 100 years or so was not the result of market forces. Instead, it has been government legislation that either gave women rights—voting, access to contraception, property rights, access to education and employment, maternity pay, equal opportunity—or abolished restrictive laws, easing the path to labour participation. Sadly, in many parts of the globe, as the World Bank regularly reports, restrictive legal obstacles remain, depriving women of the economic empowerment necessary to achieve equal status in society, for them and their family. Even in the West where legislative obstacles have now more or less been removed, the system remains suboptimal. Women often work below their skill level, or part-time to accommodate their specific needs, as they often serve as caretakers to children or ailing family members. The result is that, in the UK, for example, weekly average earnings through women’s lifetime are some 30% less than men’s and their pension wealth is just a fifth of that of men. That makes very little economic sense.
Why does this happen? Simply because barriers of a different kind and of varying intensity remain. These include: lack of financial support and entrepreneurship funding, difficulties in re-entering the market full time after giving birth, lack of role models, bad education and career advice, not enough transparency over decision-making among one’s peers, and little openness about pay differences. Women, especially mothers, also have fewer networking and mentoring opportunities and suffer from conscious and unconscious bias, which is difficult to pinpoint and call out. They travel less for jobs and have reduced choices in their careers once they have children. The result is that pay gaps persist with women overrepresented in low paying occupations which are most at risk of being automated through AI in the future.All this puts them more in danger of falling into poverty, while the economy loses talent. This can only be described as a massive market failure.
An Office for National Statistics analysis found that only 36% of the pay gap could be explained by identifiable factors such as age, occupation, length of holding the post etc. Surveys of sectors that tend to attract highly-educated women at entry level such as the legal profession, for example, show a prevalence of sexism that discourages women from staying and/or trying for the top jobs. A laziness also permeates. The hiring process is also often skewed against women if the hirer is a man, as the tendency is to choose people who are similar to oneself— and if the boss is a man, they are more likely to hire another man.
What can be done
Of course, there are all sorts of remedies to gender imbalance in hiring— anonymous CVs that hide applicants’ gender; ensuring that enough women are in any shortlist; women-only shortlists; a woman making the hiring decision. Many firms are trying a combination of these measures. I have been lucky in my career, as most of my bosses were men who were supportive and willing to give me a chance. And my stint in the civil service, which was deliberately much more diverse on gender, ethnicity, sexual orientation and disability, was an eye-opener. But in 2021, the percentage of female executive directors was still only 13.7% of senior executives in the FTSE 100 and 11.3% in the FTSE 250, hardly changing from a year earlier.
So what can extra legislation do? Surely it should push the needed cultural change along, with consequences for non-compliance. Of course, it isn’t always going to be easy for organisations to adapt. But legislation that is either already developed or is under consideration includes shared paternity leave with exact same benefits, which would mean that mothers would no longer have to bear the “motherhood penalty” of the pay gap widening for years after a child is born. We should also enshrine into law the right to greater flexibility in working hours and practises for all. This would be good for women and men alike in managing work-life balance, and as we found during the pandemic with working from home and currently evolving hybrid models, such flexibility also helps raise productivity. Additionally, in some Nordic countries, people have the legal right to access what others are earning. We are trying a limited version of that policy in the UK, with amazing results. See, for example, the furore at the BBC when it was made public that the wages of female presenters were often paid only a fraction of their male colleagues’ rate, even though they were generally perceived to be doing more or less the same job as them. Information asymmetry is a major market failure, and such remedial actions can only help.
But what about boards, which is how we started? Of course, spreading the use of quotas would help. But though it allows for some boxes to be ticked, I see no evidence that adding a couple of women NEDs, often with multiple board positions, on a traditionally all-male board does much to change an organisation’s culture. For the women NEDs involved, however good they may be, their ability to influence the way things are done is limited by being many steps removed from an organisation’s actual day-to-day operations.
Shifting Focus
The good news is that the focus is beginning to shift in the UK and elsewhere towards both mandatory quotas in countries which only have voluntary ones but also extend quotas to below board level. It is indeed having women in senior executive positions within a company that can make the biggest difference in company culture, as well being the main way of demonstrating that company culture has shifted. Germany has now introduced quotas for management boards, rather than just supervisory boards. But a lot of time has been wasted since the initial attempt by the EU to legislate—remember Norway, a member of the EEA, introduced boardroom quotas as far back as 2008. And on the executive side, the situation is improving at a glacial pace.
As of late 2021, though considered a record high, only 41 women were running a Fortune 500 company. In the UK, the number of female CEOs in the FTSE 100 stands at 8! There’s not much to show in terms of progress for women’s emancipation and economic empowerment, despite all the noise around the issue. Even when at the top, women have to fight to be taken seriously, as Mary Ann Sieghart covers in her book, The Authority Gap: women like Christine Lagarde, head of the European Central Bank and former German Chancellor Angela Merkel swapped notes about being conscious of this, and both felt they needed to prepare extra hard for meetings to be more than just on top of their brief.
Women have made great strides in the past couple of decades. Rather than resting on our laurels, now is the time to keep the momentum moving forward and demand more seats around the table—in the boardroom and otherwise.