No law without crisis

2010-11-03 When the law on joint stock companies was revised in the wake of the Icelandic financial collapse, the feminists of the Althing saw their chance. They seized the moment and added a paragraph on mandatory gender quotas for executive boards.

Former Icelandic Prime Minister, Geir H. Haarde, had to resign after the financial collapse. He will now stand trial before the Landsdómur, a special court with the mandate to handle cases where members of the Cabinet are suspected of criminal behavior. Photo: Johannes Jansson/norden.org

Homogeneity, friendships and close connections between trade executives became a decisive factor in the Icelandic financial breakdown. This is evident in several reports produced with a view to finding out what went wrong and preventing it from happening again (see article above). One of the recurrent demands has been increased transparency and variation within the upper strata of the business world. The demand for an increased share of women in private enterprise management became easier to voice.

Hildur Jónsdóttir. Photo: Gunnar Sigurgeirsson

Hildur Jónsdóttir is expert on gender equality at the prime minister’s chancellery. She feels that an unmistakable gender perspective has been present within public discourse since the collapse.

– To cut a long story short: the view that a male norm – entailing the exaggerated risk taking, nepotism and even sexism that fostered the kind of behaviour leading to the collapse – has been widely supported. One way of repairing and regenerating trust after the crash has been to increase the share of women in the private sector.

Road paved for gender quotas

– The position of women within the private sector has been very weak. Compared to e.g. politics and the public sector, this is the area where Icelandic gender equality has enjoyed the least progress, says Hildur Jónsdóttir. She recalls that already 7–8 years ago, the then responsible minister declared that an act on gender quotas would have to be passed if things failed to improve.

But despite all the discussions and pushing for change, no act on gender quotas was passed.

Then came the crisis.

In the summer of 2009, i.e. in the wake of the collapse, independent Minister of Economic Affairs Gylfi Magnússon proposed to revise the law on joint stock companies. The purpose was to increase corporate transparency by e.g. demanding full accounts of ownership and suffrage and emphasising the importance of their role to executive chairmen.

Gender quotas did not figure on the minister’s agenda. However, it did on that of others. Seeing that the current law was to be revised anyway, it was time to strike while the iron was hot.

Seizing the moment

Lilja Mósesdóttir. Photo: Bosse Parbring

– When the proposal first came up in the Althing, we were debating whether to take the opportunity to include gender quotas, but time was scarce, says MP of the reigning Left-Green Movement Lilja Mósesdóttir.

The proposal was discussed a second time in October 2009. In the meantime, Lilja Mósesdóttir had been elected spokesperson of the Althing Commerce Committee which was to consider the proposal.

– I was well-acquainted with the discussion and Norwegian legislation on the matter and decided to find a solution as to how to go about this and ultimately pass the proposal. I received a lot of support from others, within the committee as well as among other MPs, including men, she says.

In March 2010, the Althing passed the new law on joint stock companies with a paragraph on gender quotas within executive boards, making it more comprehensive than the Norwegian model. It does not apply to companies listed on the stock exchange only, but to all companies with more than 50 employees. In total, this means approximately 350 companies.

– In light of the Norwegian experiences, it was deemed necessary that the act also apply to minor private enterprises, the so-called limited companies. The Norwegian act does not, and it is estimated that this type of business has become more prevalent because of gender quotas, says Lilja Mósesdóttir.

No law without crisis

The act saw the light of day only two years after legislation on gender quotas in state-driven companies was passed. It was a rapid development. The question remains, however, whether there would have been an act on gender quotas if it had not been for the crisis.

– No, I doubt that there would have, Hildur Jónsdóttir muses. But as she points out, the collapse also led to a political shift.

Crisis and turbulence do not automatically entail any opportunities for new actors and women to get on board and take over. According to Hildur Jónsdóttir, the Icelandic collapse led to a fierce power struggle behind the scenes where the involved parties defended their positions and tried to rescue themselves in various ways. According to 2009 statistics, the share of women on executive boards decreased. Despite expectations of the opposite, the number of women on the boards of newly established businesses dropped after the bank collapse.

The political shift, then, turned out to be as important as the crisis itself.

To Lilja Mósesdóttir, the act is an example of how far one can get once one is in power.

– Thanks to the many feminists within the Althing, we managed to include the regulation on gender quotas. They’re not only present in the Commerce Committee.

Critical entrepreneurs

FKA, the Icelandic association of female entrepreneurs, however, were critical. They resisted gender quotas. Approximately a year before the act was hammered home, FKA, the Icelandic employers’ association SA and the Chamber of Commerce as well as representatives from all political parties in the Althing signed an agreement that by 2013 at the latest, each gender must be represented by a minimum of 40 percent on executive boards.

– FKA referred to the agreement we signed and believed that quotas would go against it. Statistics, however, showed something else. The share of women on executive boards decreased in 2009. Hence, we decided to legislate on the matter, says Lilja Mósesdóttir.

– But within the committee, we tried to compromise with the FKA arguments. For this reason the act won’t take effect until 2013, which it also when the agreement will expire. It’s longer than e.g. the Norwegian companies had available to achieve gender-equal boards.

The current wording of the act does not prescribe sanctions against businesses failing to meet the quota requirements. Lilja Mósesdóttir blames lack of time to include that in the statutory text this time round.

– However, I read that one of the recommendations in the research report recently presented (see article above) is to introduce sanctions. So we’ll start working on that now, Lilja Mósesdóttir concludes.

Greenlandic debate

Gender quotas within executive boards are also a topic in Greenland. Minister for Equal Opportunities Maliina Abelsen has participated actively in the debate and would like to see measures ensuring that also the competences of women are utilised within Greenlandic business management. A member of the left-wing party Inuit Ataqatigiit – in power since 2009 – has presented a proposal in the Landsting which suggests gender quotas within governing boards. The proposal comprises the boards of the large self-governing institutions rather than the private enterprises.

– In a Greenlandic context, it seems natural to focus on the entirely or partly publicly owned companies, seeing that they’re by far the largest and most important in Greenland, says Torben Weyhe, official within the Ministry of Social Affairs.

The debate is still fairly new, and so far no work is being done on any concrete law text.

By Jennie Westlund

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