Introducing Womenomics

Did you know that in the U.S., women earn less than men in 439 out of 446 major corporations?

The highest difference in median earnings is between women working as physicians and surgeons who earn almost half of what men do (see chart below).

Interestingly enough, there are only seven professions whereby women earn slightly more (average of $1,000 per annum) and these are meter readers, wood sawing machine setters/operators, highway maintenance, nutritionists, telecom line installers/repairers, crane operators, and store managers!

Gender inequality is also highlighted in the participation rate of women in politics. As we can see from the world map below, the proportion of seats held by women in national parliaments is 30% or less in the majority of the developed countries whilst it is less than15% and close to zero in less developed areas.

Although women represent roughly half the population and exceed men in educational attainment in the U.S., they remain underrepresented in the workplace, and a pernicious gender pay gap persists.

Governments around the world are now putting this on their agenda with incentives to promote gender balance at work.

A case in point is Japan whereby the government introduced the so-called “Womenomics” initiative. This seeks to enhance economic growth through the general economic empowerment of women and includes efforts to ease barriers to female employment outside the home, promote women to leadership positions, and close the gender pay gap.

But will this provide any better results for us as investors?

In a study done by Bloomberg, it was established that companies with over 10 billion in market cap that has at least one woman on their board of directors have outperformed those who currently don’t. The excess compound returns were 3.5% per annum! (see below Figure 3)

The same study also showed that the higher the number of female participation in senior management, the higher the company’s performance. (see below Figure 3.)

Do you think this is a good opportunity?

Earlier this month, General Motors were awarded the best company award in terms of gender equality. The reason for this was because it was the only one that had a female CEO, equal number of men & women on its board and implemented equality pay across all of their employees.

Other companies amongst the top 10 were L’Oréal, JPMorgan Chase, Merck, and StarHub.

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