In the past month, there has been a great deal of attention on gender quotas. In this year’s World Economic Forum, a prominent panel including Christine Lagarde, head of the International Monetary Fund, had expressed concern in regarding the dearth of women in managerial positions. The panel stated that there are many women competing for these positions but gender based obstacles continue to determine the composition of top level positions. By showing some examples in which gender quotas encouraged a level playing field, the panel concluded that these quotas are required to provide equal opportunities for women.
Required gender quotas have come in the form of government intervention. In Germany, new legislation will require German listed companies to allocate 30% of seats in supervisory boards to women starting in 2016. Sweden is also pondering forcing corporate boards to bring about greater gender equality in light of recent findings revealing that voluntary equality programs have failed. With the momentum gaining in Europe, American businesses have now come under scrutiny by advocacy groups for failing to attract more women in leadership positions. Efforts to push for gender quotas are indeed laudable, but it is important to understand why such government interference has become a necessity.
As a country praised for its post-World War II economic recovery (Wirtschaftswunder), the German government perceives the lack of women in managerial positions as an economic concern for the near future. Of 191 executive positions in 30 of the country’s largest companies, only 12 are filled by women. Furthermore women only comprise 19.1% of the entire private sector’s managerial positions. Given these statistics, the government recognizes that if more women join the workforce, the size of the country’s workforce will grow significantly, resulting in a strengthened economy. However, Germany has the continent’s oldest population and second lowest birth-rate, meaning that its workforce is rapidly shrinking. Given these conditions, the country needs more women in the workforce in order to strengthen it, but the lack of women in management makes it less attractive for women to join the workforce. Consequently, implementing gender quotas is more than a social issue for the Germans.
In contrast to Germany, Sweden is internationally recognized as a country with the lowest levels of sex-based biases. Yet with regard to the number of women in managerial positions, Sweden does not stand up to its reputation. According to a United Nations report, only 22% of the managerial positions of the country’s top 20 companies are assigned to women. Advocates for gender quotas in Sweden have pointed to a study which shows that diversity in a company’s executive board is positively correlated with higher profits. The study indicates that women bring in different a set of skills and experiences than men and tend to use holistic methods to solve problems.
[quote align=”center” color=”#999999″]there is no sense in ignoring a large talent-pool of applicants who can contribute with their vast array of skills, experiences and education.[/quote]
Both the cases above show that a social cause can be driven by pragmatic reasoning. There is no sense in ignoring a large talent-pool of applicants who can contribute with their vast array of skills, experiences and education. Current thinking has only been counter-intuitive, a mentality which will only perpetuate inequality, and limit a country’s economic potential. Yet critics have argued that mandatory gender quotas are not the solution. They point out that institutionalized quotas will have a detrimental effect on hiring policies as it would encourage “forced” preferential treatment; that is, enforced quotas will in some cases require employers to hire a female candidate who is (or is perceived to be) not as qualified as her male competitor. They instead see voluntary gender quotas as a better option, in which corporations follow their own recommendations, but do not necessarily abide by their rules.
Though critics are right to point out that meritocracy should be preferred, voluntary quotas are not a viable alternative. The example of Swedish corporations has shown that there is no incentive in attracting women to managerial positions while company hiring policies are based on flexible quotas. But critics also point out that that imposing quotas will not be effective; rather the root causes of inequalities must be addressed, that is, why do corporations choose men over women when society perceives both sexes as equal?
These critics have made cogent points. Governments either in the process of implementing gender quotas or pondering doing so must understand whether these policies will achieve the ultimate goal: fostering true equality between men and women in all sectors of society. On the other hand the disparity between the number of men and women in corporate boards is shocking. Very little has been done to create a more conducive environment for women and with economies demanding a larger work force, change needs to be precipitated. Keeping this in mind, mandatory gender quotas might not be the best method to bring change, but for now it is the most promising method.