Germany must follow France and others by setting gender quotas on companies’ boards

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To boost the number of women in high-level corporate positions, Germany must come up with mandatory law, following other European countries, like France, writes Margarete Hofmann, from the German Women Lawyers Association.

Margarete Hofmann is Vice-President of the German Women Lawyers Association. She sent this commentary in exclusivity for EurActiv.

"The German constitution makes gender equality mandatory and Berlin must impose binding law as we have seen companies' voluntary ‘commitments’ have shown they are mostly fruitless. A clear legislative signal from Brussels would be helpful.

In mid-2011, Germany‘s 30 most important DAX-listed companies had only 11% of women in their supervisory boards, and 3% in their management boards. The percentage of women in leading positions did not reflect the number of women in the companies’ staff. It is indisputable that there is still a huge gap between the percentage of women at different management levels and the total number of women in companies.

The German government (Federal Ministry of Family, Senior Citizens, Women and Youth) together with leading German Business Associations signed a “contract for more gender equality in the private economy” in 2001. But obviously, this commitment did not result in any tangible progress.

Also, the German Corporate Governance Codex, reformed on 26 May 2010 has not shown any satisfying results so far. According to the new Codex, supervisory boards are bound to cite concrete goals regarding their composition, especially respecting an adequate share of women. As for management boards and general senior positions, the Codex is less specific: supervisory boards should simply monitor ‘diversity’ in the composition of companies’ management boards and strive for an adequate share of women.

Companies have in fact set ‘goals’ for supervisory boards, and among the 30 most important DAX-listed companies, 24% of newly-appointed members of supervisory boards were women by mid-2011, which however is not enough to have an adequate representation of women. Plus, regarding management boards, only 18% of newly-appointed members were women.

For that reason the German Woman Lawyers’ Association has made it a priority to attend 75 annual shareholder meetings of DAX-listed companies in the last two years and asked for more concrete measures to improve the situation.

According to the German Woman Lawyers’ Association 2011 survey, only 3% of the 30 most important DAX-listed companies have been setting gender equality goals for management boards – and that is not likely to change soon, as companies remain passive.

All attempts to achieve gender equality in the economy’s top positions by voluntary means have failed. The time of voluntary commitments is over. We must go for specific statutory provisions.

Six of the leading German Women Associations and female members of the German Parliament from all parties signed the „Berlin Declaration for a stabilization of gender equality in the economy’s top positions by specific statutory provisions“ on 16 November 2011. These women reached the first consensus across party lines, with the primary goal of including more women in decision-making processes in the economy – equal in number and rights.

The German Constitution states explicitly that attaining gender equality is mandatory and obligatory – not only on paper, but in reality, which is more than overdue 60 years after the entry into force of the German Constitution.

Economic aspects are equally important: from a demographic point of view Germany can no longer afford to have well-qualified women not working in top positions.

Since the beginning of the economic and banking crisis, we have understood that different cognitive abilities and approaches offered by ‘diverse’ working teams are needed to master the necessary changes. Studies show that companies with a diverse workforce are more successful. Outstandingly-qualified women have been ready for this for a long time.

From an economic perspective the use of all talents is crucial for sustainable economic success within a globalized competitive world.

By establishing a corresponding statutory provision, Germany would only be following other European countries’ examples.

Mandatory women’s quotas were first established in Norway in 2003, followed by in Spain in 2007 as well as in Iceland in 2010; France, Belgium and Italy followed in 2011.

A clear signal from Brussels would certainly serve to accelerate this process across Europe.

EU Commission Vice President, Viviane Reding, is soon going to propose some measures after the public consultation she launched this week.

It is obvious already that her pledge for a participation of at least 30 percent of women by 2015 and 40 percent by 2020 in top positions in the European economy is not taken too seriously by the people in charge. Her „Pledge for Europe“ has not shown any substantial results so far.

Only binding rules could help. A non-binding recommendation, as included in the EU Commission’s 2012 legislative work programme, would be no more than a plea and would result in being useless. Furthermore, binding legislative measures are also foreseen by a European Parliament Resolution of July 2011, which can be helpful in making the case for hard law."

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