Women in Business: Otago Chamber of Commerce

Dunedin Public Art Gallery

Thank you Fiona for the introduction – it’s good to be here. It is great that I have been able to be joined by my Parliamentary Colleague, Leslie Soper MP and Shenagh Gleisner, Chief Executive of the Ministry of Women’s Affairs. I have found over the last couple of years that my portfolios have many synergies. The Commerce and Small Business linkages are pretty obvious. But it is the combination of the issues that arise from them and my Women’s Affairs portfolios that are particularly relevant to women in business – those issues are women and retirement, and women’s participation in enterprise and in leadership.

I’ll start at the end, so to speak, with retirement because it’s an issue that is very much in the news at the moment with the introduction of KiwiSaver – and it’s also an issue that women, in particular, are beginning to pay more attention to, which is good for a number of reasons.

A couple of months ago I took part in a forum on retirement issues for women as part of the current triennial Review of Retirement Income Policies. I made the point that there are significant gender differences when it comes to retirement issues and we need to take these into account when we develop policies. One size does not fit all and retirement income policies need to be based on an understanding of our changing and increasingly diverse society, and on anticipated trends.

In New Zealand, women’s working lives are often very different from men’s. Women frequently don’t have continuous full-time employment because they are more likely to take time out of the paid workforce, reduce their hours or become self-employed, often so they can have children and, in later years, they may also make similar arrangements to care for elderly relatives.

Add to this the pay gap, and the result is that, on average, women have much lower earnings over their working life, which has a big impact on their ability to save for retirement. I know this is changing, but it is not changing fast enough to make a big difference to women of my generation at least.

Other relevant gender differences include the fact that marriage and relationship breakdown often also have a greater financial impact on women, including on their retirement income; coupled with the fact that women’s lower retirement savings have to be spread over a longer period than men’s retirement savings because we live longer. Not that New Zealand is alone in this.

A couple of months ago I read an article in the Herald, which quoted recent research on Australian women’s retirement income entitled ‘Women fall through the gaps’, which said that many Australian women were falling through a social and financial gap that leaves them to retire with only a quarter of the average man's superannuation.

The factors identified against women when it came to saving for retirement included time out from the paid workforce, child rearing and lower lifetime incomes. On average, Australian women spend 20 years less in the paid workforce than men, earn about $18,000 a year less, and they live five years longer.

However, there are two very significant differences between New Zealand and Australia; one is their compulsory workplace superannuation; the other is our universal superannuation scheme.

NZ Superannuation is something we must jealously guard as women. If you need an explanation consider this. 55% of women, as opposed to 38% of men, who are currently in retirement, are totally dependent on NZ Superannuation. If NZ Superannuation were to be reduced to a means-tested benefit, a much greater proportion of women would be relegated to a ‘safety net’ level of income, something which would disregard all societal contributions that are unpaid.

And for me it is personal, because I will never forget how much it meant to my grandmother when she received her own money paid into her own account when she turned 60 – something she hadn’t experienced since she left the paid workforce to get married. And even though that doesn’t happen so much now, circumstances that lead people out of the paid workforce are much more likely to affect women and women are much more likely to re-enter the workforce at lower levels (for lower pay rates) if they have had time out. And that is not to mention those who undertake voluntary work – should they be only eligible for a safety net rather than entitled to an adequate income?

Of course adequacy is relative – and the Retirement Commissioner has been telling us we need to think seriously about the kind of income we want to have in retirement. And that is where KiwiSaver comes in.

I have been a bit surprised by those who have not seen this as the huge advantage it represents on so many levels. When I go around small business, I am told there are two major barriers to growth – skilled labour and finance: - people and money. Some of them cannot see a connection between contributing to their employees’ workplace savings and both of these.

Big businesses have no problems seeing the benefit to New Zealand of the deep capital markets we have only observed jealously across the Tasman, where a compulsory workplace superannuation scheme has turned the 20th largest economy into the 4th largest investor.

We have made this as painless as possible for employers. All they need do is give the employee the IRD information pack and pay KiwiSaver contributions to the IRD through the PAYE process so there are no extra forms to deal with. From 1 April next year the employer contributions become compulsory at 1 per cent a year over 4 years and will be fully offset by the Employer Tax Credit at the full 4 percent for the first $26,000 of salary.
I am saying this because I want the SME sector to be part of what is going to be remembered in 20 years time as the real turning point in New Zealand’s economic history. KiwiSaver is about defining New Zealand’s future, and you, as business leaders, are an important part of it. New Zealand cannot afford to miss this opportunity again – as we did in 1975.

I often speak about women in leadership, and I know that despite the great gains we have made and the wonderful role models we have seen in politics and business – including that magic moment in time when women held all of the top constitutional positions - women still find it hard to achieve their full potential in so many spheres of life.

I often quote last year’s Census of Women’s Participation, which showed that only 7 percent of the directors of New Zealand’s top 100 listed companies are women, and I ask myself why we in New Zealand cannot achieve the participation rates of the UK, the US and, yes, even Australia. But at the same time in the public sector government appointments, we have achieved participation rates of 42%.

This of course puts paid to the statement that the women are not there. Of course we are. It is just that women are invisible to self-perpetuating male-dominated boards that don’t realise that the case for diversity is a business case, not one of tokenism.

It isn’t hard to work this out – if everyone sitting at the board table comes from the same background and wears the same school tie, then their collective experience of life is not going to enable them to see the full range of risks and opportunities that exist out there.

They are going to be much more narrow in their thinking, which is why overseas studies support the view that diversity is good for business – businesses with more diversity in their management and governance do better.

I should say something about an issue I addressed in Auckland last week because it has had a bit of publicity and the response has been very interesting.

I readily confessed that I had not heard of the ‘glass cliff’ but I now know its meaning and the risks it can pose. There was an article that appeared in one of the UK financial papers earlier this year, which said that the performance of companies apparently seemed to worsen performance following the appointment of women to their boards. The Chartered Institute of Personnel and Development decided to do a study on this because it didn’t seem right. Rather than finding that the disparity was post appointment, they found it was pre-appointment.

For companies that appointed men to their boards of directors, share price performance was relatively stable both before and after the appointment. However, companies that appointed a woman were much more likely to have experienced consistently poor performance in the months preceding the appointment. This became known as the ‘glass cliff’ phenomenon, where women’s leadership positions are relatively risky or precarious since they are more likely to involve management of organisational units in crisis.

The study showed that, when provided with details of two equally qualified candidates for a leadership position, (one male; one female), respondents overwhelmingly favoured the female candidate if the opening was described as difficult and involving a high risk of failure. The explanation put forward was that interviewees believed that women possess particular abilities that are especially valuable in times of crisis.

One woman told the researchers that the glass cliff concept reminded her of a quote from Eleanor Roosevelt: ‘Women are like teabags: you don’t know how strong they are until you put them in hot water’.

But I suspect that this is not the case at all, because I think they think that women have less to lose. And there is not one woman (or man) I have discussed this with, who doesn’t think the same.

So, while a directorship is a challenging step and a great opportunity, it is critical to ensure that the position is the opportunity it is made out to be. And from what I have heard since raising this, the glass cliff is alive and well in New Zealand, and it operates in a number of spheres and not just in business.

Another point that I want to touch on is the connection between my small business and women’s affairs portfolios. The two departments that report to me, the Ministry of Women’s Affairs and the Ministry of Economic Development, have co-operated on some research designed to better understand the experience of women running small and medium sized enterprises in New Zealand and how this experience differs from men’s.

This research was largely completed some time ago but has not been published yet because we have been waiting for relevant information from the 2006 Census to become available, to ensure the underlying data is as up-to-date and as reliable as possible.

I hope to release the research in the next few weeks, but I can tell you that while, as you would expect, the basic business issues and concerns are pretty similar for men and women, women’s experience is significantly different in some areas.

As an example, nearly half of self-employed women in New Zealand work part-time, compared to only 11 percent of men, and their businesses tend to be smaller.

Understanding why this is so, and what would, could or should be done about it, is important for New Zealand’s future because the contribution of women in enterprise to the New Zealand economy is significant and growing.

New Zealand has been enjoying a sustained period of economic growth and, as you are all aware, unemployment is low and recruitment of staff is more difficult than it was in 1999 when the Labour-led government came to power.

While I am sure you would rather have these problems of prosperity than the problems of low growth, it does mean that we simply cannot afford to continue to under-value or under-use the talents of the nearly 51 percent of the population, who are female.

This means better using the talents of women already in the workforce, as well as making work-places more family-friendly for parents who both want to work, but whose commitments make the traditional nine to five difficult for either or both of them. It means more diversity in business leadership, including more female faces at the board table. And it means finding better ways to support women entrepreneurs to grow their businesses.

I believe we are capable of these changes and that they will benefit men as well as women. A company that maximises the use of all its talents and recognises its employees as people with both work and family obligations is more likely to be successful than one that ignores potential and treats its staff simply as economic units. This is the key to lifting productivity and is the only way we will attract and hold talent in a global market – the lifestyle has to be the magnet, because we cannot compete with the salary packages that larger economies close to their markets can sustain.

The SME sector that I am privileged to represent is motivated, innovative, and entrepreneurial. But it is their unrealised potential for growth that makes them critical to New Zealand’s future, not their sheer volume.

Capacity building within the SME sector is my number one priority as Minister for Small Business – because businesses themselves must first be ambitious if they are to realise their potential.

As I said at the Small Business Expo in Wellington yesterday, if every owner of every firm with high growth potential could be afforded the opportunity to spend time on their business instead of in their business, then imagine what a powerful force that would represent in economic terms.

And that is my ambition for the SME sector as the Minister for Small Business. It is not only that the voice of small business is heard at the Cabinet table; it is that their potential for growth is unleashed for the benefit of the nation as a whole.

But in closing I come back to my role as Minister for Women’s Affairs. In just two weeks time I am off to New York to present New Zealand’s 6th report to the UN Committee responsible for the Convention on the Elimination of All Forms of Discrimination Against Women. I am going to be particularly proud to do so, because for the first time in the more than 25 years since we signed up to the Convention, we will be appearing without a single reservation entered against the convention. This is because women are not discriminated against in the armed forces as they were a number of years ago. We have now removed the exemption from the Human Rights Act, which enabled the discrimination to occur and although its removal was symbolic rather than actual, it means a lot that New Zealand is one of the few countries in the world that can truly say that it is committed to the elimination of discrimination against women.

But, and I am making this point to the Committee, that discrimination in law is different from discrimination in reality although NZ compares favourably with most other countries, we still have some way to go to getting NZ women’s skills and talents recognised in the labour market, with pay and employment equity still high on the government’s agenda. We are also working to eliminate family violence which we know has a gender bias given that 54 women have died from 2000 to 2004 – which is nearly one every month. This is unacceptable – which is why the government has established a taskforce made up of government and non-government organisations, the police, the judiciary, the Family Commission and the Children’s Commission.

I make this point because although New Zealand has come a long way in the past couple of decades, there is still more to be done. When David Lange spoke at the opening of the Ministry of Women’s’ Affairs twenty years ago he said their challenge was to demolish the structure of inequality, and we must continue to do that as women because those structures of inequality are what enable discrimination to continue to occur.

Thank you.