Published on 9 Feb 2012 Sections

Female quotas may be needed for economy, says PM

Britain’s economic recovery is being held back by a lack of women in the boardroom, says David Cameron, who suggests quotas may be necessary. But did it work in Norway? Channel 4 News reports.

There is clear evidence that putting an end to Britain’s male-dominated business culture would improve performance, said the prime minister, who added that quotas may be necessary to achieve it.

Speaking at the Northern Futures Forum summit in Stockholm, Sweden, Mr Cameron said he would be looking to learn lessons from the Nordic and Baltic countries – and perhaps, from the hit Danish television show, Borgen.

During a discussion at the summit, Mr Cameron suggested quotas of around 30 per cent could be an option if companies fail to increase female representation on boards over the next few years.

If we fail to unlock the potential of women in the labour market, we’re not only failing those individuals, we’re failing our whole economy. David Cameron

“The drive for more women in business is not simply about equal opportunity, it’s about effectiveness,” said Mr Cameron.

“It’s about quality, not just equality. That’s why one of the things we’ll be discussing in Sweden is what other countries are doing to help women become entrepreneurs and take up leading positions in business.”

Securing promotion for women and encouraging female entrepreneurs are central themes of the Northern Future Forum.

The quota question

Compared to other countries at the summit – including Denmark, Estonia, Finland, Latvia, Lithuania, and the hosts, Sweden – the UK performs badly when it comes to female representation at the top of business.

Norway, which is also attending summit, has a minimum quota of 40 per cent women for all listed companies. Iceland has the same quota for publicly owned institutions.

A government-commissioned report by Lord Davies last year recommended that a quota of 25 per cent women on boards be imposed unless top firms took action to increase the number of women on their boards to at least one in four by 2015.

But Labour peer Baroness Mary Goudie, a steering committee member of the 30 Percent Club, told Channel 4 News that quotas are not the answer.

“We feel that the change is not going fast enough, but talking to people and being persuasive is the best way to deal with it,” she said.

Women are now on the radar of headhunters and investors, who are increasingly pushing for women on boards, which is already making a difference, she added.

Since Lord Davies’ report, the proportion of FTSE 100 women directors has risen from 12.5 per cent to 15 per cent this year.

“My view is that there will be an improvement. Once it starts to happen, everything else will have changed. It’s becoming now a way of life, not an exception,” added Baroness Goudie.

In the last year, 27 per cent of board-level appointments at FTSE 100 companies have gone to women. But one in 10 of Britain’s biggest firms still has a all-male board.

Did quotas work in Norway?

Back in 2003, women’s representation on executive boards in Norway stood at 7 per cent. After introducing a policy that women should make up 40 per cent of directors of listed companies, the proportion now stands at 42 per cent.

The idea was considered radical at the time, Siri Øyslebø Sørensen from the Norwegian University of Science and Technology, who has researched the impact of the quota, told Channel 4 News.

“But it’s not a fuss anymore – just business as usual,” she said.

“There were sceptics in Norway when the reform was suggested – people started to question whether there would be enough competent women. But that was silenced very quickly. It turned out that finding qualified women was not a problem.”

Companies were given four years to prepare for the change, giving them time to upskill employees, and a national training programme was put into place.

Despite the quota, there are still very few female chairmen, and just 2 per cent of CEOs of listed companies are female. Initial research also suggests the women coming in are from similar backgrounds to the men currently employed, meaning diversity has not been a byproduct.

The Confederation of Norwegian Enterprise (NHO), Norway’s main employers’ organisation, also remains anti-quotas, although it wants to see more women in boards and management positions, and its president has raised the issue of child care and parental leave as a crucial factor in the debate.

“But I believe the symbolic effect is very strong,” Ms Sørensen told Channel 4 News.

“Just the fact that now in the UK it’s possible to disucss quotas as a measure, that’s also an effect of the Norweigan case. It was quite radical at the time, but it opened up for discussion – ‘how can we change the situation’.”

Good for the economy?

Mr Cameron said that money is lost by failing to employ women. “The evidence is that there is a positive link between women in leadership and business performance, so if we fail to unlock the potential of women in the labour market, we’re not only failing those individuals, we’re failing our whole economy,” he added.

However, Unison general secretary Dave Prentis said that life under the coalition government is getting worse for many women, who won’t be “fooled” by Mr Cameron’s words.

“The unemployment figures don’t lie – they expose how hard women are being hit by heavy public sector job losses and the lack of private sector job growth,” said Mr Prentis.

“Tory cuts are also depriving women of the low-cost childcare they rely on to stay in work. Across the country, Sure Start centres are closing, even though the Tories promised at the election to protect them.”