Hamish McRae: The slow shift of economic power

As the workforce becomes more flexible, the more this swings the advantage towards women

The Equal Opportunities Commission is worried about the lack of progress over the past 30 years since the Sex Discrimination Act was made law.

In a report at the end of last week it described the pace of change as "painfully slow". In some cases it was going backwards. As an example, it pointed out that women make up only 10 per cent of directors of FTSE-100 companies and only 20 per cent of MPs. In a world that is desperate for talented people, it certainly seems odd that half the population should be so under-represented. It is odder still, given that girls in general do better than boys in school and they are fully represented when training for fields such as medicine and law.

Rationally it seems absurd that any society, including our own of course but also that of any developed economy, should waste talent in this way. But the lack of progress reported by the Equal Opportunities Commission is real. The law has largely, though not entirely, failed. But then, that surely is not too surprising, because the law often fails when it tries to determine human behaviour.

Fortunately, however, economic forces are now at work that may be much more effective at rebalancing the opportunities between the genders. In short, where the law has failed, economics may succeed.

A huge amount of work has been done in trying to analyse why gender differences in the workplace should still exist. All this was well summarised by Denise Kingsmill five years ago in her Review of Women's Employment and Pay. This was an independent study in which she was asked to look at non-legislative and cost-effective things that might be done to improve women's position in the labour market. It is good stuff and is still the best starting point for anyone wanting to see the economic case for greater gender quality. Indeed it has been so successful that, intellectually, the case is now made. Hardly anyone seriously disagrees with it.

What we should do about it is another matter. Perhaps the most respected economist in Britain in this area is Professor Andrew Oswald, of Warwick University. His view is that if you are looking at boardroom discrimination, you have to be careful about possible simplistic solutions.

For example, he notes that Sweden has a much higher proportion of women in parliament than in almost any developed economy. Nevertheless, it is harder there even than in the US for women to get top jobs in business. The pay disparity at the top is huge and the glass ceiling has actually become harder to penetrate than it was a generation ago.

Why on earth should this be? Professor Oswald is a wise bird on the interface between economics and human behaviour - in a lovely column in this newspaper last September to new undergraduates he advised them to write a postcard home as "it will raise your slice of the inheritance". His view is that men are better blaggers than women. They tend to talk up their abilities and their achievements, whereas women make a more realistic and maybe more honest assessment. So men perform better at interviews and maybe as a result end up getting the top jobs.

As far as the narrow issue of FTSE-100 directors is concerned I think another issue is relevant, namely that the range of skills needed has increased dramatically over the past 20 years. Being wise and sensible is no longer enough: you need a long track record of detailed business experience, even as a non-executive director, and the pool of women that have that is inevitably much smaller than the pool of men. I cannot see this changing.

But, of course, doing well in an economic sense is more than just being a director of a big company. Indeed, as our economy becomes more diverse, there are lots of great careers outside large companies. Indeed it is a pretty dull business clawing up the corporate ladder and anyone with any sense of balance in his or her life has to wonder whether it is worth it. So I think it is possible to paint a much more optimistic picture about the future role of women in our economy than the current statistics might suggest.

Five big changes are taking place that either play to what seem to be women's natural advantages in the workplace, or at least are gender neutral.

The first is the increased need for multi-tasking. Jobs at a senior level are less and less doing what has been laid down in the spec, and more and more trying to think creatively about the way a job can be redefined to the good of all. This means having people who can do lots of different things, often at the same time. Insofar as women seem better able to do this, that should play their way.

The second is the growth of the creative industries. Writing a book (J K Rowling) or being a Big Brother celebrity (Jade Goody) is clearly a gender-neutral activity. True, male footballers earn more than any female athletes, and only in tennis do the women get paid as much or more than the men. But female celebrities can probably out-earn men and, unlike men, can create high-profile careers from a standing start (Paris Hilton). If the creative industries continue to grow as a proportion of the whole, as I think they will, then that particular imbalance will diminish.

The third is the rise of the entrepreneur. We are in a world where capital will flow across national boundaries to wherever it gets the highest return. Technology races across too; witness the fact that factories in China are often better equipped than those in Europe or America. One of our few competitive advantages is our sense of enterprise, as the Chancellor recognises, and enterprise seems - just looking at who starts businesses - to be pretty evenly distributed between the genders.

Fourth, technology: it does not help people in top jobs maybe, but the communications revolution has made it much easier for people to work part-time and from home. About 10 per cent of our workforce are now tele-workers. Any disadvantage that women used to have by being "stuck at home with the kids" is at least diminished, though not eliminated. More generally, as the workforce becomes more flexible the more this swings the advantage towards women.

And, finally, there is the little matter of inheritance and the accumulation of assets. Women live longer than men and frequently have or have had older partners. I saw a statistic the other day that I have not been able to substantiate but, if true, is of seismic significance. It is that there are more female millionaires in Britain than male. This is partly the result of the rise of house prices and the numbers of widows living in their own homes. It may not help women in the FTSE-100 bracket and it does not help income inequity. Nevertheless, a world where women have more financial resources than men is a world where power is shifting. I'm not sure the men will be too keen on that.