German parliament approves legal quotas for women on company boards

By Caroline Copley

BERLIN (Reuters) – Germany’s lower house of parliament passed legislation on Friday requiring major companies to allot 30 percent of seats on non-executive boards to women, as a new survey found females remain grossly under-represented in business life.

Although Germany has been led by a woman, Angela Merkel, since 2005, there is not a single female chief executive among the 30 largest firms on Germany’s blue-chip DAX index (.GDAXI).

The new quotas, due to come into force from 2016, will affect more than 100 listed companies which have employee representation on their supervisory boards. A further 3,500 medium-sized companies will have to determine their own quota for executive and supervisory board seats.

Family Affairs Minister Manuela Schwesig called it an “historic step” for equal rights, saying women needed to have a voice at the level where decisions on working conditions and pay are taken.

Companies not meeting the quota will be required to fill vacancies with women or leave the positions empty.

A survey published in the Handelsblatt newspaper on Friday said 59 percent of mid-size companies in Germany did not have a single woman in a leadership position, compared to the European Union average of 36 percent.

At DAX companies, women occupy only 7 percent of executive board seats and barely 25 percent of non-executive board seats, according to the DIW think-tank, although that is above the 20 percent European average for women, according to EU data.

The law was championed by the centre-left Social Democrats (SPD), the junior partner in Merkel’s left-right coalition.

“The quotas for women are the biggest contribution to equal rights since the vote for women was introduced,” said SPD Justice Minister Heiko Maas, adding that the legislation would give impetus for cultural change in Germany.

In 2003, Norway became the first country in the world to impose a gender quota requiring at least 40 percent of public limited company board members to be women. Other countries, including France, Spain and the Netherlands, followed suit.

Some companies have already moved to bolster female leadership in recent years as the issue gained traction. Deutsche Telekom (DTEGn.DE), Munich Re (MUVGn.DE) and Adidas (ADSGn.DE) are among firms where at least 30 percent of their supervisory board seats are already occupied by women.

Still, the move has met criticism from business groups and some conservatives who say it will increase bureaucracy without addressing the real culprit behind female under-representation in business — a lack of childcare and a short school day.

(Editing by Crispian Balmer)