This chapter assesses OECD countries’ existing policies for diversity in the labour market in light of the gradually growing body of literature evaluating their impact. It considers the role of non-discrimination legislation, as well as the effects of hiring quotas, financial incentives and awards for firms that hire a diverse workforce. Furthermore, it evaluates diversity instruments such as anonymous job applications, outreach to underrepresented groups and diversity trainings for staff.
All Hands In? Making Diversity Work for All
3. Diversity policies in the OECD and evidence on their effectiveness
Abstract
This chapter assesses OECD countries’ existing policies for diversity in the labour market in light of the gradually growing body of literature evaluating the impact of such instruments. The effort to synthesise diversity instruments with the evidence in a comparative, cross-country manner must be preceded by a note of caution: the evidence currently at hand is still sparse and highly context-specific. The majority of studies evaluates diversity measures in a particular country, if not a particular firm, with limited transferability of results for a given policy instrument from one context to another.
It is, however, possible to provide initial pointers on how and under which circumstances existing diversity measures seem to promote anti-discrimination and diversity efforts. Taking an evidence-based view on what has been learned in several decades of “diversity and inclusion” on the political agenda of OECD countries, this overview seeks to derive lessons for future policymaking. A key result of this review is that diversity efforts must be targeted to the national context and the situation of a specific diverse group – otherwise, well-intended diversity measures can be ineffective and, at worst, counterproductive.
The chapter is based on a recent policy questionnaire answered by 30 OECD countries, as well as the findings of the OECD-Dauphine University HR survey conducted with around 2 400 HR professionals in eight OECD countries (see Box 3.1). Each section discusses a common policy instrument and its effectiveness.
Non-discrimination legislation and the role of equality bodies
In virtually all OECD countries, diverse populations are protected by non-discrimination legislation in the field of employment. In almost all countries, discrimination is prohibited on the grounds of sex/gender and gender identity, sexual orientation, age and race, ethnic origin or skin colour (see Annex A for an overview of protected grounds in OECD countries). Religion or belief is another commonly protected ground, while some provisions are specific to certain countries, e.g. for indigenous, native or aboriginal people in Canada, the United States and Australia. Australia, France, Finland, the Netherlands and Portugal notably go well beyond the commonly protected groups, including a variety of grounds such as political or trade union activity, criminal history, family or marital status, physical appearance, type of contract or place of domicile. Often, the above are non-exhaustive lists (including e.g. “any other grounds”) and eight countries explicitly recognise discrimination on multiple grounds (see Box 3.1).
Box 3.1. Multiple and intersectional discrimination
Legislation in many OECD countries recognises multiple, additive, or cumulative discrimination, i.e. discrimination occurring on the basis of more than one ground. This acknowledges that a person who is, for example, discriminated against on grounds of race might also suffer discrimination on grounds of gender, sexual orientation, religion or belief, age or disability.
A different approach focuses on the synergies between particular grounds, and the new forms of discrimination it creates. This phenomenon, first coined in the academic debate by (Crenshaw, 1989[1]), is known as the concept of intersectional discrimination. Proponents of intersectional approaches maintain that the focus on single grounds renders invisible the challenges faced by those at the intersection of grounds. This invisibility, so they argue, is part of a deeper structural problem of anti-discrimination and diversity efforts, namely that the categories on which grounds are based tend to predominantly focus on the barriers faced by the more privileged of the group: white women in the case of gender discrimination, and ethnic minority men in the case of race discrimination. Neither of those categories accurately capture the discrimination experienced by ethnic minority women.
While multiple discrimination can be addressed within existing legal frameworks, the situation with intersectionality is more complicated. Non-discrimination laws, and most diversity polices, cannot possibly cater to specific experiences of discrimination created by any combination of grounds. Intersectionality can, however, be mainstreamed into existing frameworks – pointing out the large diversity of experiences within a given group where necessary, rather than assuming homogeneity. Such an approach could for example inform legal proceedings, to explain in courts that a case made by black women cannot be dismissed just because the employer did hire black people who were men and women who were white. Likewise, anti-bias trainings could illustrate the specific bias against Muslim men that one might not similarly hold against Muslim women (compare Valfort (2015[2])).
Yet, intersectional discrimination remains difficult to monitor and analyse, as existing data mostly do not allow for disaggregation on grounds such as ethnic background or disability. More recently, however, there is increasing guidance on how such intersectional ‘equality data’ could be collected (Balestra and Fleischer, 2018[3]; Makkonen, 2016[4])
Twelve out of the 30 OECD countries that answered the questionnaire include socio-economic disadvantage as a protected ground in their anti-discrimination legislation. The variety in definitions used, including social origin, social status or social class as well as wealth, income, financial or economic situation, illustrates the difficulty with operationalising socio-economic status (SES). As it targets a changing characteristic, discrimination based on SES is not straightforward to measure and a cut-off is difficult to determine (see Box 3.3).
The empirical literature on the effects of non-discrimination legislation remains scant, with most studies addressing the US context. Existing evidence suggests that the initial adoption of the landmark anti-discrimination law Title VII of the 1964 Civil Rights Act initially aided the economic status of black workers in terms of both employment and wages, but with diminishing returns over time (Donohue, 2005[5]; OECD, 2008[6]).
Other studies highlight possible unintended side-effects of legal protection. In their analysis of disabled workers’ employment following the American Disabilities Act (ADA), (Acemoglu and Angrist, 2001[7]) observe a decline in employment of disabled workers after the ADA went into effect. The authors suggest that with the requirements to accommodate the needs of disabled employees, as well as regulations regarding their hiring, firing and pay, the perceived costs of might have led employers to refrain from hiring workers with disabilities. It was not possible to identify the component of the law that caused the effect, which might have been the cost of accommodation of disabled workers (costly equipment etc.) as well as the higher cost of hiring due to fear of litigation. Other studies argue that the decrease in the employment of workers with disabilities during the 1990s was a result of changes that expanded Social Security Disability Insurance (SSDI) eligibility and benefits (Autour and Duggan, 2003).
Aside from effects on employers’ behaviour, the mere institutional decision to protect certain groups may impact the wider society’s perception of social norms and influence attitudes towards diverse groups. A recent study using experimental strategies investigated how the June 2015 US Supreme Court ruling in favour of same-sex marriage affected behaviour and attitudes towards minority groups (Tankard and Paluck, 2017[8]). The authors observe that attitudes in support of gay marriage were significantly more positive among participants who were told that a positive ruling was the most likely outcome. The subsequent five-wave longitudinal time-series indeed indicated that after the actual ruling, participants believed that social norms shifted in favour of same-sex marriage. These results are in line with previous research suggesting that changes in legal norms, if democratic in nature, are seen as a signal of where the public stands, which in turn can influence attitudes and behaviour (Cialdini and Goldstein, 2004[9]).
However, for non-discrimination legislation to have any effect, awareness of legal provisions is crucial, as are effective recourse mechanisms for individuals who feel discriminated against (Heath, Liebig and Simon, 2013[10]). In almost all OECD countries, specialised equality bodies and ombudsman offices assume this task alongside civil society initiatives, trade unions and NGOs.
The competences of equality bodies in OECD countries vary. Generally, such bodies provide information about non-discrimination laws and the possibility to take legal action. In some countries, including Italy, Mexico, Sweden, the United Kingdom, Belgium and Denmark, equality bodies have litigation powers. However, even when legal representation through an equality body is possible, it is not provided in a systematic way and only strategic cases that can provide clarifications on the law or create precedence are taken up. Another role of equality bodies is that of a third party in mediation and conciliation procedures, an approach that may be less damaging to the employer-employee relationship than litigation. In almost all countries, specialised bodies assume an awareness-raising role, conducting information campaigns and/or trainings related to anti-discrimination issues in their country (see Figure 3.1).
Figure 3.1. Awareness-raising activities conducted by equality bodies in 2017
Note: See Annex B for an overview of equality bodies that have responded to the survey.
Source: OECD “Diversity at Work” questionnaire.
Figure 3.2 indicates that in all European OECD countries for which data is available, awareness of non-discrimination provisions has increased between 2007 and 2015. However, the numbers also show that there is still a long way to go in terms of awareness of rights. In the majority of countries, less than half of the population would know their rights if they were to become a victim of discrimination or harassment.
Figure 3.2. Public awareness about legal rights in case of discrimination or harassment
Source: Eurobarometer (2007) and (2015).
Further strengthening the awareness of workplace rights is critical. This must go together with strong recourse mechanisms ensuring that potential victims of discrimination can actually avail themselves of their rights, while being protected from retaliation (see Box 3.2).
Box 3.2. Towards effective and trusted recourse mechanisms to promote diversity
Promoting diversity requires implementing both effective anti-discrimination provisions and accessible and trusted recourse mechanisms to ensure that the rights of diverse groups are protected. OECD countries have put in place a variety of recourse mechanisms to deal with cases of discrimination in the labour market, ranging from ordinary courts, labour courts, quasi-judicial and specialised tribunals, to various alternative dispute resolution (ADR) mechanisms, such as mediation.
Despite a solid common ground in most OECD countries, challenges remain in enforcing the various provisions and enabling different groups of individuals to claim their rights within and outside of courts. Indeed, the data from the World Justice Project shows that many people from the most discriminated groups are most likely to take no action when facing alleged discriminations – as these groups are not always aware of the scope of anti-discrimination legislation, or where and how to find and use available assistance. For example, the 2016 UNDP/UNODC Global Study of Legal Aid showed that in some countries the absence of specialised services for women was a significant obstacle to women’s access to legal aid. The study found that women did not always understand how legal aid services can help them and were not confident in the quality of legal support available to them.
In addition, many vulnerable workers tend to face numerous economic, structural, and institutional challenges, which hinder their access to justice, including the complexity and cost of legal processes, time restrictions, and geographical and physical constraints. Studies also highlight that trust in the justice system and individual recourse mechanisms is also an important factor in determining whether people seek legal assistance, or take any action to resolve their legal problems, including when experiencing unequal treatment.
While ADRs often present an effective alternative to litigation, their use must be accompanied by the appropriate safeguards to avoid that they create additional barriers for people in claiming their rights. In particular, while ADRs are often found more effective in individual discrimination cases, these mechanisms are more limited when dealing with more systemic discrimination and structural causes of group exclusion in employment in specific sectors. This is particularly essential when vulnerable workers are parties to a discrimination case, as ADR can ignore the special needs of vulnerable parties by searching for an agreement. More broadly, there is often little communication of the available recourse mechanisms and limited evidence of the extent to which they meet the need for protecting employment rights.
In order to effectively support the development of culture of diversity where all individuals are empowered to enjoy their rights, recourse mechanisms should be tailored to meet the needs of people experiencing discrimination and include appropriate safeguards. They should also be designed on the basis of a clear understanding of the nature of potential discrimination cases, such as which groups experience discrimination, in which sectors, for which occupations and for which employment processes, and the specific access barriers that are faced by these groups. This may require conducting specific surveys on legal needs in labour and employment, and strengthening the availability of the disaggregated data on cases, processes, their outcomes as well as the claimants.
Importantly, ADR settings in employment discrimination cases require adequate representation on both sides, adequate legal aid, and cultural and psychological adjustments to all forms of disadvantage. Legal assistance services should be sufficiently funded to ensure that such matters can be appropriately pursued where necessary. Adjusting ADR mechanisms to the profile of the employee and the harm suffered can contribute to recognising the systemic nature of discrimination. At the same time, ADR mechanisms cannot be a mandatory alternative to litigation in cases of discrimination. When using the courts, however, there is a need to put in place active policies to remove the barriers to access, including the cost, complexity and length of procedures.
This Box is a contribution by the unit for Gender, Justice and Inclusiveness in the OECD Public Governance Directorate.
Affirmative action and hiring quotas
Affirmative action (AA) in hiring is broadly defined as policies addressing the under-representation of disadvantaged groups in the labour market through active measures that go beyond simple non-discrimination. In other words, AA instruments seek to increase the numbers of women and minorities in the workforce, most commonly by setting numerical targets including compulsory quotas, tie-break rules, and aspirational goals, which carry different levels of sanctions in case of non-compliance. Versions of affirmative action are found as “positive action” measures in European countries, where such policies are more recent and less extensively analysed than in the US context.
Under affirmative action legislation in the United States, federal contractors were required to implement affirmative action plans in a “good faith effort” in reaching certain targets to ensure representativeness in racial minority and female employment. Regular compliance reviews were an important factor for the effective implementation of affirmative action. Leonard (1990[11]) finds that among the firms subject to affirmative action policies within labour markets of the same industry and region, reviewed contractors fared better than the non-reviewed. Moreover, federal affirmative action requirements typically led to assignment of responsibility within the organisation to assure compliance, which has been another crucial factor for the successful implementation of affirmative action (Kalev, Dobbin and Kelly, 2006[12]). Finally, overall employment growth is a strong contextual factor influencing the success of affirmative action – evidence shows that such policies have been far more successful at growing establishments that have job openings to accommodate federal pressure (Leonard, 1990).
Overall, several studies show statistically significant shifts in the redistribution of jobs from white males to minorities and women following the introduction of federal affirmative action legislation (see Table 3.1). These beneficial effects for women and minority groups are persistent, as (Miller, 2017[13]) finds when examining the long-term effects of federal affirmative action regulation. The study, relying on turnover in public procurement relationships to compare contractors before and after falling under regulation to those firms that have never been contractors, indicates that the share of black employees continued to grow for more than a decade after a firm was deregulated. Research in the US context further suggests that following affirmative action legislation, which applied less forcefully to smaller firms with few employees, female and minority employment moved to larger firms. This transition to larger companies, which generally offer better pay, had a positive impact on women and minorities’ wage growth (Carrington, McCue and Pierce, 2000[14]; Chay, 1998[15]).
Table 3.1. Studies on the impact of US federal affirmative action legislation on employment of female and racial minority workers
Note: (+) = impact is positive and statistically significant (++) = group with largest positive and significant impact; (-) = impact is negative and statistically significant; (/) = no impact.
In the context of positive action in Europe, countries are increasingly imposing concrete numerical goals on firms. Here, it is important to distinguish between targets, which are indicative, and quotas, which are compulsory (Heath, Liebig and Simon, 2013[10]). In the past 10 years, mandatory quotas for women in management boards and persons with disabilities have proliferated in the European context (see Table 3.2).
Table 3.2. Quotas for under-represented groups in the private sector
Source: OECD “Diversity at Work” questionnaire.
Some countries, in contrast, set voluntary targets. The Swedish government, for example, suggests that 40% of management board members should be women; a similar target is set in the Netherlands. The Swedish government has also set the goal that at least 25% of newly recruited employees in the heavily male-dominated construction industry should be female by 2030. Furthermore, firms voluntarily self-regulate in many European OECD countries, stipulating non-binding targets in Corporate Governance Codes. However, only around 10% of respondents in our HR survey indicated that their firm had set targets for interviewing a certain minimum number of applicants from an under-represented group. The main groups for which these firms set interview target were women (76%), disabled people (39%), ethnic minorities (30%) and migrants (19%). Of Australian and Canadian firms with interview targets in place, 51% targeted indigenous populations.
Goals set in the context of affirmative action had a significant correlation with firms’ improvement in employment of women and minorities in the United States (Leonard, 1985[16]). The impact in Europe is less researched, but voluntary targets adopted under Dutch affirmative action law Wet SAMEN had no significant effect on firms’ end-of-year workforce composition (Groeneveld and Verbeek, 2012[17]). Unsurprisingly, non-binding targets are not being fulfilled with the same rigidity as are mandatory quotas. By way of example, the Norwegian gender quota requiring 40% females in company boards shows that under threat of dissolution of the board, which is foreseen in legislation in case of non-compliance, all companies ultimately complied. Female representation in Norwegian boards raised from less than 8% in 2002 to the required 40% after the deadline imposed by the law (Storvik and Teigen, 2010[18]). Similar results are found in the European comparison, where Germany, Belgium, France, and Italy have successfully increased the presence of female directors on boards through quota regulations (Horst and Wrohlich, 2018[19]).
The effectiveness of quotas in the European context is likely attributable to the strict sanctions imposed. A common sanction for firms that fail to comply with gender quotas in company boards is that any new appointment not in compliance with the respective law is automatically nullified. This so-called “empty chair rule” is applied in Austria, Germany and France. In Belgium, the law foresees the suspension of any financial or other benefits of all board members until the quota law has been complied with. In Italy, sanctions are applied progressively, starting from warnings, moving to fines and finally to forfeiture of the offices of all members of the board.
Firms that fail to comply with disability quotas generally incur financial penalties. Most commonly, countries have so-called “quota levy systems” in place – an equalisation mechanism that redistributes the funds raised from non-compliant firms to cover the costs of those firms that actually do employ disabled people. Some of the funds raised are also used for other purposes that further the labour market integration of disabled people. In some countries, firms that fail to hire the required number of disabled people can still be in compliance with quota. In France, firms can discharge their obligations to fulfil the disability quota by contributing into a fund for the promotion of employment of persons with disabilities. In Slovenia, firms can also partially outsource their activities to a company with more than 40% employees with disabilities.
The public discussion, however, is less centred around questions of effectiveness and focuses more on questions of fairness. This is particularly the case with regard to mandatory quotas, as the impossibility of ascertaining disadvantaged groups’ counterfactual representation were there no discrimination inherently leads to suspicion that quotas excessively put minority groups at an advantage (Valfort, 2018[20]). This can trigger stigmatisation and backlash, as women and minorities may be perceived as receiving unfair preferential treatment or as being underqualified.
Furthermore, the overall positive effect of affirmative action must be qualified. While affirmative action leads to increases in employment for all groups, the extent of the benefit seems to differ, with some gaining significantly less than others. Evidence from the United States shows that the positive effect is strongest for White females, who account for more of the difference in employment rates following the introduction of affirmative action than do Black males, Black females or Hispanics (Leonard, 1985[16]; Holzer and Neumark, 2000[21]; Kalev, Dobbin and Kelly, 2006[12]). Why this is the case is more difficult to determine. White women, as the largest group of workers after White men, who are on average more highly educated and maybe more qualified than minorities, might be easier to recruit than other disadvantaged groups (Holzer and Neumark, 2000[21]).
The impact of affirmative action does not only differ between groups – a similar imbalance in advantage gained seems to hold for individuals within respective groups. For one, evaluations of the gender quotas in Norway and Italy have shown that the positive impact was confined to the direct effect on the women appointed for board management and that such policies had no impact on the advancement of the general female workforce of a firm (Maida and Weber, 2019[22]). Furthermore, critics argue that by targeting minority status rather than socio-economic factors, affirmative action benefits the most privileged middle- or upper-income brackets within minority groups at the expense of lower income ethnic minorities and lower-income White people (Kahlenberg (2012[23]), see Box 3.3).
Box 3.3. Socio-economic disadvantage as a ground for discrimination and positive action measures
Across the OECD, socio-economic background has a considerable impact on education and labour market outcomes. On average, it would take four to five generations for the offspring of a low-income family to reach the average income if levels of intergenerational mobility remain similar over time (OECD, 2018[24]).
Against this backdrop of low social mobility, socio-economic disadvantage remains an overlooked dimension of discrimination, despite evidence that (assumed) socio-economic status can harm candidates in the application process. Several CV testing studies in France and the United States have shown that fictitious candidates from disadvantaged neighbourhoods were less likely to be invited for interviews, also when names and free-time activities signalled that candidates were native-born and/or White (Bunel and Petit, 2016[25]; Bertrand and Mullainathan, 2004[26]). Findings for the United Kingdom show negative, but not significant results for ‘postcode discrimination’ associated with lower socio-economic status (Tunstall et al., 2014[27]; Nunn et al., 2010[28]). In 2019, 14 OECD countries explicitly acknowledge in their national non-discrimination legislation that socio-economic background can be a distinct ground for discrimination.
Yet, how to integrate socio-economic status into existing diversity policies is not straightforward. The main points of contention in this debate are well illustrated in the context of higher education in the United States, where there has been considerable criticism that college admission systems based solely on race would privilege the most economically advantaged minority students. Opponents of race-based affirmative action argue that, in a system based on socio-economic status (e.g. parental income, education or wealth), the most disadvantaged minorities would benefit, along with low-income White applicants (Sowell, 2004[29]).
One such alternative to race-based affirmative action, the “class-rank approach” replacing race-based approaches at US higher education institutions in some states, has found no support in the empirical literature. The impact of this system has been examined with evidence from public universities in Texas, to which pupils in the top ten percent of all schools in the state are guaranteed admission. This effectively enables students from disadvantaged schools with lower test scores to be admitted. Simulating the gains and losses associated with this policy regime, the authors find that race-blind admissions policies do not allow institutions to maintain the same level of racial diversity in higher education as with race-based systems, generally reducing the number of Black and Hispanic students (Harris and Tienda, 2010[30]).
This finding is in line with older studies in the US higher education context (Kane, 1998[31]; Cancian, 1998[32]; Carnevale and Rose, 2003[33]). While class-based approaches increase the number of qualified minority students, they significantly decrease their overall share of the qualified pool, since African Americans and Hispanics are disproportionately from low-SES families, but low-SES families are largely white. Finding that income- and race-based policies have overlapping but not the same effects, Carnevale and Rose (2003[33]) advocate for a combination of both SES and minority status, i.e. SES as a supplement, but not a replacement of race-based admissions. Hence, SES-based policies are not an effective substitute for reaching racial and ethnic enrolment goals, unless low-income minorities can be chosen disproportionately from the qualified pool of low-SES students.
Financial incentives and public procurement
Given that the business case at the firm level is not always clear-cut, financial incentives to hire disadvantaged groups can be a means to strengthen the business case for employers under certain conditions. Similarly, public procurement regulations that promote supplier diversity can be an important policy tool, seeing that OECD countries spent around 12% of GDP on goods and services through public procurement in 2016 (OECD, 2017[34]).
Using public procurement as a strategic tool to strengthen diversity and equal treatment is a fairly widespread policy approach in OECD countries (see Figure 3.3), mostly with regard to incentivising the hiring of women and employees with disabilities. Some governments give preference to firms in cases of tie-break between applications for public funds, e.g. in Latvia, others grant extra points in point-based contract award systems, as is the case in Japan and Mexico. In addition, many EU OECD countries, where public procurement is regulated by both domestic and EU law, follow the clauses for “social considerations” stipulated in the EU public procurement Directive of 2014 (2014/24/EU). These allow Member States the option to consider participation of vulnerable and disadvantaged people in the award of contracts as well as the possibility to reserve procurement procedures to social enterprises working for the inclusion of disadvantaged people.
Figure 3.3. Diversity criteria considered in public procurement
Note: This includes countries that allow for social considerations in public procurement rather than making this a mandatory component of public tenders.
Source: OECD “Diversity at Work” questionnaire.
Some countries have stronger and more concrete obligations in this regard. Australia has set a target in procurement – the Commonwealth Indigenous Procurement Policy requires that by 2020, 3% of Federal Government contracts each year be sourced from indigenous suppliers. In Canada, all contractors must sign an Agreement to Implement Employment Equity within 30 days of contract award. As per the agreement, firms are required to make reasonable efforts to ensure progress is made towards having full representation of women, disabled people, and members of visible minorities and indigenous people within their workforce. Progress is reviewed through regular compliance assessments by the Labour Program. Failure to adhere to the requirements can result in the loss of the current contract and/or in the contractor losing the right to bid on future contracts.
Governments using public procurement to support diversity objectives should, however, also consider the risk of disrupting the efficiency of public procurement. The expenses and trade-offs, if they exist, must be evaluated, assessing whether procurement is the most cost-effective way to achieve specific diversity objectives (OECD, 2017[35]; 2013[36]).
Subsidising wages in the employment of under-represented groups is another means by which OECD governments seek to strengthen the business case for diversity with regard to workers with disabilities, as well as migrant and older workers. There are two types of wage subsidies: Hiring subsidies are granted temporarily, whereas employment subsidies are provided over an extended period of time or indefinitely. While the latter assumes a permanent productivity gap, temporary subsidy schemes that phase-out after time follow the rationale that on-the-job training of certain groups takes more time, but that the productivity gap can eventually be closed. Temporary subsidies can also reduce the initial insecurity with regard to the actual productivity, lowering the costs that a “trial phase” imposes on employers. Across OECD countries, subsidies vary in type (wages and/or social security contributions) and the amount of labour cost compensated.
Wage subsidies are a long-standing component of active labour market policies to strengthen the employment of low-wage workers, long-term unemployed and young job seekers in OECD countries. A rich literature on the impact of such subsidies on the employment of disadvantaged groups has developed, highlighting the difficulties of getting incentives ‘right’. Issues with wage subsidies include risks of stigmatisation, substitution and displacement effects as well as dead-weight losses, i.e. providing subsidies to firms that would have hired workers without these financial incentives.
The effectiveness of subsidies for older workers has been investigated through studies of such schemes in Germany, Finland and Belgium. The evidence suggest that for these groups, the deadweight effect is high, meaning that employers’ decisions are unchanged in comparison to a hypothetical situation in which the subsidy is not paid. It also appears that generally, subsidised work simply displaces unsubsidised work, with little net gain in terms of employment (Boockmann, 2015[37]).
Although rarely explicitly targeting migrants, wage subsidies have proven effective for this group. A meta-analysis by Butschek and Walter (2014[38]) on interventions in Nordic countries, Germany, the Netherlands and Switzerland finds that effect estimates for wage subsidy programmes are mostly positive, suggesting that such subsidies are indeed a promising measure to increase employment rates of immigrants. Migrants, however, tend to be underrepresented among beneficiaries of such schemes, possibly because they themselves or employers do not know about their eligibility (OECD, 2014[39]).
Other studies on subsidies for workers with disabilities show that some of the general risks around active labour market policy, e.g. regarding deadweight or substitution effects, is less relevant for this group, because of the permanent productivity loss of some groups of people with disabilities (OECD, 2003[40]). Especially for this group, schemes must consider that persons with disabilities are a very heterogeneous group. People have different types of disabilities and these can be more or less severe and can be acquired at birth or later in life. Persons with disabilities also vary in other demographic characteristics to which the subsidies should be well-targeted. For example, age seems to be an important factor determining if subsidies are successful or counterproductive and stigmatising (Deuchert and Kauer, 2017[41]). The level of subsidy should be dependent on the capacity of the worker as well as flexible, as work capacity of persons with disabilities may also change over time. On the other hand, subsidies might be needed for a long period and even a permanent subsidy might be justified in some cases (OECD, 2010[42]).
OECD countries also offer financial compensation and rewards to firms for taking action beyond hiring disadvantaged groups. One such instrument are accommodation subsidies. Slovakia, for example, provides cash allowances for firms that wish to establish sheltered workplaces, hire a personal assistant for a disabled employee, or facilitate their transport. Another type of incentives seeks to encourage disadvantaged groups’ career development. Japan, for instance, offers subsidy schemes providing a financial reward to employers that achieve a self-imposed numerical target for the advancement of female employees set in action plans. A majority of countries also provides non-financial incentives (see Box 3.4).
Box 3.4. Rewarding ‘diversity champions’ through awards and labels
Providing awards and labels to firms that have implemented comprehensive diversity strategies is fairly widespread across OECD countries. The rationale behind this is often to create awareness of good practices and reward business for inclusive policies as ‘leading by example.’ For companies themselves, the motivation of participating in an award or labelling process may also be related to brand management, raising their visibility and attracting more talent.
A number of countries have annual awards that are given to companies on behalf of the government or Ministries. Most of these awards, e.g. in Australia, Spain, Portugal and Slovakia, concern policies that seek to promote gender equality based on selection criteria such as work-life balance, parental leave policies and flexible work arrangements. In addition, some awards take into account other grounds, e.g. Slovenia granting senior-friendly company awards and Mexico providing diversity awards based on multiple grounds, including, amongst others, ethnic and indigenous minorities and LGBT people. The UK Civil Service rewards individual public servants who have acted as ‘diversity champions’ within the civil services, including on LGBT inclusion, race equality, gender, disability and socio-economic status.
In addition to governments, numerous NGO initiatives, HR associations and social partners seek to promote and reward inclusive businesses. For instance, so-called Diversity Charters – with currently 21 national organisations in the EU and an EU platform serving as umbrella organisation – encourage firms to sign their charter, pledging to advance diversity and inclusion through concrete workplace policies. Overall, more than 10 000 firms are signatories to these charters, representing almost 15 million employees in the EU.
Furthermore, a number of countries have developed certification procedures and diversity labels that are granted usually for two to three years before the certification is re-assessed. France, for example, introduced the so-called Diversity Label in 2008, together with social partners and the national HR association (ANDRH). Firms applying for this label undergo a ‘diversity audit’ conducted by the French Standardisation Association (AFNOR). As of 2018, around 300 companies had received this label, representing around 1.3 million workers. AFNOR also provides a label specifically for promoting gender equality. A similar label is provided by the Brussels-Capital region, Estonia and Latvia. In Latvia, for example, companies can receive a “family-friendly company status” if they have implemented measures around work-life balance, flexible working hours and health protection in the workplace, while Slovenia provides a label for disability inclusion at the workplace.
Outreach to under-represented groups
The importance of networks in finding employment is well established; social and professional networks may not only help for being referred and making personal connections, but also for obtaining information on job openings in the first place. Groups traditionally disadvantaged in the labour market may not have these connections. For example, people with a migrant background and ethnic minorities tend to have fewer contacts with people in higher social positions (Li, Savage and Warde (2008[43]) for the United Kingdom); get fewer job leads (McDonald, Lin and Ao (2009[44]) for the United States); and receive less help from their social network when applying for apprenticeships (Beicht and Granato (2010[45]) for Germany). Thus, an important component of diversity policies is to mitigate this initial disadvantage and increase the pool of qualified candidates through proactive outreach measures. In a number of OECD countries, such campaigns have been developed, often on a city or regional level, specifically targeting candidates with a migration background (see Box 3.5).
In addition, outreach to underrepresented groups can address barriers that are not only related to a lack of networks, but also to gender stereotypes about what are perceived as typically male and female jobs, leading to fewer candidates in STEM jobs for women and education and care for men. For instance, 5.5% of male workers in OECD countries are ICT specialists, compared to only 1.4% of female workers. At the same time, women remain strongly over-represented in the education and care sector; among primary school teachers, more than four in five are women (OECD, 2017[46]).
Difficulties in increasing the applicant pool also became apparent in the findings of the HR survey. When asked about the main difficulties faced while implementing diversity measures, the most common obstacle named was that too few qualified candidates from disadvantaged groups applied (47%).
The majority of HR representatives believe that outreach campaigns would help their company increase diversity (see Figure 3.4). Nevertheless, only 20% of all firms surveyed indicated that they have implemented outreach or recruitment campaigns targeting under-represented groups. Partly, this reflect that outreach campaigns are costly to implement and may not be feasible for smaller companies; of the firms with diversity measures, only 20% of firms with less than 250 employees had outreach measures in place, compared to 40% among firms with over 250 employees.
Figure 3.4. A majority of HR representatives think that outreach campaigns would help their company recruit disadvantaged groups
Source: OECD-Dauphine HR Survey.
Many public administrations in OECD countries have implemented outreach campaigns and traineeship programmes targeting specific groups with the aim of building a workforce that is more representative of the public they serve.
Most outreach campaigns for the public sector tend to be concentrated in education, targeting pupils and recent or soon-to-be university graduates. In Australia, specific programmes seek to encourage Aboriginal and/or Torres Strait university graduates, as well as graduates with a disability into the Australian Public Service (APS). Similarly, the Swiss public administration cooperates with specific universities to recruit more women. In some countries, such programmes begin as early as during secondary education. In Estonia, campaigns in Russian language schools seek to encourage pupils of Russian nationality to apply for the public service. The French public service offers 15 000 internships in the public administration to students around age 15 who attend schools with high shares of disadvantaged students (schools in the réseau d’éducation prioritaire renforcé).
Recruiters for the public administration use a wide range of channels to reach diverse groups. The Irish Public Appointments Service, for example, has engaged in a number of activities to communicate job opportunities to underrepresented groups over social media including Facebook, Twitter and LinkedIn, targeting a range of nationalities and Travellers, LGBT people, disabled people and Irish language groups. In the Netherlands, public authorities work with professional migrant or diversity networks and student associations to encourage highly educated young people with a non-Western migration background to apply for jobs in the public administration. Integrating such local stakeholders into efforts to approach hard-to-reach groups is crucial, especially with regard to youth from migrant families (OECD, forthcoming[47]).
Box 3.5. Reaching out to young people with a migrant background
In a number of OECD countries, outreach campaigns have targeted young people with a migrant background to apply for apprenticeships and jobs.
The state of Hamburg, for example, has launched the campaign “We are Hamburg” (Wir sind Hamburg) encouraging young people with a migration background to apply for internships in the public administration. Similarly, the state of Berlin has launched the campaign “Berlin needs you” (Berlin braucht dich). The initiative works through a network of 30 schools and 60 companies, providing career guidance, organising side visits and running trainings and information sessions.
In addition, a number of initiatives have focused specifically on diversifying the police force through outreach campaigns, including for example in the city of Vienna, Chicago and London. In addition, 14 out of the 16 German regional states have outreach activities in place for recruiting more people with a migrant background for the police force (Ghelli and Pross, 2019[48]).
Anonymous job applications
Anonymous or “blind” job applications are aimed at reducing bias in the application process by removing information that could activate recruiters’ stereotypes, such as ‘foreign-sounding’ names, gender, age or address. Used only by 6% of firms that have diversity measures in place, anonymous applications were not a common instrument in the HR survey sample. Those firms that did hide characteristics in the hiring process, most often removed an applicant’s age, followed by their name and address (see Figure 3.5). Another commonly masked characteristic was civil or marital status. Almost 19% of those firms implementing diversity measures stated that their application process does not require a photograph of the candidate, despite this being common practice within the industry or country concerned.
Figure 3.5. CV information hidden to recruiters in anonymous application procedures
Note: Number of firms; n=79 (companies with anonymous CV procedures in place).
Source: OECD-Dauphine HR Survey.
In several European countries including Sweden, France, the Netherlands and Germany, the effects of anonymous job applications have been tested in field experiments. The French government has conducted an experiment with jobseekers registered with the public employment service in 2010 and 2011 involving around 1 000 firms for a period of ten months. The result was that women benefited from higher call-back rates. Surprisingly, the second finding was that immigrants and residents of deprived neighbourhoods suffered from anonymous job applications, as their call-back rates were lower with anonymous job applications than with standard applications (Behaghel, Crépon and Le Barbanchon, 2011[49]). The gap in interview rate between minority and majority candidates widened by around 10 percentage points when CVs were anonymised. The effect seemed to persist beyond the application screening stage, as the hiring gap also widened by four points (only significant at the 10% level).
A second experiment was conducted by the Swedish city of Gothenburg between 2004 and 2006, which introduced a pilot project to test the impact of anonymous CVs on hiring outcomes. Based on a difference-in-differences analysis of around 3 500 applications made to around 100 job openings in the local administration, Åslund and Skans (2012[50]) find that anonymous job applications increased the chances of an interview invitation for both women and applicants of non-Western origin when compared to standard applications, by the same order of magnitude for both groups. These increased chances for candidates in the first stage translated into a higher job offer rate for women, but not for migrants, suggesting that barriers at the interview stage are more difficult to remove for the latter group. The authors speculate that the high importance placed on gender equality in the Swedish context may have influenced the findings.
Studies on further trials, including small-scale pilots within single organisations, did not yield statistically significant effects. Nevertheless, they give indications of how diverse the effects of anonymous applications can be depending on the groups concerned (see for example Krause, Rinne and Zimmermann (2011[51])). A common explanation for the contradicting findings in the literature is the crucial importance of the initial situation in the respective industry or organisation. While effective in the face of bias and discriminatory practices, anonymity prevents employers committed to diversity from favouring minority applicants when credentials are equal. In situations where such affirmative action practices are in place, the introduction of anonymous job applications may cause interview invitation probabilities of minority groups to decrease. Anonymous applications might be helpful with regard to biases, but unproductive when it comes to structural disadvantages, since they remove characteristics that could serve to explain subpar labour market outcomes from the process.
Current evidence does therefore not support the introduction of anonymous job applications in every context. Anonymous hiring might be sensible in a specific sector or for a certain company where there is sizeable discrimination, but be futile where there is no discrimination, and even counterproductive where practices of favouring women or minorities are in place. This finding relates to the limitation of the studies discussed above: the firms and organisations in these experiments were participating on a voluntary basis. There has likely been firm selection into such programmes by those already concerned with diversity issues, who are more likely to already have affirmative action in place, which might explain some of the negative results.
Removing bias from the recruitment process has also been a topic of interest in the context of data-driven HR practices. HR analytics aim to use statistical (data mining) techniques to predict uncertain outcomes, i.e. the performance of potential employees, and monitor the success of recruitment and retention. Through predictive analytics in recruitment, HR can draw upon data-driven predictive models, instead of relying on gut feeling and soft science.
Such new technologies are already impacting the labour market, with the potential to counteract discrimination and unconscious bias in hiring. Two recent studies provide experimental evidence on the impact of algorithms on the probability that atypical job candidates are hired. In both cases the software favoured “non-traditional” candidates, in contrast to human screeners. The algorithm exhibited significantly less bias against candidates that were underrepresented at the firm, such as those without personal referrals or degrees from prestigious universities (Cowgill, 2018[52]; Hoffman, Kahn and Li, 2018[53]). Another recent study finds that compared to those candidates chosen by humans, board directors selected by algorithms were less likely to be male and had smaller networks (Erel et al., 2018[54]).
However, it must be kept in mind that algorithms are not necessarily free of bias, as they are written and maintained by people, and machine learning algorithms adjust what they do based on people’s behaviour. Although not designed with the intent of discriminating against certain groups, algorithms are likely to incorporate historical prejudices if the training data reflect existing social biases against a minority (Goodman, 2016[55]). Nevertheless, the more relevant question for practitioners and policy makers concerned with diversity and anti-discrimination is to ask how algorithms compare with the status quo – and the evidence suggests that HR analytics has the potential to make some decisions exhibiting less bias than humans do.
Diversity training
Creating an inclusive workplace is a crucial step in making the most of diversity. All efforts put into hiring diverse candidates are fruitless if these workers cannot flourish or end up leaving the organisation for feeling excluded at the workplace. To this end, diversity training encompasses a wide array of programmes intended to train managers’ and employees’ attitudes, reduce stereotypes and enhance their skills in dealing with diversity. Such trainings were found to be in widespread use in the HR survey – 44% of firms with measures in place have implemented trainings for all employees, and 20% have specific training for HR personnel. The overwhelming majority of HR representatives surveyed stated that a wider availability of training could help their company increase diversity (see Figure 3.6). In the academic literature, diversity training has generally been found to have no impact on the representation of disadvantaged groups (Kalev, Dobbin and Kelly, 2006[12]), while the impact on attitudes towards diversity varies from beneficial in some contexts to no or a relatively modest negative effect in others (Kulik and Roberson, 2008[56]).
Kulik et al. (2007[57]) find that voluntary diversity training likely attracts those employees who need training the least. Because employees who are sceptical towards diversity are usually not able to gauge their own competence in dealing with diversity, they assess their need to develop those skills inadequately. This means that voluntary training often misses those employees with lowest skill competencies. While pre-training competence of (potential) participants matters, demographics have non-significant effects on interest in training and participation. This means that women, ethnic minorities and older employees do not seem more open towards voluntary training on diversity issues than are other employees.
Implementing mandatory diversity training may avoid ‘preaching to the choir’, yet it is unclear whether they are more effective, as external control and perceived societal pressure were found to have a negative effect on training outcomes (Legault, Gutsell and Inzlicht, 2011[58]).
Figure 3.6. An overwhelming majority of HR representatives think that wider availability of diversity trainings would be helpful to increase diversity in their company
Source: OECD-Dauphine HR Survey.
Several studies examine how training should be designed to affect participants’ attitude and skill outcomes positively, showing that diversity training needs to stimulate intrinsic motivation rather than framing it around social norms. Legault et al. provided participants with instructions that either encouraged autonomous motivation to regulate prejudice by emphasising the value of non-prejudice, or imposed control of prejudice, framing it as a societal requirement to comply with norms. The results show that external control to reduce prejudice produces more bias than not intervening at all. (Kulik, Perry and Bourhis, 2000[59]) find that under certain circumstances, instructing participants to suppress age-related stereotypes activated them in the first place, thus creating unintended negative consequences for the evaluation of older applicants. Similarly, instructing participants to simply discard their bias as “wrong” without adequately addressing and deconstructing it seems to leave participants more confused and more biased towards diverse groups (Dobbin and Kalev, 2018[60]).
The duration of training is another important factor. To be effective in the long-run, training must be sustained over an extended period, as effects are found to dissipate within short time periods, often within days (Paluck and Green, 2009[61]). Devine et al. (2012[62]) develop a multi-faceted prejudice habit-breaking intervention to produce long-term reductions in implicit race bias. The 12-week longitudinal study comparing a group of people who completed the intervention to a control group who did not showed that sustained training leads to increased concern about discrimination and personal awareness of bias. For most participants, the effect on implicit bias control lasted throughout the eight week interval observed in the aftermath of the intervention. Such repeated, longer-term trainings, however, are a costly undertaking that firms are unlikely to implement.
In view of the volatile nature of training effects, diversity training can only be one element of a wider set of policies. As a one-time, standalone measure, it is unlikely to have any substantial impact on attitudes. Diversity training might get the conversation on existing bias started, but must be combined with other, more structural measures (Dobbin and Kalev, 2018[60]) suggest that firms must actively engage managers in reducing bias within their workforce, including them as “diversity champions” in an overall positive message. The close interaction with women and minorities in mentoring and college recruitment schemes, for example, seem to be more effective in reducing managers’ bias than diversity training.
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