The employment ratio for females has increased dramatically across a selection of OECD countries over the past four decades. Data on ethnicity are harder to obtain, but there have been improvements in employment rates among foreign-born residents in many countries over the past 15 years. Numbers of women and ethnic minorities in senior positions have also increased. The Davies Review recently found that the UK has now reached its target of 25% female board representation among FTSE-100 companies, having doubled in less than 5 years. 58 Although progress has been made, there are a number of areas where we still fall short. In the UK, the employment rate for those with Black, Asian and Minority Ethnic (BAME) backgrounds is still materially lower than for the population at large. 59 Women still only account for a third of employment in higher managerial roles in the UK. Although the pay gap has fallen, average pay for men in the UK remains almost 20% higher than for women. 60 And male CEOs across European public companies earn on average over 30% more than their female equivalents. 61 The Bank has itself made good progress over recent years. For example, we currently have 43% female representation across the organisation and we are working towards a 50/50 gender split by 2020. At senior management levels, 27% are women with a target to boost this number further. If we rewind 10 years, the equivalent figure would have been only 7%.
Writing back in 1848, John Stuart Mill captured well the societal benefits of diversity: 15 “It is hardly possible to overrate the value, in the present low state of human improvement, of placing human beings in contact with persons dissimilar to themselves, and with modes of thought and action unlike those with which they are familiar…Such communication has always been, and is peculiarly in the present age, one of the primary sources of progress” More recently, Scott Page (2011) has encapsulated the positive social externality of diversity more formally. Economists love an equation, so here is one: Collective Ability = Individual Ability + Diversity Recent evidence, drawn from a range of disciplines and settings, has tended to confirm Mill and Page’s conjectures. Diversity generates a positive social externality, helping the collective far exceed the sum of its individual parts. Diversity is synergy. This has been found at almost every scale of social grouping, from small communities and organisations, to large economies and nation states. The benefits have been found, too, in non-social settings, such as ecological and logistical systems. 16 One channel through which diversity may improve societal outcomes is by fostering innovation and creativity. If different raw ingredients are added to the intellectual melting pot, the final dish is likely to be richer and more innovative. 17 Psychologists believe that divergent thinking is the cradle of creativity. That is why creativity is often found to be greatest among very young children whose thinking is unconstrained by convention.