Around 2,000 German companies are actually legally obliged to set targets for the proportion of women in management positions. But only a portion of them comply with this obligation.
Possible penalties are apparently not a deterrent: despite the legal obligation, according to recent data, many companies do not set an annual target for the proportion of women on their boards. According to a recent report by the federal government on the proportion of women in management levels, only 62.1 percent of the 2,109 companies that were subject to the legal obligation in 2021 did so.
The federal government’s report, which the cabinet approved today, mainly refers to the survey periods 2021 and 2022. More recent data is therefore not available. The more than 2,000 companies include firms from the private sector, the federal public service and companies with a direct majority shareholding of the federal government.
According to the report, more than half of the companies that set a target for women on their boards (53 percent) set a target of zero – that is, the goal of not having a single woman on the respective company board. Companies have been allowed to do this so far.
And yet not everyone is fulfilling their duty, complains Federal Minister for Family Affairs Lisa Paus (Greens). She is calling for more consistency in the enforcement of legal requirements, in other words: more sanctions. “It is quite clear: such violations can be sanctioned. They result in penalties,” Paus told the dpa. The Federal Financial Supervisory Authority (Bafin) and the Federal Office of Justice are responsible for prosecuting them. In talks with both bodies, she is currently working harder to make the violations of the rules “more visible in the future and to enforce sanctions effectively.”
Fines of up to two million euros
And that could be expensive: If a company violates the obligation to set targets for the proportion of women, this can lead to fines of up to 50,000 euros. For capital market-oriented companies, the sanction could even amount to “a maximum of two million euros or twice the economic benefit gained from the administrative offence”, according to a recently published analysis by the organization “Women on Supervisory Boards” (Fidar). Many companies do not even know that they are subject to the law or which rules they have to follow, Fidar President Anja Seng told dpa. In addition to the non-functioning sanctioning system, this is also a major problem. Minister Paus wants to counteract this and, according to her ministry, has recently sent all companies affected the relevant information – including the Fidar analysis.
Legal requirements on the women’s quota since 2015
In 2015, a law came into force that was intended to significantly increase the proportion of women on the executive boards and supervisory boards of German companies. Since then, around 2,000 German companies have been required to set a target for the proportion of women on executive boards and in top management. If they set a target of zero, they have had to justify this since 2021, when the law was expanded. Since 2016, some listed companies have also been obliged to adhere to a binding women’s quota of 30 percent when filling new positions on the supervisory board. There are currently 104 companies.
According to the report, in companies subject to this quota, the proportion of women on supervisory boards increased by more than ten percentage points between 2015 and 2021. The proportion was most recently 35.7 percent – and thus even above the statutory quota of 30 percent. For all private companies examined, the proportion of female supervisory board members rose by more than seven percentage points to 26 percent during the period.
Binding quotas apply only to a few companies
On the other hand, women are still severely underrepresented on executive boards. One of the reasons: very few companies are subject to the obligation, in force since summer 2022, that at least one woman and one man must be represented on executive boards with more than three members (minimum participation requirement). The law currently only provides for this for listed and co-determined companies with more than 2,000 employees. According to Fidar, this affects just 65 companies.
President Seng believes this is a gap that needs to be closed. In her view, the 30 percent quota for women on supervisory boards and the executive board quota should apply to all companies considered – i.e. to around 2,000 companies instead of just 104 and 65 respectively.
Federal government wants to achieve parity in its authorities by the end of 2025
The fact that binding quotas could work is also shown by the high proportion of women in federal companies, says Seng. If the subordinate authorities are included, the highest federal authorities have a female share of 45 percent in management positions. According to the report, this is the latest figure at the end of June 2023.
In 2021, the federal government committed itself to ensuring a 50/50 distribution of women and men in executive positions by the end of 2025. According to Minister Paus, one of the levers for this positive development is “the expansion of part-time management”.
A strategy that Seng is partly critical of. “Part-time management is good if it is intended for both men and women, and if part-time also means more than 50 percent,” she says. Otherwise there is a risk that part-time will only be associated with women in people’s minds – and that, in turn, is bad for equality.
Source: Stern
