The Korea Herald


[Editorial] More women on boards

By Yu Kun-ha

Published : Jan. 16, 2013 - 19:25

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A group of lawmakers are moving to set a statutory quota of women directors at public institutions to break the glass ceiling.

Rep. Chung Mong-joon of the ruling Saenuri Party and 61 other legislators have proposed a bill requiring state-run corporations and other public organizations to raise the ratio of women on their boards to 15 percent in three years and 30 percent in five years.

The move is justified, given the dearth of women in the boardrooms of public as well as private corporations in Korea. Yet the target may be too ambitious in light of the small number of women at management level.

According to government data, women account for a mere 9.1 percent, or 272, of the total 2,993 directors at 288 public institutions. More than half of these agencies have no women in executive roles, while 5.6 percent, or 16 agencies, are run by female chief executive officers.

The lack of women directors is more pronounced at private companies. In 2011, the proportion of women in the boardrooms of the nation’s 100 largest corporations was a paltry 1.48 percent.

The bill on a female quota, if enacted, is expected to put pressure on private companies to promote more women to the executive level.

The lawmakers’ legislative move was apparently inspired by the examples of several European countries, including Norway, Sweden, France, Spain and Italy.

Norway was the first country in the world to introduce a quota of female directors. In 2003 the country ordered private companies to allocate 40 percent of their board seats to women in five years.

Norway now leads the world with women accounting for 35 percent of corporate non-executive directors and 18 percent of senior management positions.

Sweden has an even higher gender balance target of 50/50, with women currently holding 25 percent of boardroom seats and 22 percent of senior management jobs.

France set a 40 percent women quota in 2010 and has since boosted the ratio of women on corporate boards from 12 percent to 22 percent.

These examples suggest that setting a statutory quota works. So last year the European Commission sought to force Europe’s listed companies to set aside at least 40 percent of their non-executive board seats for women by 2020.

Yet the commission left the decision to individual countries in the face of strong opposition from the United Kingdom and other countries.

The U.K. government prefers a voluntary approach. It encourages, rather than compelling, companies to put more women on their boards. According to a recent report, FTSE 100 companies increased the share of women directors from 12.5 percent in 2010 to 17.3 percent in 2012.

In Korea, a legislative approach may be more effective. But to make any difference, the proposed bill should have teeth. Simply setting a quota would be nothing more than a token gesture.

Rep. Chung said penalties would be meted out to CEOs of public institutions who failed to meet the quota.

But the quota needs to be set in consideration of the reality, given the possibility of reverse discrimination. If corporations promote female managers to director-level simply to meet the quota, although their abilities are not up to par, it could amount to reverse discrimination against male managers.

While setting a mandatory quota is necessary, a more important thing is to improve the work environment for women so that they can balance work and family. Many female workers quit their job to give birth or raise children.

For individual companies, taking steps to alleviate the burden female employees face when bearing and raising children would add to the costs. But this should be seen as a form of investment in the future of the nation.