In late 2013, Germany’s new coalition government introduced a mandatory quota of 30% for female directors on companies’ supervisory boards. This policy decision suggests that the previous voluntary commitment by German companies to increase the proportion of women in upper management had made only small gains. However, there is evidence that there are now nearly twice as many women with seats on both non-executive (17.2%) and executive boards (6.1%) as there were in 2011.
Background
Currently, 17.2% of (non-executive) supervisory board members in Germany are female, according to the Women on Board Index, published in November 2013 by Women on Supervisory Boards (FidAR), a German pressure group campaigning for more female directors. In 2011, only one in ten supervisory board members were women. On (executive) management boards, 6.1% of directors are now women, compared to just 3% in 2011.
However, critical voices maintain that these increases have been too slow.
As a result, in late 2013, the new government announced in their coalition agreement (DE1312019I) that a mandatory quota would be introduced. This comes 12 years after policy makers and business leaders first made a voluntary commitment to increase the number of women on boards, and four years after the issue of diversity was first included in the German Corporate Governance Code. The new legislation will oblige companies to ensure that, by 2016, at least 30% of directors on newly established supervisory boards are female. From 2015, companies must also set public targets for an increase in the proportion of female managers.
Women in top management positions
A recent study, Women in leadership positions: advantage points in western German establishments (in German), has been published by the Institute for Employment Research (IAB). It shows that in 2012, while the share of women in the upper and middle layers of management in the private sector were 26% and 38% respectively, there had been only a moderate rise in the proportion of female managers since the previous survey conducted in 2008. The increase in female managers was greatest in companies with 500 employees and more, where the number of women in upper management rose from 9% in 2008 to 19% in 2012, and the number of women in middle management rose from 18% in 2008 to 26% in 2012.
There are more female leaders (46%) in upper management in the health and education sectors than in any other; this is followed by the retail trade and accommodation sectors, food service and other service sectors (40%). By contrast, in the construction sector only 9% of upper management are female. The different proportions of female managers across sectors generally reflects the overall share of women in each sectoral workforce. Notable exceptions, however, are the financial and insurance sectors, where the proportion of women managers is below the overall proportion of women in the workforce. The reverse is true in the transport and storage sector where a higher proportion of women are managers than are employed in the sector as a whole.
With respective shares of 31% and 25%, more women occupy a first-layer managerial position in eastern German than in western Germany. At first glance, there also appears to be a greater proportion of women in upper management in the public sector (38%) than in the private sector (26%). However, when these figures are compared to the overall proportions of women in the public and private sector workforces, it is clear that women have a slightly higher chance of becoming a manager in the private sector.
Women in management, 2008 and 2012
| Company size (employees) | Proportion of women in the first (upper) layer of management (%) | Proportion of women in the second (middle) layer of management (%) | Proportion of women in the workforce as whole (%) |
| | 2008 | 2012 | 2008 | 2010 | 2008 | 2010 |
| 1 to 9 | 27 | 28 | - | - | 50 | 50 |
| 10 to 49 | 21 | 25 | 37 | 40 | 44 | 45 |
| 50 to 99 | 20 | 22 | 34 | 34 | 41 | 42 |
| 100 to 199 | 16 | 18 | 28 | 30 | 40 | 42 |
| 200 to 499 | 12 | 16 | 23 | 26 | 39 | 41 |
| 500 and more | 9 | 19 | 18 | 26 | 34 | 41 |
| Total | 25 | 26 | 35 | 38 | 42 | 43 |
| Western Germany Total | 23 | 25 | 24 | 36 | 41 | 43 |
| Eastern Germany Total | 30 | 31 | 43 | 46 | 44 | 45 |
Source: Kohaut & Möller (2013), Women in leadership positions: percentage-point gains in western German establishments, IAB, Nuremburg.
Mixed views on quota system
While the social partners agree that there is a need to increase gender diversity in the top management of German companies, the introduction of a mandatory quota is highly controversial (DE1209019I).
The German Trade Union Confederation (DGB) said in a report, Gender in the life course (in German, 95.9 KB PDF), that it supports a mandatory quota as a way of discouraging discrimination against women in promotion decisions.
However, the Confederation of the German Employers’ Associations (BDA) argues that a mandatory quota is not the right way to achieve gender equality in management positions
Promotions based on quotas reduce performance incentives and are perceived by a majority as unfair, as discussed, for example, in Mara Ewers and Andrea Hammermann’s paper, The role of justice perception in policy interventions (in German).
Commentary
Quotas do not reduce the structural disadvantages women face when deciding to apply for a senior position. This can only be achieved by improving childcare services and by encouraging more women to opt for occupations where they are currently underrepresented at all levels, such as engineering and the natural sciences. Furthermore, measures which enhance work/life balance, such as working time flexibility and home office work, could convince more women to work full-time and to also apply for management positions, which are known to involve long working hours.
Andrea Hammermann, Cologne Institute for Economic Research (IW Köln)