The appointment of Kazuo Ueda as the Bank of Japan’s new governor in February, alongside two male deputy governors, has thrown into light the topic of gender equality – or lack of – at central banks. These appointments will set back progress for gender parity by at least another five years in an institution that does not have a good track record on this issue.
There has been some progress in improving female representation at the senior level in central banks globally. Contrary to Japan, Bank Indonesia has just appointed Filianingsih Hendarta as deputy governor and the rate-setting board has achieved gender balance. But there is much further to go.
Greater diversity in the workplace, not just for gender, introduces new perspectives and attitudes while avoiding echo chambers. Fresh perspectives encourage innovation. More specifically for central banks, inclusion really matters. If those at the senior level – and the rest of the institution – reflect the demographics of the country, then it ensures that monetary policy serves the whole population, not just a portion of it.
OMFIF’s Gender Balance Index measures gender parity in central banks by scoring institutions based on the presence of men and women among high-level staff, weighted by seniority. The score for each institution is then calculated by taking the ratio of the female and male components, where perfect gender balance is given a score of 100.
According to last year’s GBI, central banks have a long way to go to reach parity. The aggregate GBI score for Asia Pacific reflects the recent appointments by the Bank of Japan – the region’s score only increased to 13.5 from 7.5 between 2017-22 (Figure 1). Globally, GBI scores have only risen to 31.6 from 30.8 over this period. Latin America and the Caribbean is the only region with consistent improvement but it is still far from a perfect score.
Figure 1. Central banks make very little progress globally over five years
GDP-weighted aggregate GBI scores by region
Source: OMFIF analysis
The path towards gender parity has not been linear. Since 2014, the number of female governors in central banks has only increased by one. Figure 2 shows a decline in female governors from 2014 before it starts to increase again in 2019. Mirroring gender balance scores, progress for the number of female governors is happening, but at an incremental and inconsistent pace. Central banks will have to do more to make it easier for women to advance through the ranks to achieve gender balance.
Figure 2. Female central bank governors increase by one in 10 years
Number of female central bank governors
Source: OMFIF analysis
To do so, central banks will need to focus on their internal policies, which will be explored in detail in this year’s GBI report. OMFIF has surveyed 46 central banks on their recruitment practices, HR policies and gender equality initiatives. The findings of this survey will be released in April.
Preliminary analysis of the survey suggests that flexible work arrangements are the most commonly adopted policies among respondents – particularly remote work arrangements, which had already been widespread due to the pandemic. Parental leave is another promising result. All central banks have some form of policy in place, but they vary widely .
Paid leave can range from a couple of months to more than a year for mothers, while paternal paid leave can be anything between a day to a year. Flexible work and parental leave policies are crucial for providing flexibility and control over caring responsibilities, for both women and men. If parental leave policies were more generous, it could ease the pressure of care on women, who could then be more likely to remain at work.
However, flexible work and parental care policies only help with one dimension of promoting female representation. Based on past GBI findings, there is a clear pipeline problem in promoting women to the top and central banks can do more to rectify this.
Quotas and targets for hiring entry-level staff or selecting senior management may help to ensure that women have a foot in the door. Pay gap assessments would shed light on whether women receive equal pay for equal work. Mentorships and leadership programmes can equip women with the skills to confidently navigate their careers. There are solutions to achieving gender balance – central banks first need to act.
Katerina Liu is a Research Analyst at OMFIF.
These themes were also explored in the Sustainable Policy Institute journal, spring 2023 edition.