LeadersIndex-WIN 'Domestic Companies Diversity Index' Survey
Increase in Female Executive Ratio After Capital Market Act Amendment
Female Employees' Tenure and Salary at 60-70% of Male Employees
The proportion of female executives in Korea's top 500 companies has surpassed 7%, but the share of female employment and the gender wage gap remain stagnant, according to a recent survey. The average tenure of female employees is only in the 70% range compared to male employees, and their average salary is just in the 60% range, indicating a need for improvement. Although the growth rate of registered female executives has increased, most of the increase is in outside directors, with minimal growth in inside directors, leading to criticism that companies are merely making superficial changes to their boards.
According to the results of the domestic major companies' Diversity Index evaluated by Leaders Index in collaboration with Women Innovation (WIN) on the 10th, among the top 500 companies in Korea, 353 companies scored an average gender equality index of 54.7 out of 100, which is 3.0 points higher than the pre-pandemic score of 51.7 in 2019. The Diversity Index evaluates six categories: gender employment ratio, difference in tenure, wage gap, proportion of male and female executives, gender ratio among registered executives, and gender ratio among senior executives. Since 2020, the two organizations have been assessing companies excelling in gender equality and announcing the 'WIN-Award.'
Outstanding companies by industry in the Diversity Index include 10 companies such as Shinsegae International, Shinhan Financial Group, Youngone Corporation, Eugene Corporation, Krafton, Poongsan, Standard Chartered Bank Korea, Hanmi Pharmaceutical, Hansae Co., and Hyundai Kefico.
By industry, the highest diversity scores were seen in pharmaceuticals, finance, consumer goods, and information and communication technology (ICT) services, while construction, public enterprises, and machinery scored lower.
The most improved area is the proportion of female executives. The share of female executives in the top 500 companies nearly doubled from 3.9% in 2019 to 7.3% this year. Before the Capital Market Act revision in 2020, the proportion of female executives remained in the 3% range, but after the law was amended, it increased to 5.5% in 2021, 6.3% in 2022, 7.0% in 2023, and 7.3% in 2024.
The increase in female executives follows the passage of a law mandating female directors on the boards of listed companies. The law requires that the boards of listed companies with total assets exceeding 2 trillion won not be monopolized by one gender.
The growth rate of female registered executives was even higher. Female registered executives, who accounted for 2.9% in 2019, rose nearly threefold to 11.3% this year. Most of the increase in registered executives was among outside directors, while the growth rate of inside directors was minimal.
The proportion of female outside directors increased from 5.5% in 2020 to 16.4% this year, a rise of 10.9 percentage points. In contrast, the share of female inside directors only expanded from 2.0% in 2020 to 3.8% this year, an increase of 1.8 percentage points.
Leaders Index commented, "(Regarding the small increase in inside directors) this could be criticized as large companies making superficial changes to their boards following the law revision."
The proportion of female employees within companies showed no change. This was identified as the slowest improving area among the six evaluation categories. The number of female employees in the surveyed large companies was 340,651 in 2019, accounting for 26.2% of the total workforce (1,300,571). The ratio was 26.4% in 2020, 25.1% in 2021, 25.5% in 2022, and returned to 26.2% this year, the same level as in 2019.
The reduction in workforce during the pandemic period (2020?2022) in industries with relatively high female employment, such as distribution and consumer goods, had a significant impact. Leaders Index stated, "Although the proportion of female employees has recovered to pre-pandemic levels this year, compared to the increase in female executive ratios following the law revision, the employment rate of female employees remains relatively low."
The gap in tenure and wage between men and women has improved since the law revision, but female tenure and wages still remain at 60?70% of male levels, Leaders Index pointed out. The average tenure of male employees in the surveyed companies increased from 11.3 years in 2018 to 11.6 years last year, while female employees' tenure rose from 8.1 years to 8.7 years. The gap narrowed from 3.2 years to 2.9 years.
During the same period, the average salary of male employees increased by 19.4%, from 83.6 million won to 101.6 million won, while female employees' average salary rose by 27.1%, from 52.9 million won to 69.8 million won. The salary increase rate for women was 7.7 percentage points higher than that for men.
Female tenure was 75% of male tenure, and average salary was 68.7% of male salary.
Seo Ji-hee, Chairperson of WIN, said, "While the increase in female executives in large companies is clearly evident through the law revision, measures to nurture female executive candidates must follow to achieve substantive change."
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