Gender Right: Quotas for women on boards of companies may not be working as envisioned

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Published: February 20, 2018 5:55:04 AM

Quotas for women on boards of companies may not be working as envisioned, the Norwegian example shows

gender rights, reserve board positions for women, Quotas for women on boards of companies, Belgium, france, reservation, Netherlands, norway, European countries Most western European countries either force or urge their firms to reserve board positions for women. (Reuters)

Many gender-rights advocates believe that quotas for women in board positions will address poor representation in top management. Governments have built this into policy. Most western European countries either force or urge their firms to reserve board positions for women. In 2008, Norway compelled listed firms to reserve at least 40% of board seats for women. Failing to this, the government/regulator would dissolve the board. Soon enough, other countries followed with 30-40% reservation for women. Belgium, France and Italy fine or even ban firms from paying existing directors if their boards don’t feature the required number of women. Critics have talked about how this will cause all manner of problems, from proxies to the same women becoming member in many firms, stretching their capabilities too thin. Of course, the latter indicates gender disparity.

However, have quotas helped? An article in The Economist says it is difficult to tell. A study in Norway found that these had very little effect—just 7% of the country’s largest firms have female bosses. France has even lesser, 2%, compared with quota-less US’s 5%. While the pay gap shrunk for women at the top, there was no such effect in the lower and mid rungs of the workforce. In France, Germany and Netherlands, just 10-20% of the senior management jobs are held by women, and this has remained steady over the recent years. The quotas would thus seem to have had little purpose.

However, in the UK, which went with guidelines on reservation, the boards of 27% of large firms had the desired number of women-members in 2017, doubling from a decade earlier. Also, the fears of the same set of women becoming directors in many firms hasn’t materialised in almost all countries , neither has the fear of women becoming proxies for their male peers. But some firms chose to get de-listed instead of complying. There is no evidence yet that quotas are the way to go. But it is far likelier that making it easier for women to enter and stay in the workforce will yield better results.

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