Future of Europe Conference: Tackling the gender gap in organisations

At a time when the effort and talent of all is needed to find the best solutions to this crisis in many areas of life. Women need to reinforce the message of optimism and hope in order to innovate, create wealth and generate greater overall GDP growth and contribute talent. Society needs to be imbued across the board with freedom, tolerance and, never better said, equality, for the benefit of all actors. 

In the framework of the Conference on the Future of Europe, we see it as particularly relevant that the European Union considers taking action in the following areas in particular:

Tackling the gender gap is the W20's priority. This year, the presidency of this parallel G20 lobby group has fallen to Italy, one of the countries where the pandemic has driven the most women out of the labour market.

In order to close this gap, the Italian women's group 'Half of It' has sent a letter to the Government of Giuseppe Conte calling for greater participation of women in the use of EU funds. Adopting specific measures to alleviate the gender gap is undoubtedly an important parameter for assessing the success of the economic recovery plan.

The message that more and more women are stressing is clear: women are half of the world's population, who must contribute to generating value and wealth, in proportion to their representation in society and in the educational spheres. It is therefore time to call not only for inclusion, but for women's empowerment, by all women. 

Regarding the value created by women in organisations, the Woman Forward Foundation has carried out a research that gathers and classifies in different areas, the main research that validates this creation of value from the business point of view, together with the arguments of equity and social justice: "The creation of value and equality in companies: Tools to move forward". The research can be downloaded at the following link: https://womanforward.org/investigaciones-igualdad-de-genero/

After many years of trying to improve the position of women in the corporate world, it seems increasingly necessary to complement voluntary measures with legislative approaches to move forward, as well as awareness raising campaigns in companies and organisations.

It is important that companies understand the value of gender equality and diversity in terms of strategic alignment, attracting and retaining talent, better understanding of the market, greater acceptance by different stakeholders... and not only as a formal obligation, which once fulfilled at a minimum, is put aside.

In relation to the presence of women in senior management positions, there are different regulatory approaches. An intermediate level combining discretion with obligation is that of Sweden, which, when introducing its legislation, announced that in case of failure to achieve parity on boards, the government itself would impose it through mandatory gender quotas. Another possibility could be to require organisations to submit annual reports with specific targets.

In France, efforts to aggregate and disseminate information on potential candidates have played an important role in increasing the number of female board members, leading to the country's leading position in female participation in board decision-making positions. To this end, they have adopted the Zimmermann Index, essential to measure the progress of the implementation of gender quotas in 2011 of the Copé-Zimmermann Law, which obliges French companies to have a minimum of 40% of women on their boards of directors. 

At the international level, several countries have corporate equality indexes: the Gender Diversity Index (GDI) of the 50/50WOB Campaign. Specially formulated for the American market, the GDI evaluates companies in market capitalization indices such as the Russell 1000-3000 and the Fortune 100-1000.

At the Woman Forward Foundation we are convinced of the importance of measuring diversity in order to move forward. Lord Kelvin, inventor of the Kelvin scale of temperature measurement, said: "What is not measured cannot be improved. What is not improved always degrades". We believe that in order to achieve the much-needed real and effective equality between men and women, a very powerful tool would be the generalisation at European Union level of an Equality Index that would serve to monitor equality in administrations and large companies, listed or not. 

We know, for example, that in the 500 largest companies in OECD countries, according to the Analytical Database on Individual Multinationals and their Affiliates (ADIMA), the presence of women in top decision-making positions, far from the minimum 30% recommended in most European countries for listed companies, is around 16%, 12% for technology companies. Making progress in a handful of companies per country will not change the diversity figures in the European Union, not even for decades.

In Spain, the Woman Forward Foundation has developed a certification in equality and competitiveness with a Woman ForwardⒸ Gender Diversity Business Index to measure the degree of progress in companies and to establish a 'benchmark' between them. The certification could also harmonise the way of measuring the pay gap, given that in Spain alone within the 35 companies of the Ibex 35, there are 16 different ways of measuring the pay gap. We hope that the Cambourg report on Non-Financial Reporting Standards will make progress in this direction towards harmonisation.

In parallel, there are other useful accompanying measures such as the establishment of paternity leave. The Peterson research institute conducted research in 2017 in 71 countries, which concludes that there is a correlation and causality between paternity leave and the percentage of women reaching top decision-making positions in organisations.

Data from the EU statistical report indicate that the three most important sectors for female entrepreneurship include health and social work activities with 60%, other service activities with 59% and education with 55%. It seems clear that women prefer entrepreneurship in certain sectors known to them as "traditional" or more feminine, which are initially characterised by requiring smaller enterprises, with few or no employees, where initial investment is low.

As a result, the majority of women-owned businesses in Europe are micro-SMEs and women CEOs are not considered as candidates for other positions of responsibility (representation in business associations, advisory boards, boards of directors...).

According to the World Economic Forum report 'The Future of Work', data show that around 57% of 1.4 million jobs will be lost by 2026 due to automation, digitalisation, virtual reality, robotics, and most of them will belong to women, as they are less attracted to careers related to STEM studies, which, in turn, are associated with these technologies. We are therefore facing potential new gender gaps that, instead of converging, are moving away from equal opportunities.

It would be appropriate, at this point, to try to explain in a neutral way, following economic theories, the reason for the distance that separates women in economic decision-making from the representation that would correspond to them in society.

In economics, the term equalisation, developed by Paul Samuelson, states that the economic cost of a factor of production in two different markets tends to equalise under equal conditions; if the conditions are not equalised, the differences persist. If, similarly, we study the behaviour of the factor of production labour in the labour market and apply different hypotheses using this theory, segregating by gender, we see how different variables related to the labour force such as cost, career development in the workforce, promotion, recruitment, are different according to the gender of the labour force. 

The fact that the cost and career development circumstances of men in general are different from those of women raises the suspicion that we are dealing with two different labour markets, which apply different conditions for recruitment, promotion, career development.... These differences, corresponding to two different labour markets, are at the basis of the explanation of the pay gap, but also of the difficulties in promotion specific to women or of most of the manifestations of the glass ceiling.

Since what you measure, you get, measuring the effectiveness of gender equality in organisations could be an important key to accelerating the necessary change within the EU towards greater equality and equity, more competitive companies and a more sustainable European Union.

Mirian Izquierdo, CEO of the company Comerciando Global, president of the Woman Forward Foundation and member of the delegated commission of the board of trustees of the Independent Foundation and Civil Society Now