Government wants more women on company boards

The Norwegian government approved in March 2002 measures to increase the number of women on the boards of private and public companies. Within a year, at least 40% of the board members in state-owned enterprises must be women. A 40% quota will also be imposed by law in private companies in 2005, if this level of women's representation has not been achieved voluntarily by then.

In 2002, the Norwegian government approved measures to increase the number of women on the executive boards of both state-owned and private companies. Within one year, the government will ensure that at least 40% of the members of the boards of state-owned enterprises are women. Private companies have until 2005 to increase their share of women on their boards to an acceptable level - ie at least 40%. If this goal is not achieved, regulations setting quotas will come into force in the private sector. If, however, satisfactorily levels of women's participation are reached, the regulations will not take effect.

New quota system on company boards

In February 2002, the Minister of Trade and Industry in the centre-right coalition government, Ansgar Gabrielsen of the Conservative Party (Høyre), caused significant debate when he called for more women on company boards. Mr Gabrielsen expressed a wish to turn words into action, and stated that he was willing to introduce radical measures to achieve greater female representation on company boards. The minister also pledged to bring more women onto the board of Norway's largest bank – Den norske Bank– in which the state holds a significant ownership share.

The minister's proposal was met with considerable opposition within his own party, where a majority do not want to see any restrictions put on company owners' rights to elect their own board members. However, the other parties in the coalition government, in particular the Christian Democratic Party (Kristelig Folkeparti, KrF), which is in charge of the ministry responsible for gender equality issues, support affirmative action in this regard. The Minister for Gender Equality Issues, Laila Dåvøy, managed to gain acceptance for her party's views in the final proposal for new rules on women's representation on boards that was accepted on 7 March 2002. However, the proposal bears the imprints of a compromise, in that the new statutory provisions will not come into effect in the private sector if the goal of increased female representation is achieved voluntarily.

The government approved the following measures:

• each sex must make up at least 40% of the representatives on the boards of all state-owned enterprises within one year;

• similar regulations for private limited companies will come into effect by the end of 2005 (though see next point). The government will prepare a proposal for legislation by the end of 2002; and

• the government will invite the social partners to enter into a cooperative agreement, with a view to increasing the proportion of women on the boards of private limited companies to at least 40%. If the desired quota is accomplished through such an agreement, the new legislation will not come into effect

Debate on quotas

A large majority of Norwegian companies, including some state-owned enterprises, are required by law to have an executive board with at least three members. With the exception of employee representatives (TN9809201S), board members are normally elected by the company's general assembly of shareholders. Norwegian executive boards are recruited from among the companies' owners and from other parts of business life, but also from political sphere, business law experts and so on. The issue of gender representation on company boards has been on the political agenda for some time. The share of women on boards is at present low (6% in companies listed on the stock exchange), and it does not seem to be increasing at all.

In 1999, the Ministry of Children and Family Affairs issued a proposal for change to the Gender Equality Act in this area to be considered by the relevant parties (NO9910157F and NO0003183F). It was followed up in 2001 with another proposal in which the relevant parties were asked, among other issues, to submit their recommendations for concrete models to improve the ratio of women on company boards. On both occasions there was little consensus on the issue of gender quotas. While some institutions and organisations saw such quotas as a necessity in order to achieve balanced gender representation, most business organisations were reluctant. The trade unions on the other hand were positive, also with regard to gender quotas relating to the employee representation on companies' boards. Thus, when the government put forward its views and proposal in March 2002, this concluded the consideration of a controversial issue generating significant tension and debate both outside and within the present government.

Commentary

The relatively low level of female representation on company boards – both in private and state-owned enterprises – has frequently been subject to debate and controversy in Norway. Women occupy a significant share of important political posts and offices in Norway. The Equal Status Act stipulates that both sexes shall have at least 40% representation in public committees and councils, and there are similar provisions for elected bodies in the municipal sector. Furthermore, a number of political parties have rules that safeguard a female ratio of 40% in elected bodies and in relation to nominations for parliamentary elections, and all Norwegian governments over the last 15 years have had a share of women members of at least 40%.

The high rate of women in politics has not, however, spread to management positions in Norwegian private sector businesses, nor to company boards. In stock exchange-listed companies only 6% of board members are women and the proportion is even lower among the representatives elected by the owners of these companies (ie excluding employee representatives). There are no signs of an increase in this figure. The share of women in management positions in Norwegian businesses and industries is also low, bearing in mind the high rate of female employment in Norway

The government's proposal has received a mixed reception. The Confederation of Norwegian Business and Industry (Næringslivet Hovedorganisasjon, NHO) opposes any form of imposition, and argues that the government should have spent more time considering the issue before making its decision. NHO's industrial relations director, Sigrun Vågeng, describes as 'incomprehensible the fact that the government has come up with a proposal for an Act with a randomly chosen rate of 40%', and is worried that it will contribute to undermining the value of Norwegian companies. Another argument is that there are too few women who are sufficiently competent and willing to be board members, and as such the quota will not be easily achieved.

The government's proposal has, however, been welcomed in many quarters. The supporters of quota regulations point to the fact that little has actually happened in relation to increasing female board representation despite the fact that the issue has been on the agenda in recent years, and state that stronger measures are thus needed. They also reject the assumption that women are neither willing nor in many cases qualified for these types of posts, and point to the fact that a database has been created containing information about women available to fill board seats and other positions. (Kristine Nergaard, FAFO Institute of Applied Social Sciences)