by Ryu Hyunseok
Published 08 Mar.2024 10:36(KST)
Indicators related to gender equality in domestic companies are gradually improving, but substantial inequalities persist in areas such as the proportion of women on boards, pay disparities between men and women, and length of service.
On March 8, in celebration of International Women's Day, KCGI Asset Management announced that it had analyzed gender equality indicators of 370 major publicly listed domestic companies (149 companies with a market capitalization of 2 trillion KRW or more, and 221 companies below 2 trillion KRW) within the 2023 KCGI The Women Fund investment universe, in collaboration with Sustainvest, an ESG (Environmental, Social, and Governance) rating agency.
The proportion of female employees within companies has been increasing annually, but the share of women on boards remains low. As of the end of 2022, the average proportion of female employees was 27.7%, exceeding one-quarter of all employees, whereas the proportion of female board members was only 8.8%, equivalent to one-eleventh of all employees.
Specifically, among companies with assets of 2 trillion KRW or more, out of an average of 1,572 female employees, only 4.8 (3.0%) were female executives. For companies with assets below 2 trillion KRW, only 1.4 (0.7%) out of 195 female employees were executives, indicating that a significant glass ceiling still exists.
Although slight, improvements in gender equality indicators have also been detected. The proportion of female employees in companies with assets of 2 trillion KRW or more increased from 22.2% in 2020 to 24.1% in 2022, a rise of 1.9 percentage points. For companies below 2 trillion KRW, the figure rose from 27.9% to 29.4%, an increase of 1.5 percentage points, showing a steady growth in female workforce representation. Additionally, the proportion of female executives on boards increased from 5.7% to 8.6% in companies with assets of 2 trillion KRW or more, and from 7.1% to 8.8% in companies below 2 trillion KRW, indicating a modest but positive trend.
Jung Dasom, Senior Researcher at Sustainvest, stated, “While quantitative indicators are improving, efforts to enhance gender equality within companies from a long-term perspective, such as fostering female internal directors, remain insufficient.” She added, “Notably, most female registered executives are appointed as outside directors, and among those appointed as inside directors, many are family members of controlling shareholders, which is regrettable as it does not reflect an increase in female executives through internal talent development.”
The difference in length of service between men and women has shown little change. For companies with assets of 2 trillion KRW or more, the average length of service gap decreased slightly from 3.2 years in 2020 to 3.0 years in 2022. For companies below 2 trillion KRW, it increased slightly from 1.4 years to 1.5 years. The length of service gap is a meaningful indicator reflecting pay disparities and the proportion of non-regular workers. A larger number indicates a greater gap in length of service, which can be interpreted as increased inequality for women in terms of talent development.
Despite the increase in the length of service for female employees, pay disparities between men and women remain significant. The pay gap is measured by the male-to-female pay ratio. This gender equality indicator is influenced by factors such as length of service, job difficulty, and employment type, which affect productivity and tenure. A higher ratio indicates higher male pay.
For companies with total assets of 2 trillion KRW or more, the male-to-female pay ratio slightly improved from 1.57 times in 2020 to 1.55 times in 2022, but the gap remains substantial. For companies below 2 trillion KRW, the ratio worsened from 1.41 times to 1.43 times. When considering both length of service and pay, the difference in length of service is about 3 years for companies with assets of 2 trillion KRW or more and 1.5 years for those below 2 trillion KRW, which is not a significant gap, but men’s pay was 1.55 times and 1.43 times that of women, respectively.
KCGI Asset Management, which operates The Women Fund, stated, “Gender equity is expected to contribute to long-term corporate competitiveness and value enhancement,” adding, “We will continuously urge investee companies to increase the actual proportion of female executives and improve length of service to enhance gender diversity.”
In November 2018, KCGI Asset Management launched the 'KCGI The Women Securities Investment Company,' the first mutual fund in Korea that selects fundamentally strong companies with relatively well-established gender diversity and equity for long-term investment. The current assets under management stand at 21.2 billion KRW based on net asset value.
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