Lagarde favours affirmative action to boost 'womenomics'

THE best way to ensure that women secure key posts in government and in the private sector is through the introduction of formal "quota" systems, Christine Lagarde - the first woman to become managing director of the International Monetary Fund (IMF) - declared in Tokyo over the weekend during the World Assembly of Women.

A keynote speaker at the international event, Ms Lagarde said this in answer to a question from a Singapore delegate: that while she had initially been opposed to affirmative action for securing key positions for women in the public and private sectors, she had now changed her mind. Otherwise, "we could wait forever for change".

A major area affecting women's empowerment is law and institutions, Ms Lagarde noted. Citing an IMF study spanning 100 countries, she pointed out that the preliminary findings are that gender gaps are "lower when men and women are treated equally under the law", including in the area of economic opportunity.

Ms Lagarde did not comment on whether the IMF might introduce as part of its policy advice to member countries a recommendation that they consider quota systems to ensure women's empowerment. But her personal support for such systems is likely to be seen as a significant incentive.

During a lunch with business leaders of Japan's leading international trading companies, Ms Lagarde challenged them to live up to the target set by Prime Minister Shinzo Abe of "having women occupy 30 per cent of leadership positions by 2020" and appoint half a dozen women to senior executive positions right away.

Long known as a male- dominated society in the workplace - and under what Ms Lagarde referred to as the "great leadership shown by Prime Minister Abe" - Japan is seeking to alter its national image and become what Mr Abe promised at the United Nations General Assembly last year: a "place where women can shine".

Hosting the World Assembly of Women (WAW) in Tokyo is part of this image-changing process, and Mr Abe promised that "more than 100 events related to this symposium will be held throughout Japan, as well as in over 20 countries". Hosted by Japanese business federation Keidanren and others, the meeting represented 24 countries and six international organisations.

Ms Lagarde made it clear in Tokyo that she expects action and not just words from Japan. She urged Mr Abe (who sat in the audience during her speech) to invite her back again to Tokyo later so that she is able to check whether women's representation in key business slots has increased.

"Many large companies (in Japan) reserve permanent positions - the coveted sogo shoku - for men. And women flock to lower-paying and less secure jobs - the ippan shoku," she said. Globally also, women tend to be locked out of leadership positions, where gender seems to matter more than ability.

Women, Ms Lagarde said, "make up only 5 per cent of Fortune 500 CEOs". "They account for only 24 per cent of senior management positions around the world. These numbers are fairly consistent across Asia, Europe, Latin America and North America. In Japan, it is 9 per cent."

So-called "womenomics" has become a central pillar of Mr Abe's policies as Japan's society ages rapidly and the country's labour pool diminishes. Large-scale immigration is not considered a culturally acceptable way of overcoming this problem.

"Gradually raising (Japan's) female labour force to the average of the G-7 could raise income per capita by 4 per cent permanently," Ms Lagarde said. "Going further to participation levels of Northern Europe would give Japan a further 4 per cent. This shows the powerful ripple effect of higher female labour market participation."

Japan is not the only country that needs womenomics, she stressed. "Seven years into the worst global financial crisis since the Great Depression, the recovery is still too tepid and turbulent. And even after the crisis abates, we face grave challenges to growth - as a slower 'new normal' sets in, as populations age.

"Given these challenges, we will need all the economic growth, dynamism and ingenuity we can get in the years ahead. Thankfully, a key part of the solution is staring us right in the face: unleashing the economic power of women; bringing the world's largest excluded group into the fold."

Through his recent government reshuffle, the number of female Cabinet members in Japan (half a dozen) "advanced remarkably, from 29th to 11th among all OECD member countries", Mr Abe noted - while acknowledging that the proportion of women among the members of the National Diet "remains low" at 11 per cent.

"I have been urging the Japanese business community to take concrete actions towards appointing women to executive positions. Female directors have emerged one after another at financial institutions, trading companies, and other business categories that in Japan have previously been considered male workplaces."

Mr Abe has urged listed Japanese firms to appoint at least one female member to their boards. Japan will revise the system governing securities reports to require companies to include information on the number of female board members.

"Firms that promote women will enjoy 'expanded opportunities' for government procurement orders while the government will also provide subsidies to those companies that pursue the appointment of women to executive ranks," he said.