Does positive discrimination work?

21 April 2016

Author: Duncan Forgan


Does positive discrimination work?

Its adherents say over-compensating for traditional imbalances is a “necessary evil”. But proper diversity policies may be a more effective tool

Watershed moments in history have often proved a febrile basis for positive discrimination – the idea that promoting the interests of underrepresented groups, particularly when it comes to recruitment or progression in the workplace, can help redress long-standing imbalances caused by discriminatory practices.
 
In the US, the civil rights movement paved the way for positive discrimination to be used as a way to combat racism in the hiring process. And affirmative action legislation was used in South Africa to correct the gross imbalances of the apartheid era.
 
In Malaysia, the only country in southeast Asia to practise an ongoing official policy of positive discrimination, the defining moment occurred on 13 May 1969, the date of the Kuala Lumpur race riot.
 
While the last throes of the so-called ‘love decade’ were being played out elsewhere, the landscape was bloody and bitter in the Malaysian capital. Violence erupted on the city streets following a fiercely contested general election, pitting Chinese and Indian against Malay, and shining a light on the chasm between the races that had been widening since the days of British colonial rule.
 
The reasons for the riot – in which the official death toll of 196 is widely believed to be grossly underestimated – varied. The most notable cause, however, was resentment of the huge disparity in wealth between the country’s Chinese and Indian minorities – many of whom were imported by the British to service the powerhouse colonial industries of tin mining and rubber tapping – and native Malays, known as bumiputera, or ‘sons of the soil’.
 
The government responded to the riot with a New Economic Policy (NEP) aimed at improving the lot of the bumiputera, who were overwhelmingly rural subsistence farmers and manual labourers, by giving them preferential treatment in university admissions and for civil service jobs. The policy, introduced in 1971, remains largely in place today, even though the official term for the NEP ended in 1990.
 
Few would dispute that the policy has achieved a tremendous amount of good. According to figures from the World Bank, the percentage of households living below the poverty line across all ethnic groups has been reduced from 49.3 per cent in 1970 to less than 0.6 per cent today. The wealth ownership of the bumiputera has increased substantially, and Malays account for a significant percentage of the managerial and professional ranks in the workplace. Although racial tensions still exist, Malaysia is a largely peaceful country and there has been no sign of any repeat of the calamitous events of 1969.
 
The continued existence of positive discrimination, however, is a point of contention, and highlights the difficulties surrounding a concept that is seen by many to be worthy, but flawed, corruptible and, by its very nature, reverse discriminatory and unfair.
 
“Positive discrimination is a necessary evil,” says Prabhakar Bagchand, a rights activist fighting on behalf of lower caste groups in Nepal, who have (as they have in India) benefitted from reservation quotas for further education and employment. “It is necessary because certain groups in society have not had opportunities to do well in life. It is evil because it often institutionalises and fortifies differences.”
 
Critics of the NEP in Malaysia argue that provisions requiring a certain proportion of the shares of any publicly quoted company to be in bumiputera hands, and that favour bumiputera-owned firms for various government contracts, enrich only a few well-connected Malays.
 
The policy has also nurtured simmering resentment among Malaysia’s Chinese and Indian citizens. With most public universities in Malaysia reserving 70 per cent of their places for bumiputeras, Chinese and Indian students flock instead to private and foreign institutions. With many staying away after their studies, it is argued that the policy has exacerbated a brain drain. A World Bank study in 2011 found that about one million Malaysians from a total population of 30 million had left the country. Most were ethnic Chinese and many were highly educated.
 
Conversely, critics of the policy say it dulls bumiputeras’ incentives to excel. Mahathir Mohamad, the country’s former prime minister who extended the reach of the policy during his time in office, is among those who have lamented that bumiputeras treat university places as “a matter of right”.
 
“Positive discrimination based on race has no place in modern Malaysia,” says Sheena Rajagopal, an Indian Malaysian owner of an accountancy firm in Kuala Lumpur. “The NEP was created with good intentions, but it has been abused and only a percentage of privileged Malays have progressed. Instead, the platform should be used to assist Malaysians regardless of race. Malays, Indians and indigenous people remain the poorest in the country. NEP should be used to assist these groups.”
 
Just as the NEP has proved divisive, opinion is split in Malaysia on how to use positive discrimination to promote more equal representation in workplaces. “Right now, we are either ignoring critical issues, or perpetuating a polarised stand-off between those defending the privileged status quo without assessing the downside, versus those demanding meritocracy without thinking of viability,” says Dr Hwok-Aun Lee, senior lecturer in the department of development studies at the University of Malaya. “Need-based affirmative action – as a substitute for race-based affirmative action – is a vague, muddled and ill-formed concept that was not, and cannot, be the basis for necessary systemic reform.
 
“Malaysia’s economy has done exceptionally well by international standards. There’s no reason to hypothesise more spectacular growth in the absence of the NEP. The focus should be on the way affirmative action is disempowering or under-equipping bumiputeras for more open competition, not whether growth could have been faster.”
 
Although Malaysia is the only country in southeast Asia to have officially adopted clear, government-mandated positive discrimination policies based on ethnicity, it is not the only nation to have flirted with the concept in one form or another. Unofficial quotas based on nationality are in place in several job markets, ensuring members of the local workforce are given fair – and sometimes preferential – treatment. In Thailand, although official policy is often opaque and subject to change, legal firms that specialise in assisting foreigners with visa issues currently advise that four Thai employees must be registered in a social fund per foreign employee.
 
The topic is contentious in Singapore, where the People’s Action Party government has been forced to negotiate a delicate balancing act between keeping the economy on an upward trajectory and managing resentment among the local population – many of whom feel expatriates are filling jobs that should be theirs.
 
The number of foreign workers in the country, which has a population of approximately 5.6 million, has risen significantly in recent years from 1,053,500 in December 2009 to 1,336,700 in June 2014, according to figures from the Ministry of Manpower. Although unemployment stands at just under 3 per cent, many Singaporeans feel expatriates are likely to receive preferential treatment when looking for a job, work shorter hours and get promoted more rapidly. This has led to plenty of anti-immigrant rhetoric and, on occasion, public protests.
 
In August 2014, the government introduced the Fair Consideration Framework (FCF) policy, requiring all employers to consider Singaporeans fairly for job vacancies. It states that they should only hire an expat if no suitable Singaporeans apply within two weeks.
 
Although some Singaporeans say the FCF doesn’t go far enough in applying what could be classed as a form of positive discrimination in their favour, many expatriates have a different take. In a widely publicised blog post entitled ‘The Foreign Talent Landscape is Changing in Singapore’, Elliot Jackson of specialist recruitment consultancy Morgan McKinley highlighted what he perceived as an increase in pro-Singaporean employment practices.
 
“The introduction of government policies such as the FCF and the continuation of internal promotions of Singaporeans into top-layer management has made it increasingly difficult for foreigners to secure an employment pass in Singapore,” he wrote.
 
Despite strong views on either side, there are many others who would say the Singaporean government has done its best to facilitate a system of meritocracy (enshrined as one of the country’s official guiding principles) in its workplaces.
 
Charlie Thomas, CEO of The Talent Business, an international recruiter for creative businesses with an office in Singapore, says: “I have encountered little positive or negative discrimination in Singapore.” Others suggest that the Ministry of Manpower will generally withhold employment passes only when an organisation employs a noticeably large number of foreigners.
 
Race or nationality is, of course, not the only area where positive discrimination can apply. Preferential treatment has historically been given to people with disabilities, those from financially disadvantaged backgrounds and (especially) women in various job markets. In Norway, on all public stock company boards, either gender should be represented by at least 40 per cent. In the UK, positive discrimination is technically illegal, but it has been suggested as a way to address the fact that most of the country’s police forces fail to reflect the country’s ethnic make-up.
 
Positive discrimination has certainly changed the make-up of Norwegian businesses, and has also been attempted by British political parties to increase female representation among parliamentary candidates. But there have been few reliable studies to assess its long-term impact, and in most cases it has been deployed as a temporary fix rather than a fundamental game-changer.
 
Asian governments seem reluctant to use it as an ongoing tool. Calls for tougher action to address workplace gender imbalances in traditionally patriarchal societies, for example, have generally gone unheeded.
 
This aversion to overtly positive discrimination hasn’t prevented companies from working to promote better diversity in more systemic ways. In Singapore, the Tripartite Alliance for Fair Employment Practices promotes greater awareness of fair employment practices among employers and the public. Its multi-pronged strategy involves creating awareness and educating employers on the business benefits of selecting staff on the basis of merit, regardless of age, race, gender, religion, marital status, family responsibilities or disability.
 
Larger companies, especially multinationals, are putting more of an emphasis on their diversity and inclusion strategies – and with good reason. Mixed gender executive boards outperformed all-male ones by 26 per cent over six years, according to research in 2014 by Credit Suisse. And global studies have shown that organisations with diverse and inclusive cultures are 45 per cent more likely to improve their market share, and have employees who not only give greater discretionary effort, but are also less likely to leave.
 
“We strive to have a diverse staff because we believe it is beneficial to our business and our company culture,” says Byron Perry, founder and managing director of Coconuts Media, a local city website network with offices in Singapore, Bangkok and Hong Kong. “Diversity is definitely something we consider when we are hiring. We believe in openness, equality and freedom of expression. It is better for us to have different perspectives and different types of people. If we have an imbalance in gender or ethnicity, it is something we would try to address through the hiring process. Having said that, we are a meritocracy, so it would always come down to getting the right candidate for a job.”
 
Despite a growing awareness of the economic benefits of diversity, huge challenges remain. “Asia is behind on issues such as gender representation and pay parity,” a diversity specialist for a US investment bank in Hong Kong says. “Homosexuality is still illegal in countries such as Singapore and Malaysia, which also presents barriers.”
 
The specialist maintains that positive discrimination would not be a direction most private enterprises would choose to pursue. “Although I can see the rationale for positive discrimination, I think private companies are coming round to the idea that more diversity is better for business without having to deal with things like quotas.”
 
Almost 47 years after the Kuala Lumpur race riots, Malaysia continues to grapple to ensure a fair deal for all of its ethnic groups through positive discrimination. With other markets in the region also facing related challenges in areas of gender, race, age and sexual orientation, however, the country is far from alone in seeking the ideal solution to the diversity conundrum.