The country of Norway has many American admirers, from President Trump to Sen. Bernie Sanders. Progressives like Sanders consider Norway a progressive paradise, because it has implemented almost every progressive policy under the sun, from universal health care to government mandated gender equality policy in the work place. But have these policies achieved the desired outcome that the progressives are seeking? The latest data on gender quotas in the work place from Norway and some other European countries shows a policy with a good intention doesn’t necessarily translate to a good outcome.
We’ve all heard the argument, especially in these days, that women are well represented in the educational system and the labor force, but at the top of the power hierarchy they are still surprisingly poorly represented.
UK Channel 4 journalist Cathy Newman repeatedly said “only seven women run the FTSE 100 companies” in a recent interview of Jordan Peterson, to back up her view that male dominance in the workplace prevents women from reaching the top.
‘It Will Be Denied Registration As A Business Enterprise’
Ten years ago, Norway, the progressive paradise, took a drastic step to address this gender gap at the top of corporations. Its Minister of Trade and Industry Ansgar Gabrielsen of the Conservative Party introduced a mandatory gender quota of 40 percent for the boards of all public limited companies. The passing of this draconian law means, “If a company breaks the gender quota rules in Norway, it will be denied registration as a business enterprise in the Brønnøysund Register Centre and be subject to forced dissolution by the courts.” Following Norway’s example, a dozen other European countries, including France, Germany and Italy, adopted similar gender quotas- — 30 to 40 percent of corporate boards must be made up of women.
Ten years later, The Economist reported how the policy turned out based on data from Norway and other European countries with similar gender quota policies. On the surface, it seems the gender quota mandate achieved its desired outcome — female representation on corporate boards in these European countries increased. “In some countries the share of women among directors of large companies has increased four- or fivefold since 2007.” But as always, the devil is in the details.
The Devil In The Details
Did the higher female representation on corporate boards improve corporate profitability and corporate governance as proponents promised? The data is inconclusive. Some companies saw improvement in both areas but some didn’t. Did the higher female representation on corporate boards improve board’s decision making as supporters claimed? Data shows that although decision making processes might have changed, the substance of the decisions and the quality of decision didn’t improve by simply having more women on boards.
Now corporations in Europe are facing a shortage in finding qualified women to fill the gender quota mandates on their boards. Some reached for less qualified and less experienced women to meet the quota, which doesn’t help improving corporate performance or governance. Since the law in Norway only applies to public companies, some Norwegian companies became private. The number of public limited companies in Norway dropped from 452 in 2008 to only 257 in 2013. The number of board seats dropped from 2,366 in 2008 to 1,423 in 2013. So there are fewer seats for women to fill.
The ‘Golden Skirts’ Are Stretched Thin
But what everyone is most interested in answering is the question of whether the quota really benefited women. The answer depends on who you ask. The quota has certainly benefited a small group of women who are already high achievers and are at the top of corporate hierarchies. They are called the “golden skirts” and their numbers are very limited. Since the quota mandate led to a surge of demand for these women, many of them found more opportunities and higher pay, but they also found themselves stretched thin by serving on multiple boards.
As The Economist reported, the most puzzling information revealed by the data is that the quota mandate “had no discernible beneficial effect on women at lower levels of the corporate hierarchy.” Proponents of such a policy have long promised that more women in leadership positions would translate to more career opportunities and promotions for women in the lower levels, which in turn will lead to better paying jobs and a shrinking gender pay gap. But that promise turned out to be wishful thinking.
Data shows that in France, Germany and the Netherlands, which all mandate women taking 30 to 40 percent of corporate board seats, only 10 to 20 percent of senior management jobs (one level below the board of director position) are held by women and that number has been consistent for the last 10 years. The Norwegians own study shows eight years after Norway introduced the law on gender equality in boardrooms, there are zero female CEOs in the country’s 60 largest companies. There is no data to demonstrate any higher pay or more career advancing opportunities for the vast majority of women in the workforce. Thus, having more women on the board has done little to benefit 99 percent of women in the workforce. Rather, it failed to lure more women to climb the corporate ladder and it failed to open up more mid-career opportunities and better pay.
In fact, Norway is seemingly going the wrong direction. In 2015, the World Economic Forum’s Global Gender Gap ranked Norway as the world’s second most gender equality place, with a score of 0.85, where 0 is inequality and 1 is complete equality. But in 2016, Norway’s ranking dropped to the third place with a lower score of 0.84.
The logical conclusion, as The Economist presented, is that “gender quotas at board level in Europe have done little to boost corporate performance or to help women lower down.” Like so many progressive policies, the mandatory quota benefits a very small elitist group at the expense of the masses, despite its slogans on “equality.”
One of the reasons that we don’t see more women at the top of corporate hierarchy is the choices that women make. For example, some women choose to become stay-home moms for a period of time due to the high cost of childcare. When women make that choice, they end up paying a price in their career advancement. So if society wants to see more women taking leadership roles in any organizations, one sensible policy is to make childcare more affordable. Given the fact that the high cost of childcare is the result of government policies, getting rid of those ruinous policies will likely lower the cost of childcare, which in turn helps more women stay in workforce to climb corporate ladders. The last thing women need is a useless gender quota at the board level that does nothing for the majority of us except window dressing.