Written by David Zahra, 2 July 2013
The Office for Democratic Institutions and Human Rights (within the OSCE) has recently recommended the introduction of measures to promote women’s participation in politics, as part of its report on recent parliamentary elections in Malta.
This concern subsists despite both major political parties in Malta having introduced some form of gender quota mechanisms in their statutes.
This lack of participation does not exist only in the political field. A report issued by the European Commission in 2012 highlighted the fact that only 3% of the boards of the largest listed companies in Malta were women (compared to the EU-27 average of 13.7%).
What can governments do to break the ‘glass ceiling’ and to release the ‘sticky floor’ in corporate governance structures?
The introduction of gender quotas on boards of directors has been somewhat controversial. Opinion is divided: some deem them to be a form of special preferential treatment, an attack on meritocracy; others a necessary evil; others consider any form of opposition to gender quotas as ‘shocking’.
In November 2012, the European Commission proposed a measure which shall, by 2020, bind all listed companies to have at least 40% of their non-executive directors from the “under-represented gender” – a term that is meant to ensure that men are not adversely affected by the proposal.
This proposal follows the introduction, in 2003, by Norway of legislation requiring that women occupy 40% of boards in both large private firms and public enterprises by 2006 (which measures were followed by Spain, France, and the Netherlands) as well as the Davies Report in early 2011, which proposed that businesses voluntarily set their own targets to up the number of women on boards to 25% by 2015.
It is expected that around 5,000 companies across the EU will be affected by the European Commission’s proposal.
However, the proposal’s SME exemption – i.e. listed companies with less than 250 employees and turnover under €50 million or a balance sheet of less than €43 million – might mean that only a few Maltese listed companies would be affected by this proposal.
The European Commission’s proposal leaves it up to the individual Member States to determine the sanctions that would apply for non-compliance. The proposal also suggests that such rules would expire on 31 December 2028 by which time it is expected that there would be no further need for rules of the sort.
There are mixed reactions on the Norwegian experience – whilst some suggest that the legislative changes have led to improvements in: the financial performance of companies, the protection of shareholder value and innovation in working methods, others suggest that it has yielded more negatives than positives.
There is no doubt that gender quotas should encourage diversity in boards – however, if women occupy board positions as a forced imposition rather than because they merit it, would the professional calibre of boards improve and will corporate performance be enhanced?
Is the EU resorting to a redundant measure to address inequality or are gender quotas the only way in which the imbalance can be addressed? Could family-friendly measures be considered to be the better solution?
One thing is for sure – opinion remains divided on this matter, across the sexes. Let us hope, though, that the debate remains a rational one that does not ignore the intended objective of re-addressing gender imbalance in corporate governance structures.