Boardroom Balance EU Commissioner Eyes Binding Gender Quota System

European Justice Commissioner Viviane Reding is running out of patience. Germany's voluntary scheme to increase the number of women in the boardrooms of listed companies is failing, she told a German newspaper. If Europe's workplace inequality does not improve by the summer, she may implement binding quota systems.

Germany continues to have a lack of women in the boardroom.
Corbis via Getty Images

Germany continues to have a lack of women in the boardroom.

In 2011, large German companies managed to avert a mandatory system to increase the proportion of women in top management, instead opting for a voluntary scheme. But that may be about to change. The European Union is piling pressure onto companies and governments, threatening a legally binding quota if companies fail to elevate more women to the higher ranks of business.

European Justice Commissioner Viviane Reding is even considering pan-European legislation. "I'm not a fan of quotas. But I do like the results they achieve," Reding told Monday's edition of the German daily Die Welt.

By summer, she wants to make concrete proposals for an EU-wide legal structure. Her remarks follow a lackluster response to her voluntary system, whereby firms pledged to commit to a quota of 30 percent by 2015 and 40 percent by 2020. "Only 24 companies signed up and there was not a single German company among them," said Reding.

Since late 2010, the proportion of women in management and supervisory boards of listed companies in Europe has risen from 12 to 14 percent. Reding said the case of France indicated the effectiveness of a mandatory scheme. Since 2011, French law secures female representation in the top echelons of business and now the proportion of women has increased from 12 to 22 percent. "Where there are laws, there is progress," Reding said.

Given a lack of improvement elsewhere in Europe, she predicted that, at the current pace of change, most EU countries will take 40 years until women fill 40 percent of top jobs.

'Ready for Anything'

Statistics released by the Organization for Economic Cooperation and Development on Monday would seem to provide confirmation of Reding's concerns. According tothe group's numbers, no other European country has as large a discrepancy between the salaries of men and women as Germany. Women working full time earn an average of 21.6 percent less than their male counterparts, according to the OECD. The average for the 34 industrialized countries that belong to the OECD is 16 percent. The new data also notes that Germany is near the bottom when it comes to women in the boardroom.

Reding, who as justice commissioner is also responsible for equality, said there were signs that EU citizens wanted action to achieve gender equality in the workplace. "Citizens want the quota, the polls show us that," said Reding.

According to the latest Eurobarometer survey, three out of four Europeans say they are in favor of laws to ensure that women with equal qualifications get the same access to top jobs as men.

The commissioner has embarked on a public consultation which will last until the end of May, which she said would be closely monitored. "If people say loud and clear: We do not want this to continue -- then we must do something," she said. "I'm ready for anything. The Commission has looked seriously at this important social issue. Now it's others' turn. I give governments and businesses until the summer."

But she is already facing resistance. A binding quota is "a mistake", Mervyn Davies told The Financial Times. Last year, Davies, former British trade minister, penned a report on the proportion of women in British business, calling for boardrooms of major companies to have a quota of at least 25 percent by 2015.

Davies argues against an obligatory quota, instead backing voluntary enforcement of representation as "the right way" to tackle the problem. A new study shows that the proportion of women in the boardrooms of major British companies increased from 12.5 to nearly 15 percent within a year.

Promoting Women in Germany

There is also significant German resistance to a legally binding quota. Labor Minister Ursula von der Leyen, from Merkel's Christian Democratic Party, has backed legislation on women's representation within companies. Justice Minister Sabine Leutheusser-Schnarrenberger (FDP) and Family Minister Kristina Schröder (CDU), however, have rejected such a path. "It's a shame if such an important question gets caught up in party political debate," Reding said, referring to Germany. "I wish there was more courage to find new solutions. In Germany, it is a question of demographics: there are already too few apprentices."

Despite the criticism, a study by management consultancy firm McKinsey points to some progress in women's role within business in Germany. It found about 80 percent of German companies are investing in the promotion of women and looking at how to make work more compatible with family life.

Germany, where women make up just 3 percent of boardroom professionals, lags behind most of its European neighbors. But the McKinsey report hinted that change may be on the way, saying that many new policies have been introduced since 2010. Women, meanwhile, account for at least 16 percent of last year's new board members of DAX-listed companies.

The German Institute for Economic Research (DIW), however, warned of a prevalent "male mono-culture" among German companies. In a recent report it said there was little sign of change in Germany's boardrooms. In 2011, the proportion of women in executive posts in Germany's 200 largest companies remained at 3 percent, no improvement on a year earlier.

jas -- with wire reports

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