German parliament passes gender quota for corporate boards

A general view of the Reichstag building, seat of German parliament Bundestag in Berlin, November 22, 2010. Germany’s parliament approved a law setting gender quotas for some corporate boards on Friday. Photo by Pawel Kopczynsk/Reuters

Major German companies will soon be required to ensure that women make up 30 percent of their supervisory boards. The quota is part of a new law, approved Friday by Germany’s parliament, intended to improve women’s representation at the highest levels of German companies.

Although women form nearly half the German workforce, they only account for about 20 percent of supervisory board members.

In the U.S., women hold about 15 percent of corporate board seats, according to professional services firm Ernst & Young.

The so-called “frauenquote” – “women’s quota” — will apply to more than 100 of Germany’s largest publicly traded companies, which will have to start implementing the law in 2016. A further 3,500 medium-sized companies will be required to publish their own targets to increase gender equality on their boards.

The German quota law passed in parliament with a majority of votes that included the support of Chancellor Angela Merkel’s Christian Democratic Union, which opposed a similar law in 2013.

Some liberal German parliamentarians abstained from the Friday vote, saying the measure was too narrow in scope.

“A real quota for women must apply to all companies,” said lawmaker Caren Lay of the opposition Left Party, the BBC reported.

Many prominent members of the German government praised the law, however. Justice minister Heiko Mass described the law as “the greatest contribution to equality since the introduction of women’s suffrage” a century ago.

The quota has also faced criticism from some who argue that supervisory boards’ limited power in German corporate structures will limit the law’s impact.

In 2003, Norway became the first country to legislate a mandatory quota for female representation on corporate boards. Since then, a number of European nations have legislated similar requirements, including France, Spain, Iceland and the Netherlands.

Other countries, including South Africa, Israel and Ireland, have enacted gender quotas for state-owned enterprises.

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