November 27, 2014

Germany backs female board quota law

The German coalition government has agreed to pass a law which will require at least 30% of executive positions to be filled by women.

Women’s quotas, or Frauenquote, will be signed into law in December, and is expected to have a major impact on 108 of Germany’s largest firms and 3,500 smaller businesses.

Some business leaders had argued that the law was not necessary, as equality between men and women is already an integral part of the German constitution.

However, Germany’s women’s affairs minister Manuela Schwesig responded that equality was "far from being true in real life." Indeed, women currently hold only 12% of executive board posts in Germany.

After initially opposing the reform, Chancellor Angela Merkel said: "It has been decided on and it is coming. We cannot afford to do without the skills of women."

Companies will be expected to start implementing the law by 2016.

Our author Nina Smith has written about the effects of gender quotas on boards of directors, noting that decision-making processes can be improved with greater gender diversity. She also notes that a greater number of female board members correlates with better board attendance, and can improve the career development of women at lower levels of the organization.

However, Smith also suggests that policies focused on boosting the number of women who progress into senior management is likely to improve long-term impacts on both gender equality and economic growth.

Read more here.

Related articles:
Gender quotas on boards of directors, by Nina Smith
Gender diversity in teams, by Ghazala Azmat