“Women hold up half the sky,” Mao Zedong once said.
They also hold up 41% of China’s GDP, the biggest share in the Asia Pacific (followed by Thailand, Vietnam, Singapore, Australia, South Korea and the Philippines). In the Philippines, 142 women hold professional or technical jobs for every 100 men; China boasts 114 of the world’s 147 female self-made billionaires (America has 14). But China could add 13% to its GDP by 2025, if it increased women’s employment and productivity as quickly as the leading countries in Asia. That would translate into an extra US$2.6 trillion by 2025 (an economy the size of France). In India, the relative gain could be even greater (18%), because it has far more room to improve.
This would require 37% of Indian women to be in the workforce, up from 27% now. The most egalitarian employment rates in the region are found in two of its poorest: Myanmar and Nepal, where many women have no choice but to work as farmers. As I see it, GDP data understate women’s contributions.
In China, women did 73% of unpaid work (including child-care, shopping and housework), according to the OECD. Women’s share is even higher in South Korea (83%), Japan (84%) and India (85%). What will happen to those unpaid hours if women’s paid work is increased? No doubt, some may be “outsourced” to professional cleaners, cooks and childminders, contributing further to raise the GDP. Perhaps, they should be paid for their efforts.
Norway pioneered a policy to deal with the persistent & stubborn gender gap. Amid objections from shareholders, Norway introduced in 2008 compulsory quotas requiring stock market-listed companies to give women at least 40% of their board seats (up from less than 8% in 2002), or face dissolution. Critics decried mandatory quotas as the wrong way to promote women. But they have caught on. In Belgium, Germany and France, women make up 30-40% of board directors in large listed firms, 3 to 4 times the share of a decade ago.
In US, which has no quotas, representation has inched up to 20%. Malaysia has a 30% quota. But does the spread of women in the boardroom justify the quota system itself? Many say: token non-executives is demeaning for women, who prefers to rise on the basis of merit rather than sex. It also jeopardises corporate governance, the sceptics warned, by putting women in positions for which they were possibly underqualified or staffing several boards with the same clique of high-achievers – known disparagingly as “golden skirts”.
The evidence suggests otherwise. In large listed European companies, “golden trousers” are almost as common: 15% of male directors sit on 3 or more boards; 19% of women directors do. Compared with the clubby, white-maned boards of old, women bring youth and foreign experience.
Sure, women are getting on to boards faster (10 years, against 12 for men) and in greater numbers. Yet, as I see it, the evidence so far also undermines the business case for quotas. Studies from at least 6 countries on companies’ performance, decision-making and stock market returns fail to show that quotas do make a consistent difference, good or bad. That has not stopped pension funds lobbying for more inclusiveness.
That highlights a problem with boardroom quotas (dubbed today as the 30% Club). They are a distraction. In Norway, only 7% of the biggest companies have female bosses. In Britain, France, Germany and Netherlands, 80-90% of senior-management jobs are still held by men.
Across OECD, the median wage for women graduates is 26% less than for men. Surely, a larger number of women on boards would help right these imbalances. So far, they have not, simply because their problems are deep rooted. The workplace has proved to be too complicated as well. Quotas have yet to prove their worth. Other proven policies may be a better bet. Fathers should be encouraged to take parental leave, so that child-bearing does not harm a mother’s chance of making it to the top. Variable working hours should become the norm. High-quality child-care, and more accommodating school calendars, would help.
Time may yet prove that boardroom quotas are good for business as a whole. So far, they have been a sideshow. The important task is to make it easier for women lower down the company to keep good jobs and fight their way to the top on their own merits. Sure, women are taking small steps in the boardroom. But giant leaps are still needed elsewhere.
Shareholders are key
In 2012, the UK government-backed initiative set a target for women to make up a quarter of the boards at the UK’s largest public companies by 2015. It was reached. Since then, however, progress has been snail-like. The successor project, the Hampton-Alexander review (HAR) aims for women to make-up a third of FTSE 350 boards, executive committees and direct reports to executive committees by 2020. There has been since barely any progress.
In 2017, women made up 30% of FTSE 100 boards, and 27% of the combined executive committees and direct reports. In the mid-cap FTSE 250, women now account for a quarter of boards, executive committees and direct reports. Meanwhile, the number of female chairs in the FTSE 350 has inched up from 17 to a measly 22, while female CEOs has actually fallen, from 15 to 12. Making FTSE 350 meet HAR targets by 2020 means that, over the next two years, half of all appointments to boards, excos and direct reports will have to go to women. This is unlikely.
Companies that are proving the biggest drags on progress seem to feel little need to change their ways. The explanations for this sorry state of affairs have become worn with overuse: lack of a pipeline of qualified women; those who make it are often not in roles that provide the traditional path to the chair; & women executive directors are still disproportionately in roles without real power over the P&L or pay. It has become obvious that, for some companies, having a more diverse senior leadership team is neither an aim nor a desire. What’s to be done? Mandatory quotas are regarded as unnecessarily heavy-handed. The evidence on their effectiveness is today rather mixed: six European countries have a higher proportion of women in senior corporate roles than the UK, five of them backed by legislatively enforced targets.
But even Norway has seen relatively little trickle-down effects to the lower ranks. In the end, boards listen more to investors than they do to government. Fund managers and proxy advisers are not the most revolutionary of groups. But since diverse leadership is supposed to mean higher profitability, corporates now need to put their money where their mouth is.
Why women shun STEM
Why do relatively few women work in STEM, i.e. science, technology, engineering & mathematics? Recent studies suggest that women’s superior verbal and analytical skills lead them to take up career choices outside STEM. It is well acknowledged that professors have profound influence over students’ career choices, and there is a bias (even antagonism) towards STEM from outside scientific fields. They suggest STEM is only for those who enjoy “rote” work; that engineering is not creative.
Much of the bias is sexist. Second, STEM disciplines are caricatured as a gulag for creative types, despite STEM being the most creative and satisfying discipline. Third, women tend to do better than men verbally – a consequence of early development advantages.
Psychologically, the average men and women have similar abilities in science & maths. But because women do better in non-science subjects, there is that powerful pull towards the humanities and social sciences. So, women often jump the STEM ship. Make no mistake. Women are vitally important to STEM. This horrible bias will take time to unwind.
Bias among economists
My economics profession has long lagged behind other social sciences (even most hard sciences) in recruiting female students, faculty and promotion. Male economists today hold 72% of US assistant professorships and 87% of full professorships.
A recent survey conducted by the former Fed chairman, Janet Yellen (using on-line experiments to identify biases among economists from 19 countries) uncovered: (i) existence of a strong ideological bias – female economists were 40% less likely to be swayed by prominent author names than their male colleagues; implying that there will be less bias in the profession if it became more gender balanced; (ii) sharp differences between the way male and female economists perceive their profession’s effort at gender equality.
Women were 26% more likely to agree that “the hurdles women face in economics are real,” than their male peers; and (iii) females’ agreement with this statement did not change with the author’s identity, unlike their male counterparts, suggesting that females are able to put aside their biases and focus on content rather than author’s identity.
Yellen concluded that the way to fix ideological bias in economics is to recruit more women.
What then are we to do
I am told often enough that the 21st century belongs to women. Will the new age of artificial intelligence (AI) & robotics deal a blow to women in the workplace which is already reputed to be biased against them? The concern is legitimate. Still, given the big ways in which the world of work is changing, it is just as possible that men appear to be the ones in danger of being left behind.
Data from Linkedin profiles suggest 78% of people working in AI are men. So, not only are they shaping the future, they are also occupying some of the best new jobs being created. But, algorithms function best with transparency, accountability and human checks & balances. The implication: AI jobs need to be held by a more diverse set of smart people, male and female. Still, only a small number of jobs of the future will actually involve creating algorithms. Far too many will find work reshaped and revalued by them.
Here, women may have the advantage. As machines become better at many cognitive tasks, it is likely that the skills they are relatively bad at will become more valuable. This list includes creative problem-solving, empathy, negotiation and persuasion. It is often said: “the high-skill, high-pay jobs of the future may involve skills better measured by EQs (a measure of emotional intelligence) than IQs.”
There is no reason why men should not excel at these even though empirically, such skills have been identified more with women. Indeed, research at the University of Zurich indicates that the trend predicted has begun. In the US since the 1980s, the probability of a college-educated man ending up in a highly skilled cognitive job has fallen, while the probability of a college-educated woman achieving the same feat has increased. This is connected to raising demand in these jobs for supplementary skills, such as emotional intelligence.
This has since given women an edge. The dawn of AI and robotics requires an overhaul of the way these skills are valued, including the way they are taught. Things need to change. Sure, girls should be persuaded that “coding” is not just for boys. So, why aren’t boys also be persuaded that empathy is not just for girls? I suggest a start be made by changing the language used.
For too long “soft skills” are talked about with connotations of femininity and a lack of rigour. Let’s call them what they are: “robot-proof skills,” that neither men nor women can afford to be without in the 21st century.
Former banker, Harvard educated economist and British Chartered Scientist, Tan Sri Lin See-Yan is the author of The Global Economy in Turbulent Times (Wiley, 2015) & Turbulence in Trying Times (Pearson, 2017). Feedback is most welcome.