Proposal for balanced gender representation on company boards proves controversial

Consultations ended in February 2000 on a government proposal to amend Norway's Equal Status Act in a number of areas. The proposed introduction of regulations stipulating a pro-rata representation of the sexes on the boards of semi-public and private enterprises proved especially controversial.

In October 1999, the Ministry of Children and Family Affairs issued a proposal to amend the 1978 Equal Status Act (Likestillingsloven), which governs equality between the sexes, as a consultation paper (NO9910157F). The paper was considered by a wide range of bodies, including the main social partner organisations, with the deadline for submission of responses being 1 February 2000. The consultation paper proved to be controversial, especially the recommended introduction of regulations stipulating a pro-rata representation of the sexes on the boards of semi-public and private enterprises. There is also a certain degree of disagreement between the social partners over the issue of equal pay.

In addition to balanced representation on boards and equal pay measures, the Ministry recommends four other important areas of change to the Equal Status Act. It aims to establish by law a duty on companies to encourage equal opportunities within their organisations, and to introduce provisions safeguarding legal protection against sexual harassment. The Ministry wants it to become mandatory for enterprises to report on matters concerning gender equality, and, in compliance with the European Economic Area (EEA) agreement, the Ministry proposes to introduce an objective liability for compensation for employers breaching the Act's provisions concerning equal treatment with regard to appointment and conditions of employment.

Gender representation on boards

The Equal Status Act requires each sex to provide at least 40% of all representatives on public councils and boards. The Ministry proposes that these provisions be made applicable to the boards of semi-public and private enterprises. The Confederation of Norwegian Business and Industry (Næringslivets Hovedorganisasjon, NHO) and the Commercial Employers' Association (Handels-og Servicenæringens Hovedorganisasjon, HSH) draw a distinction between public and private enterprises in this regard, arguing that it is acceptable for public enterprises to lead the way in pursuing equal status objectives, but that it should mainly be left to the social partners themselves to deal with such issues, especially in the private sector. NHO opposes the extension of the legal framework to private enterprises on the grounds that it will impinge on the rights of private ownership, and that it will only add to an already "over-bureaucratised" regulatory system. The vice-director of NHO, Kristin Clement, stated in a newspaper article (DN, 6 March 2000) that the Ministry's proposal may lead to a situation in which smaller companies choose to establish single-member boards, in order to bypass the new regulations, and that, in any case, it may prove to be an impediment to the recruitment of competent board members. HSH takes the matter even further by arguing that the needs of companies should be given priority in cases where these needs conflict with rules on the balanced gender composition of boards.

Trade union organisations welcome the proposals concerning balanced board representation, and see gender equality activity as an all-embracing responsibility, and not just a responsibility of the public authorities. As such, the Norwegian Confederation of Trade Unions (Landsorganisasjonen i Norge, LO) and the Confederation of Vocational Unions (Yrkesorganisasjonenes Sentralforbund, YS) want to see the provisions extended to all types of enterprises, private as well as public. YS also explicitly states that the responsibility for supervision of compliance with the proposed new provisions should be vested in the Ombudsman for Gender Equality, something that is strongly opposed by HSH.

Several organisations, including LO and NHO, have commented on the paper's lack of consideration of employee representation on company boards in the light of the proposed alterations to the Act (employees have the right to elect up to a third of board representatives in companies with more than 50 employees - TN9809201S). They want to see further deliberation on how to best to accommodate the requirement for balanced gender representation on boards of companies with the requirement for employee representation.

Equal pay

On the issue of equal pay, the parties disagree about the scope of the Act. At present, the rule of "equal pay for work of equal value" is applicable only to work of an apparently similar nature and, for the purpose of comparison, only to work which is within the same enterprise. The Ministry proposes extending the interpretation of "equal value" to cover most occupations across professional and collective agreement boundaries, but does not want to allow comparative evaluations that cut across enterprise or company boundaries. Only YS has expressed a wish to see the comparative evaluation of different types of work extended to work executed in different enterprises. Most organisations want the present provisions in this regard to remain as they are, although the Confederation of Norwegian Professional Associations (Akademikernes Fellesorganisasjon, AF) indicates that a comparative evaluation of work across enterprise boundaries is possible in the municipal sector, taking into consideration the nature and structure of public sector enterprises (municipalities).

Another area of disagreement in relation to the issue of equal pay is the Ministry's proposed definition of "equal value" through a "total appraisal in which the emphasis is on those skills necessary to execute the work, as well as other factors such as work load/strain, responsibility and working conditions". Although there is a general consensus about the dangers of an overly narrow definition of the term, there is significant disagreement concerning the elements to be included in this definition, reflecting the particular interests and preferences of the social partner organisations. LO wants the concept of "market value" to be omitted from the new proposal, while, by contrast, this concept is stressed by NHO, which cites legal precedents.

Commentary

The proposal put forward by the Ministry to alter the Equal Status Act is controversial, although there is broad support in principle for the main goal of increasing the proportion of women in leading positions in Norway. Disputes arise among the social partners, however, on the issue of the scope of regulations, and the extent to which voluntary measures are sufficient or there is a need for additional legal measures. The employer side wants to see less legal regulation, while the employee side seems generally, though not uniformly, to be satisfied with the introduction of new provisions in the Act. Furthermore, within the government itself there are differing views on the desirability of legal amendments, and the Ministry of Trade and Industry especially has expressed a wish to see gender equality being encouraged by means other than legal changes, such as through political initiatives aimed at involving women themselves in a more active and direct way.

There is nevertheless a general consensus about the need for alterations to the Act, at least in order to bring it into line with international agreements to which Norway is party, and especially to the EEA agreement. Reforming the equal pay provisions is particularly important in this regard. The Ministry will now prepare a white paper based on the responses to the consultation exercise, which is to be put before the Norwegian parliament (Stortinget) some time in the autumn of 2000. (Haavard Lismoen, FAFO Institute for Applied Social Science)

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