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The German government is cracking down on corporations that lack equal representation with a new bill. 

Germany’s cabinet greenlit legislation on Wednesday requiring publicly listed companies to have at least one woman on their management boards, according to Reuters. The bill also includes stricter gender equality guidelines for government companies and requires boards with more than two members will have at least one woman serve on them. 

Approval for the bill comes after a lengthy debate surrounding the issue.

The legislation is an extension of a quota introduced in 2015 that requires publicly listed companies with more than three management board members to allocate 30% of supervisory boards to women. Despite the quota, the gender pay gap is still prevalent in the country, where women earn an average of 19% less than men. 

The Social Democratic Party (SPD) has advocated for the new bill for some time, but the Christian Democrats were hesitant to support it. German Chancellor Angela Merkel has said that companies were taking too long to appoint women leaders, according to Reuters. 

"We can show that Germany is on the way to becoming a modern society fit for the future," Family Affairs Minister Franziska Giffey said, according to Deutsche Welle. 

The new law will impact around 70 companies, 30 of which currently do not have any women on management boards, according to a joint statement released by Germany’s family and justice ministries. Women only account for 12.8% of management board members at Germany’s 30 largest publicly listed companies.

Women’s representation on corporate supervisory boards exceeded the 30% quota in 2017 and reached 35.2% in November 2020, according to Reuters. However, women only accounted for 11.5% of management board positions on around 100 of the largest publicly listed companies. 

The COVID-19 pandemic has only made it more difficult for women to stay in the workforce due to the imbalanced care burden. The number of women in senior executive positions declined in Germany to 23 in September, compared to the previous year. 

Lack of equal representation at corporate companies is not unique to Germany in comparison with other EU countries. Women made up only 27.8% of board members of the largest publicly-listed companies registered in EU countries in April 2019.

“This law is a milestone for more women in leadership positions,” Giffey said in a statement.


Demand Equity

German Government Passes Bill Requiring Companies to Hire More Women on Boards

By Leah Rodriguez