Chick quotas and the return to cabinet culture

Yesterday, the EU Parliament voted for quotas on women. According to the proposal, at least 40 percent of the board members of listed companies should be women by 2020, and the issue is next to be moved on to being dealt with by EU member states. Finland supports quotas. In the next part, I’ll write about why the decision is contrary to a sense of justice, makes a societal problem of an issue that isn’t one and, furthermore, attempts to tackle the matter from an illogical angle.

The decision does not respect ability. The decision presumes either that women do not have the kind of expertise with which they could get into listed companies unassisted or that the owners of the companies did not have their own best interests at heart, and instead discriminated against gifted female applicants. If the latter supposition is the case, then what is the justification of the parliamentarians who voted for the proposal for the owners to close their eyes to this very issue? Instead, you hear of owners being accused of unscrupulously looking out for their interests in all other situations.

The decision does not respect ownership protection one little bit i.e. that in a just state people should have as much power as possible over themselves, their own work and the fruit of their labour. Instead of allowing people decide for themselves – either directly or through an intermediary – who or what controls their ownership, the EU Parliament is now doing it on behalf of the people. Will the next proposal be that every housing company has to include at least one EU official on its board?

The problem, if there is one, is being resolved from the wrong angle. The initiative overleaps logic by supposing that the board positions of listed companies are in some way special prize positions that should be distributed evenly to everybody in the spirit of equality. Why board positions, exactly? Is it equitable that in some company only between 5% and 10% of the people with powers to decide on business operations are women, but they make up 40% of the top tier of management? Board positions are the roles that have the highest authority after the general meeting, which are gained in an open market in two ways: either by being a significant owner yourself (or a representative of one) or by having acquired the kind of expertise in your working life that is appreciated by the owners of the company. If we set aside the criteria for qualifying through ownership, then let us look more closely at qualifying through expertise.

Expertise rarely occurs by accident. Owners have a need to select people for their board who not only know the field of operations and the company as widely as possible, but also, if the company works in competitive markets, what is happening in those markets and what entrepreneurship is. Generally, you cannot qualify for a task like this in the service of the state or through management of a union, however large the figures being run through are, regardless of whether you’re a man or woman. If you have never felt it at your back what risk-taking and free competition are, you will simply not know what risk-taking and free competition are.

In some fields, the quota on women should be no more than 10%. The Confederation of Finnish Industries’ study establishes that the occupational division in the Finnish labour market into men’s and women’s roles in the sixth highest in the EU behind a few Eastern and Southern European countries. If you look at the Finnish stock exchange, then of the large listed companies there, aside from a few retailers or money market firms, the business model of every one of them is based on industry and/or technology. In the technology industry, the proportion of women in the workforce is a fifth.

The proportion of women in technological subjects at higher educational establishments has remained more or less the same for the last few decades. For example, the proportion of the admissions into the Helsinki University of Technology (now known as the Aalto University) has been around a quarter. And only a little over 10% of the students in IT, electronic and data communications and mechanical technology have been women through the years. If you look at these statistics, then the women’s quota to be aimed for should be more like 10% and even that may be high, taking into account that a large proportion of women bear children and have primary responsibility for them when they are young.

Formal expertise is only a partial factor in assessing competence. What is more important is concrete business activity and entrepreneurial know-how in the field in question. The proportion of women in entrepreneurial lists is very low. In Finland, only 23.4% of companies that employ more than one person are owned by women. In the absence of sensible statistics, nothing of weight can be said about the proportion of women at the helm of innovative and technology-centred growth companies, but, based on my own experience and estimating it with caution, it is well under 20%. It is highly peculiar that the best of these firms – that is, the ones that are growing to be large and successful – would want to install people other than ones selected through competence criteria to their highest decision-making level.

The decision is contrary to equality. The decision takes away the possibility from people to compete for positions from the same starting point with the competence gained through their own work, expertise and achievements. At most, it only concentrates power further because it narrows a person’s possibility to advance their position through their own sense of enterprise. Positive discrimination is just as negative a form of discrimination as negative discrimination, and it brings back with it a form of economic life that is becoming more and more open and diverse at the time when cabinet decisions are made. At the same time, it also discriminates against companies when compared against each other. Why does the decision only concern listed companies, and only the largest of those as well?

The question is possibly to do with a conception popularised in recent years in public debate that listed companies are in some way like public property. That bypasses the fact that listed companies are already subject to significantly more exacting reporting and transparency criteria than those operating outside the stock exchange, irrespective of the size of the company. But they also have owners whose ownership protection should be as extensive as elsewhere in society. The decision will probably raise the threshold for becoming listed in countries where quotas are adopted. For example, the Helsinki Stock Exchange has hardly been deluged in recent years. This is an issue of intentionally weakening the competitive ability of one’s own producers, and in that sense an unhappy continuation of the decisions that have come from the European Union in recent years.

Finally. I am not completely convinced myself that it is a societal problem if women and men, through their own free will and without external hindrances choose different paths of study and positions in the course of their lives. It is demeaning to women to presume that a woman, for example if she trains in women’s studies, does not do that consciously and refusing management positions in technology firms, amongst others. If there are still prejudices related to employing women in industrialised countries, then quotas will not reduce them one jot. Instead, any woman is free in an open economy to set up her own growth company and gain competence for the tasks she considers to be important. Before even that opportunity is taken away, let each chick be free to choose the people they want for the management of their business.