Germany Targets Gender Gap With Quotas for Business and Politics

(Bloomberg) -- Germany is pushing to narrow the gender gap with new targets aimed at increasing the role of women in board rooms and in the country’s largest political party.

Chancellor Angela Merkel’s cabinet on Wednesday approved a proposal that would increase the number of companies required to have at least 30% women on their supervisory boards to 600 from 105. Other goals include a reduction in the women’s pension and pay gaps, and an increase in career opportunities.

The move is a breakthrough because it obliges the federal government to adhere to specific goals and to monitor progress, said Monika Schulz-Strelow, head of FidAR, a group that promotes female participation in corporate management. To be effective, the plan needs to be backed by legislation that allows authorities to levy fines on companies that fail to comply, she added.

“Unfortunately, without sanctions and pressure, not much happens in Germany,” Schulz-Strelow, said in a phone interview.

Political Proposal

A similar initiative is under way in politics. Late on Tuesday, the leadership of Merkel’s Christian Democratic Union approved a proposal to introduce a binding female quota of 50% for the CDU’s government positions and parliamentary seats by 2025.

The move, which still requires approval at a convention in December, is controversial in a party that’s still male-dominated. Even though the CDU has been run for 20 years by a female leader -- Merkel and then her successor Annegret Kramp-Karrenbauer -- only 26% of CDU members are female, and only 6% of leading positions are held by women, according to a recent study.

The situation is similarly unbalanced in the corporate world. As of September, women only made up 9.3% of positions on the executive boards of Germany’s publicly traded companies. By contrast, women in Sweden made up 24% of those positions, and the rate is even higher in the U.S.

A 2016 law requiring 30% of non-executive board members of German-headquartered companies to be women has helped, but gains have stagnated recently.

Since 2015, the share of female supervisory-board members has risen 12.3 percentage points to 32.2% for Germany’s 188 biggest listed companies, but the increase was just 1.3 percentage points over the past year, according to FidAR’s latest tally. Out of that group, 75 have no plans for women on their board.

None of the country’s 30 biggest listed companies are run by a woman. Jennifer Morgan, the first female to break that glass ceiling when she took the top job at SAP SE last year, lasted only a few months before her male co-CEO, Christian Klein, took sole charge.

Management teams of listed German companies are predominantly male economists from the western part of the country in their mid-fifties, according to a report last year by the AllBright Foundation, a nonprofit that aims to promote diversity among business leaders.

Merkel, who resigned from the party leadership in December 2018 and who will not seek re-election next year, recently complained that there are still listed companies in Germany that don’t have a single woman on their executive boards.

“This is a situation that one cannot find reasonable,” Merkel said.

©2020 Bloomberg L.P.