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Tuesday, March 02, 2021

Explained: What is Germany’s new boardroom quota for women?

The move has been called "historic" by Germany’s Federal Minister of Women Franziska Giffey, and is being seen as the next step in narrowing the gap of sexual inequality in the country.

By: Explained Desk | New Delhi |
Updated: November 25, 2020 5:37:49 pm
Germany, Germany women quota, Germany boardroom quota, Germany women in senior positions, Indian ExpressGerman Minister Franziska Giffey wears a protective mask before the weekly cabinet meeting of the German government at the chancellery in Berlin, Germany, November 18, 2020. (Michael Kappeler/Pool via Reuters)

Last week, a working group of Germany’s ruling coalition parties headed by Chancellor Angela Merkel agreed to impose a mandatory quota for the number of women working in senior management positions in the country’s listed firms. A final decision on the key points of the legislature, called the Second Management Positions Act, will be made by the cabinet this week.

The move has been called “historic” by Germany’s Federal Minister of Women Franziska Giffey, and is being seen as the next step in narrowing the gap of sexual inequality in the country. However, the proposal has also been criticised, with Germany’s Green Party saying it does not do enough to achieve gender equality when it comes to representation in the workplace.

What is Germany’s new boardroom quota for women?

As per the agreed-upon provisions, in case executive boards of listed companies have more than three members, one of them must be a woman. Further, companies in which the federal government has a stake will require a supervisory board quota of at least 30 per cent and minimum participation in executive boards.

Giffey, who has maintained that voluntary action regarding women’s representation does not yield substantial results, was quoted as saying in a press release, “… This one breakthrough is historic. We are putting an end to women-free boardrooms in large companies. We are setting an example for a sustainable, modern society. We are exploiting all of our country’s potential so that the best in mixed teams can be more successful. Because nothing is done voluntarily and we need guidelines to move forward.”📣 Express Explained is now on Telegram

Why is there a need for such a quota in Germany?

Since 2015, Germany, which is Europe’s biggest economy, has had a voluntary quota of 30 per cent for women on supervisory boards. However, various studies have indicated this did little to improve the proportion of senior executive positions held by women.

The new provisions will build upon this already existing voluntary quota.

An analysis by the German newspaper Welt, which was published in June this year, found the quota had reached a standstill in efforts to make the management levels of German corporations more feminine. “A remarkable 115 of the country’s major publicly traded companies do not have a single woman on their boards,” it said.

According to a survey conducted by the Swedish-German AllBright Foundation, women currently make up 12.8 per cent of the management boards in German companies that are listed on the Dax Index.

Further, as per the third and fourth annual report on the Development of the Proportion of Women and Men in Management Levels and in Committees of the Private Sector and the Public Service released by the German Federal Minister of Justice and the Federal Minister of Women in June this year, since the law came into force in 2015, the proportion of women on supervisory boards rose from 25 per cent to 32.5 per cent. In the case of management boards, the percentage of women was at 7.7 per cent in the 2017 financial year. Overall, the report noted, “Little is done voluntarily, only the fixed quota works.”

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