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More women in the boardroom? Europe considers forcing the issue

Gender quotas are receiving increased attention — and dividing governments — across Europe.

Christine Lagarde used to find them “offensive.” Now the first female director of the International Monetary Fund sees gender quotas as a necessary, albeit temporary, tool to help women reach top jobs.

“At the end of the day, people will have to be convinced that [women] bring something to the table,” the former French finance minister told the Dublin-based Irish European Movement, an independent, not-for-profit group aimed at enhancing the connection between Ireland and Europe, in March.

Half a century after the European Union’s Treaty of Rome sowed the seeds for gender equality in Europe, Ms. Lagarde’s push for mandatory corporate board quotas for women – which proponents hope will trickle down and improve gender equality throughout workplaces – is gaining momentum, and dividing governments, across the continent.

Last fall, European Union Justice Commissioner Viviane Reding pushed through a proposal for gender quotas for the board of corporations across Europe. Men, she said, continue to dominate top jobs, although women are better educated and the economy needs them. But with German Chancellor Angela Merkel vetoing the idea, whether the 27-member EU Council, the European Union’s legislative body, turns the idea into law this fall remains to be seen.

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Law or no law, Reding’s initiative has brought the issue of gender equality to the fore of political consciousness in Europe, helping shake old fashioned views of gender roles in Europe’s most conservative societies, including powerhouse Germany. Algimanta Pabedinskienė, the  Lithuanian minister of social security and labor, said the issue would top the agenda of the Lithuanian EU presidency, which started July 1.

“What we’ve tried to do for years, to start a political discussion on gender equality is now happening thanks to the initiative from Viviane Reding,” says Jana Smiggels Kavková, president of Fórum 50%, a Prague-based nonprofit group advocating gender quotas for Czech politics.

The Czech government, like that of Germany and Britain, sees mandatory quotas as an unwelcome intrusion in free business practices. Denmark, Sweden, and the Netherlands also oppose the European gender quota initiative, but because they feel it overlaps with their own quota systems.

“Before it was just this talking and talking, ‘we need more women,’ but now we have a real concrete step, that’s why there is so much resistance. Gender equality is becoming an issue,” says Ms. Kavková.

Catalyst for discussion

For traditional Germany, the gender debate “was like a wake-up call,” says Elke Holst, research director of the German Economic Research Institute DWI in Berlin.

“Before it was not taken seriously, but now companies know you have to change and do as much as you can yourself so you don’t have to do something like quotas.”

It was Deutsche Telekom two years ago that got the discussion started when it committed to women filling 30 percent of its managerial positions by 2015, the first company in Germany on the country’s DAX-30 stock index to do so. The breakthrough decision led Chancellor Merkel to get 30 of Germany’s top companies to institute voluntary management board quotas for women.

“My patience on this topic is running out,” she said in Berlin then. “I want to finally see results. Companies need to deliver; they cannot exploit the good faith we have extended them.”

But things barely changed. A recent DWI study shows that by the end of 2012, only 4 percent of German companies had a woman on their boards and just under 13 percent on the supervisory boards of the top 200 companies in Germany were occupied by women. Though a slight increase over previous years, those figures pale next to Norway, which has seen the proportion of women on supervisory boards rise to more than 35 percent. And while Europe’s number one economy, Germany has the largest pay gap between men and women in the EU, according to 2012 statistics released by the Organization for Economic Cooperation and Development (OECD).

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By rejecting the Reding proposal for legally binding quotas in favor of voluntary quotas this fall, Merkel gave a new impetus to the debate on gender issues, triggering a rift within the conservative CDU party.

“If we don’t move on the gender quota issue, we’ll end up being forced to do so by Brussels,” Annegret Kramp-Karrenbauer, the governor of the state of Saarland, told the magazine Der Spiegel. She was one of two of CDU governors who endorsed a SPD initiative on gender quotas in the Bundesrat, the body representing the country’s 16 states, this fall.

“Ten years ago they would not have had the guts to do that,” says Monika Schulz-Strelow, president of Women on Supervisory Board (FidAR), a Berlin-based association of women in executive positions aimed at increasing the proportion of women on the supervisory boards of German companies.

Meanwhile Ursula von der Leyen, Merkel’s powerful labor minister and a mother of seven, has vowed to make gender equality a central issue of the conservative party. In April she threatened to vote in favor of the SPD’s gender-quota initiative when it came up in the Bundestag, Germany’s national parliament. She did not, but negotiated a deal, instead: Gender quota would be mentioned in the party’s campaign platform for the upcoming chancellor elections.

“Pressure from inside and outside led to a compromise that would never had seen the light under normal circumstances,’ says Schulz-Strelow. “That was a huge success. The issue would have gone to sleep if Viviane Reding hadn’t come up with her proposal.”

“But this remains a campaign promise,” Schulz-Strelow adds.

Looking for results

In Britain, the government has also threatened to introduce quotas if British companies failed to appoint more women on their boards. “Companies should be under no illusion that [the UK] government will adopt tougher measures if necessary,” UK Business Secretary Vince Cable told the press in April. “Quotas are still a real possibility if we do not meet the 25 percent [UK] target.”

Viviane Reding’s EU-wide legislation would guarantee that 40 percent of listed company boards be made up of women by the year 2020. “Personally, I am not a great fan of quotas, but I like the results they bring,” said Reding. “Where there are legal regulations, there is progress.”

That has proven the case in pioneering Norway, and also in Iceland and France: All have seen the number of women in top positions rise.

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Experts say 2013 will see more German women reach top positions.

“But what really interests me the most is that we see a shift in German corporate culture,” says Schulz-Strelow. “That men and women become naturally accepted in business, that they see the duty of raising kids as a shared one.”

Elke Holst of DWI says there should be more emphasis on the benefits that all women – from the cashier at the supermarket to the investment banker – understand how gender quotas can benefit benefit all women, not only those who’ve made it to the top.

“The more women make it to top positions the more the reality of the life of women can be taken into account in the decision process of companies,” Holst says. “Who says women have to be at work so much? It’s always been that way because men have always decided. “

“German companies have tried to do quite a lot to make it possible for women to work and have children, but it doesn’t work because only men have leadership positions,” Holst says.

In the end, the ultimate message is that, in a changing society where couples get divorced more and more and women find themselves having to cope with their future by themselves, “It’s important to know that it’s better if you work than if you don’t work,” says Holst.