A new Iceland is being built

2009-11-30 The Icelandic financial crisis was caused by a clique of men within politics and business who were too closely associated with each other. This is the view of many Icelanders. They want to see a fundamental change to this situation when the new Iceland is rebuilt.

There are clear signs that something is happening in Iceland. The solid stone building of the Icelandic Parliament, the Alþingi, has historically housed a considerable male dominance. In 2007, 32 per cent of women were elected to the Parliament, but this proportion increased to 43 per cent in the latest election, held on 25 April 2009.

Furthermore, Iceland now has its first ever female Prime Minister – Jóhanna Sigurðardóttir – and a government consisting of six women and six men.

And there is a debate in process on how the male dominance of the world of business is to be tackled. In the spring of 2009 the Prime Minister raised the question of whether Iceland should introduce quota legislation similar to that of Norway. At the moment however, voluntary measures are the way forward.


At the same time, everyday life is hard for many Icelanders. On the outskirts of Reykjavik cranes stand idle on the sites of large, half-finished buildings. The financial crisis has stalled many planned projects, and Iceland is in a downward spiral with no clear end in sight. Previously, unemployment was virtually non-existent. Now it is close to ten per cent and the expected bankruptcies have not yet hit the labour market with full force.

Lilja Mósesdóttir, representing the Left-Green Movement has been a member of the Alþingi since the spring election. She is also Professor of Economics at the University of Iceland. Her research focuses on the labour market and on gender equality, and she has, among other things, studied the effects of the financial crisis in the early 1990s.

“The entire Icelandic welfare state is organised around low unemployment,” says Lilja Mósesdóttir. “If you lose your job, you get 70 per cent of your salary for three months. After that, the allowance is very small. Unemployment is very quickly followed by poverty. There are no financial margins in place for increasing this allowance.”

However, in the port of Reykjavik a project aimed at providing jobs within the building sector continues. The building of a large concert hall and congress centre has been started earlier than planned, and a new hospital is to be built.

“This secures the jobs of men within the construction business, but meanwhile the jobs of women within the health services are being cut,” Lilja Mósesdóttir notes. “At the early stages of a financial crisis it is the men within the private sectors who usually lose their jobs. But when, at a later stage, cutbacks within the public sector are inevitable, many women lose their jobs. And by that time there is no money left to secure their employment.”

So contrary to appearances, the financial crisis can actually lead to further gender segregation. Women may be in demand at the top, but this does not guarantee an improvement in the situation in Icelandic homes.

However, many want the new Iceland to be built on values other than those that led to the financial crisis. And the new Iceland must not be built without the participation of women. This was an important theme in the demonstrations that resulted in the resignation of the former government.

Time for women to take control

“The demonstrators said that now is the time for women to rule,” Lila Mósesdóttir reports. “Not just in politics, but also in business life. But when it comes to action, Icelanders are somewhat conservative. We are now encountering opposition.”

The Minister of Education, Katrín Jakobsdóttir, is also member of the same party as Lilja Mósesdóttir. The Left-Green Movement formed the new government together with the Social Democrats. She has also worked at the University of Iceland and has a background in promoting feminist awareness.

“The Icelandic banking system was male dominated,” says Katrín Jakobsdóttir. “There has been a discussion as to whether the financial crisis would have happened at all if there had been more women in the sector.”

“I think it is a question of masculinity. They took big chances, lived a glamorous life and held a masculine view. This was also true of the previous government.”

Such criticism led to the fall of the previous government and has resulted in more women entering politics, but according to Katrín Jakobsdóttir the business sector has not changed.

“The three big banks are still male dominated and private companies are mostly run by men.

The banks are now owned by the state and their boards have a gender balance, but the staff is still male dominated.”

Margret K. Sverrisdottir. Photo: Bosse Parbring

Also Margrét K. Sverrisdóttir, chair of the Icelandic women’s organisation, says that so far, changes can only be seen in politics.

“The most important milestone was the appointment of Jóhanna Sigurðardóttir as Prime Minister. There has been a debate in the media on the visibility of women. This has changed many things. She is an important model for all women, particularly younger women. This is a big step.”

But Margrét K. Sverrisdóttir thinks that it is not only the financial crisis that has led to the breakthrough for women in politics.

“This is the result of a slow process of development. In 1980 Vigdís Finnbogadóttir was elected President and thus became one of the first democratically appointed female heads of state. In 1983 Iceland women joined forces in the Women’s Party and were elected into the Alþingi. Historically, we have gradually moved towards this development. It would not have happened without all the prior smaller steps.”

“Jóhanna Sigurðardóttir’s emergence has actually been the result of a slow, incremental change,” says Margrét K. Sverrisdóttir. I think she would have been elected even if there hadn’t been a financial crisis. There has been a general opinion that women must be part of the rebuilding of society. But if a real change is to happen there must be more than 43 per cent women in Parliament. That is not enough.”

Quotas where needed

Katrin Jakobsdottir. Photo: Bosse Parbring

Minister of Education Katrín Jakobsdóttir also emphasizes that there is a historical background to the advance of women in politics. She also thinks that Icelanders were perhaps more interested in an ideological change than in a gender change. And the Left already included more women than the prior right-wing government.

“The Left-Green Movement and the Social Democrats had focussed on gender equality sooner than other parties and have now gained the political majority.”

“In my party there must be at least 40 per cent of each gender. But in the latest election we didn’t need to have quotas. There were enough women anyway. In Reykjavik there were even more women than men. So quotas are not intended as something permanent, but only to be used where needed.”

There is an average of 36 per cent of women in the political assemblies in Icelandic municipalities. But there, too, Katrín Jakobsdóttir hopes for a change.

“Perhaps a change will take place after the local elections in 2010. There was one third of women in Parliament, too, so the number might also increase at the local level. We have a female mayor in Reykjavik.”

The new Government has carried out extensive changes in public gender equality policies. Now both the Prime Minister and the Minister for Social Affairs are responsible for gender equality policy. Together with the Minister of Finance they form a Ministerial Committee for Gender Equality.

“Gender equality has thus gained more weight in the government,” says Katrín Jakobsdóttir. “I think we will see some changes thanks to the Committee.”

If quotas are introduced voluntarily in politics, the question of what will happen within business life remains open. Prime Minister Jóhanna Sigurðardóttir has raised the possibility of the introduction of a law on quotas for corporate boards similar to that in Norway. Katrín Jakobsdóttir, Lilja Mósesdóttir and Margrét K. Sverrisdóttir would be pleased so see such a law. But the corporate sector wants to try the voluntary alternative first.

The time is ripe

Just outside the centre of Reykjavik lies the Laugardalur area with its warm springs, one of many places in the city with outdoor pools open all year. Here, Hafdís Jónsdóttir has run Iceland’s largest spa and gym for 25 years. Her enterprise has 200 employees. She is also the new chair of Iceland’s organisation for female entrepreneurs, the FKA. The organisation has 650 members, who all own, or are on the board of a business. They turn to the ministers in the new government to make sure change will actually happen.

Hafdis Jonsdottir. Photo: Bosse Parbring

“The three banks now have women on their boards,” says Hafdís Jónsdóttir. “That’s good. But we still don’t see women entering companies, not even the companies that the banks have taken over. We can’t afford not having female board members when the new Iceland is being built.”

Jónsdóttir thinks the government should use its authority and its ownership of the banks to influence the development of gender equality within the business sector.

“That would benefit the country. This is the time to act wisely. We mustn’t rebuild an Iceland to be like it was before. We believe women are somewhat softer managers than men. Of course, we want our companies to do well, but we also think more carefully about the people involved. I think more women in the management of companies would make things more interesting and more varied.”

And to those who claim that it makes no difference if company boards are gender balanced, as long as the employed management is not, Hafdís Jónsdóttir has an answer based on research she has read.

“In order to get more women into management posts, there must be women on the boards. If a board consists of men only, they will employ a male manager. We really must start with the boards.”

However, Hafdís Jónsdóttir would prefer not to have a law on quotas.

“I think it is better if we manage this change without a law. But if there is no change, a law is the only solution.”

This year the FKA and other trade and industry representatives have entered into an agreement with the political parties in the Alþingi that by 2013 there will a proportion of at least 40 per cent of each gender on all corporate boards. Jónsdóttir thinks this will be realised.

“I’m quite optimistic. The time is ripe.”

The FKA has presented a list of women who are willing to serve on a board. Some women have already been chosen from the list. Lilja Mósesdóttir is prepared not only to be active in politics but also to be on a company board.

“As a trained economist I’m qualified for it.”

Purple velvet

Thoranna Jonsdottir. Photo: Bosse Parbring

The office of Auður Capital is situated not far from Laugardalur. This is a financial company created by two successful business women who tired of the male dominated financial sector. Auður Capital wants to change the sector by applying other values than mere economic profit there. The company was established in 2007 and currently it has 30 employees, of which 20 are women and 10 are men. The board consists of three women and two men.

Þóranna Jónsdóttir is responsible for corporate communications at Auður Capital. She meets me in a reception area which signals that this is a finance company wanting to be different: the reception desk is upholstered in purple velvet. On the wall behind two purple velvet chairs there are pictures of the staff’s children.

“Children are part of our world and our future,” Þóranna Jónsdóttir points out.

Naturally, there are no portraits of male board members in the board room, but instead pictures of pioneering Icelandic women in various fields of society.

“The world of finance was run by masculine values before the financial crisis,” says Þóranna Jónsdóttir. “It consisted of interwoven relationships.”

“Firstly, the finance companies invested with a very narrow spread of risk. There was extremely high risk behaviour. This was far beyond what is sensible. The main focus was short term. Nobody thought about the broader context.”

“Secondly, there was a lack of transparency. There was a promise of profits, but it wasn’t easy to see the real value of the investments.”

“Thirdly, there was a narrow definition of what success is made of. Money, and money only was the issue. Of course money is important, but it is not everything.”

This set of values was not attractive to women, according to Þóranna Jónsdóttir. Few women stayed on in the finance sector and the group become homogenous.

At the same time, Auður Capital emphasizes that there is a growing market among women which has not received any response from the financial market.

“This is an unexploited market,” says Þóranna Jónsdóttir. “It opens up opportunities for companies like ours. Women make 80 per cent of purchases in the household. There are large investment opportunities.”

“So the basis for our company is on the one hand to create a change of values within the finance sector, and on the other to make use of the opportunities presented by the female market. The female market consists both of enterprises run by women and of ordinary women.”

Growth in a design company

Auður Capital started its activities in early 2008 – before the collapse in October 2008 – but has not yet made that many investments in companies. However, the assets they had before the collapse they managed to keep, which is unique.

“We were cautious in the beginning. We didn’t take any big chances. This was what took us through the financial collapse. We managed to keep our assets after October 2008. The reason for this is that we are independent in our business activities. We don’t sit on both sides of the table, as many others in the finance sector did. We are also very aware of the risks. We protect our assets. At the beginning of the financial crisis many companies promised that things would improve, but thought only of themselves.”

Auður Capital has created two share funds for investing in small enterprises. Auður 1 invests in companies which are run primarily by women, aimed at women or in other ways demonstrate values that fit the values of Auður Capital.

“We have invested in ELM design, which is a company created by three female fashion designers,” Þóranna Jónsdóttir explains. “80 per cent of their market is outside of Iceland. They had contacts for establishing outlets abroad, but needed capital to be able to realise their opportunities. This year alone ELM design has grown considerably, despite the recession.”

The second fund has received capital from the Icelandic musician Björk, who has also lent her name to the fund.

“Its object is to invest in smaller Icelandic companies with a profile in innovation, culture and nature, as well as social and environmental sustainability – for example, small tourist enterprises.”

Auður Capital does not merely want to invest and then hope for the money to yield profits. Their package also includes practical and moral support.

“We wish to add not only financial capital, but also emotional capital,” Þóranna Jónsdóttir emphasizes. “We want to follow up on our investments by giving support and feedback. There is a mutual interest in doing this. This is a human side to business that we want to bring out.”

Changed attitudes

In addition to her business work, Þóranna Jónsdóttir is writing a doctoral thesis on women on corporate boards. She has interviewed women and men in large Icelandic companies. She did the first interviews in 2006–2007 – when the economy was blooming and there were few female board members – and the second set of interviews she carried out in the spring of 2009.

The interviews focus on what the board members think are the most important requirements for being competent as a board member. As a consequence of the financial crisis, many boards were reconstructed and in several cases acquired more female members than before.

“In the first interviews the men talked about the importance of being a generalist, and they emphasized the value of informal networks of business relationships,” Þóranna Jónsdóttir says. “The women, for their part, emphasized the merits of more formal structures. They did not think that the informal relationships were so important. But then they weren’t part of the power sphere as the men were.”

“In the second set of interviews, there was not much change on those boards that were still male dominated. But boards that were more gender balanced were characterised by a culture of more open discussion and trust, and displayed many of the traits regarded as important for an ideal board. The new boards appointed after the financial crisis had to create new rules. Personal relationships were no longer interesting after the economic collapse. On the contrary, there had been too many personal relationships and those were the reason for the collapse. There was no objectivity.”

The party whip governs

Although there are many positive signs that the financial crisis can lead to change within politics and business, Iceland still faces many problems and they have an impact on ordinary people and leaders at the top alike. When Lilja Mósesdóttir shows me around the Alþingi she points to a series of portraits of ministers from various governments. Many of them are on long-term sick leave. Personally, she regards her time in politics as limited, and she is afraid other women politicians do likewise. After the financial crisis of the1990s, quite a few young women were elected into the Swedish Parliament. But they did not stay there for long.

“I have been a member of the Women’s Party for a while, but didn’t want to actively engage in politics until last winter. I wanted to participate in making sure that changes would happen. I thought we had an opportunity to create something entirely new. There was a danger that things would have continued as they were before. I also wanted to see gender equality as a red thread. That women should be used more than before.”

“We’ve taken two steps forward and one step backward,” says Lilja Mósesdóttir. “After the election we took one step back. I got into Parliament, but there is not much space for influencing development, since the IMF governs most things.”

Lilja Mósesdóttir is critical of the government letting the International Monetary Fund set the conditions. New demonstrations flared after the Icesave agreement with the UK and the Netherlands, which meant that the Icelandic taxpayers are to pay for the money that the British and Dutch lost in Icelandic banks. Lilja Mósesdóttir feels that such criticism of the government is not welcome within her own party. The party whip lashes against her.

“The protests a year ago were very much about the political system not being dynamic. But the people who entered politics then quickly became like everybody else. We need people who dare oppose the opinion of the leaders.”

“But it is very difficult. I was against the Icesave agreement, but my party does not want Members of Parliament who don’t follow the party leaders. This might have something to do with gender. It is felt that women are to obey men. We as women might be more subject to this belief than the men. I think it is harder for women than for men to diverge from the opinion of the party.”

“But it doesn’t matter. I won’t stay that long in politics. I entered in order to improve gender equality and the situation of low-paid women.”

By Bosse Parbring

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