The pace of gender diversity reforms in Singapore and South Korea could accelerate as both jurisdictions tackle risks to economic development. In recent years, Singaporean and South Korean governments have become increasingly aware of the pressing need to boost gender diversity in the workplace to ensure longer-term economic sustainability.
Singapore government lays groundwork for more reform
In Singapore, studies linking diverse workplaces to increased innovation and competitiveness are driving corporate governance reforms to boost gender diversity. The territory’s economic welfare, which has been battered severely by the novel coronavirus pandemic, is an additional source of pressure to leverage the full working population. Board diversity has been a focus for reforms so far. As of last year, listed companies in Singapore are required to disclose their board diversity policy and show progress in implementing objectives set by that policy.
Further reforms that could affect businesses are in the pipeline. K. Shanmugam, the Law and Home Affairs Minister of Singapore, recently announced the government would conduct a review of women’s issues and gender equality. In October, it started to engage the public and private sectors as well as non-government organizations, to identify issues pertaining to gender equality in Singapore.
While gender-based discrimination and gender-based violence are two of the main areas that the study will focus on, workplace inequality has also been highlighted as an issue that warrants deeper examination by the government. The review will study what can be done to improve gender equality in home, school and workplace settings. Shanmugam has described the initiative as a wholesale “re-tuning” of Singaporean culture, suggesting that the government is prepared to make sweeping changes. Participating agencies aim to publish a white paper detailing the government’s findings, potentially laying the groundwork for regulatory reform, in the first half of next year.
The Council for Board Diversity, previously known as the Diversity Action Committee, had initially set a target of 20% of female representation on boards of the top 100 companies listed on the Singapore Stock Exchange (SGX) by 2020. At the end of 2019, 16.2% of those board seats were held by women, prompting calls to accelerate progress.
The Council has set a higher target for 2030, aiming for 30% of board seats to be filled by women by that time. The goal, along with the planned review of gender diversity issues in Singapore, could further prompt regulators to put more pressure on listed companies to meet their gender diversity targets.
Economic effects of gender-based disparity loom in South Korea
Government officials in South Korea have become acutely aware of the potentially devastating effects that declining demographics and pervasive gender-based discrimination in the workplace could have on the country’s future.
Despite its status as a developed economy and one of the most technologically advanced countries in the world, the World Economic Forum ranks South Korea 124 out of 149 countries in the world in terms of economic participation by women. In 2019, deaths in the country exceeded births for the first time. At the same time, South Korea’s workforce is expected to shrink the fastest over the next two decades, compared to other countries such as the United States, China and Brazil. These developments raise concerns over the sustainability of the country’s economy in the not-so-distant future.
Conscious of the need to increase the number of people in the workforce to sustain tax revenue, gradual efforts have been made by the government to incentivize South Korean workplaces to be more inclusive of women; however, little progress has been made.
Earlier this year, the Korea Herald, a local news publication, reported that only 8%, or three outside directors at the five largest financial institutions in South Korea, are female. KB Financial Group, Hana Financial Group and NH Financial Group each have one female director. The remaining groups have none.
According to data compiled by the Korean chapter of Women Corporate Directors, 78.5% of large listed companies, including conglomerates such as LG and Hanwha, have no women on their boards.
The South Korean government is accelerating efforts to incentivize companies to hire and retain more women. The Employment Insurance Act and the Equal Employment Opportunity and Work-Family Balance Assistance Act were amended in October 2019 allow men to take parental leave and to allow parents to divide parental leave. Employers that permit parents to work fewer hours for childcare reasons are also eligible for government incentives.
Listed companies could soon be required to show more progress in including women at the board level. Under the revised Financial Investment Services and Capital Market Act, which came into effect in January, large listed companies will be required to shift away from all-male boards. The move to comply could be sizeable. As of January 2020, eight out of 10 listed companies in South Korea with assets of more than 2 trillion won ($1.7 billion) did not have any women on their boards.
Gender diversity and inclusion in the workplace in Singapore and South Korea are becoming ever more important priorities for governments in these two respective jurisdictions. South Korea noticeably lags most developed economies in gender diversity in the workplace but the government has shown a willingness to accelerate the pace of regulatory reforms specifically aimed at including more women in the workforce. In Singapore, policymakers are focused on continued progress, especially increasing the number of women in senior positions and on boards of directors.
Both jurisdictions have a history of driving lasting policy reforms, successfully developing their respective economies, from among the poorest in the world, into world leading financial and technology hubs over roughly two generations. Given the growing recognition by both governments of the role that increased gender diversity in the workplace could play in ensuring economic sustainability, businesses in the region can expect transformative change on the horizon.