Tag Archive: Gender quotas

Gender Jousting in the EU Institutions

Article 21 of the EU Charter of Fundamental Rights, which is legally binding on all Member States under Article 6 of the TEU states that “[A]ny discrimination on the basis of sex…shall be prohibited.”  Recently, European Union institutions have had an opportunity to demonstrate their thoughts regarding the limits of Article 21 through the discussion of legislation proposed by the European Commission that would require gender quotas for all boards of publicly held companies in the European Union.  Viviane Reding, European Commission Vice President and Commissioner for Justice and Fundamental Rights initially proposed legislation that would require 40% of all publicly listed boards to be made up of women by 2020.

This goal of Reding’s proposal is to address the implied problem with regard to gender diversity in decision-making positions in the EU.  Currently in the EU, women make up only 12% of the boards of publicly traded companies even though 60% of university graduates are women. The implication that arises from these statistics is that gender discrimination is taking place in companies that promote significantly more men to top positions than women, in spite of the large body of women who are qualified.  Such gender discrimination is prohibited under Article 6 of the TEU, and under Reding’s rationale gender quotas would serve to level the playing field for women to gain access to decision- making positions.

While one may be tempted to think that support for this legislation would be divided down gender lines, there has not necessarily been such gender stratification regarding support for this bill.  For instance, Jose Manuel Barrosso, the head of the European Commission, made the decision to postpone a vote on the legislation that, if he had not postponed the vote until November, would have effectively doomed the passage of the bill.  Reding stated that she had support of the main finance commissioners themselves, including Barrosso, Joaquin Almunia, Laszlo Andor, Michel Barnier, Andris Piebalgs, Olli Rehn and Antonio Tajani, who all backed “an ambitious directive.”

On the opposing side, a number of female commissioners opposed the bill. Additionally, Luxembourg MEP Astrid Lulling explained that she was opposed because she thought candidates should be judged based on competency, not gender. She said that many countries, particularly in the Nordic region, had had problems with the quota system.  She cited instances of abuse, circumvention of national gender quota laws, and the fact that in decades past, many women did not study subjects such as economics, business administration or mathematics, which explains why there are fewer women in high-level business positions today.

An equally noteworthy debate was present in the European Parliament’s vote on the European Central Bank’s board nominee, Yves Mensch.  The European Parliament voted against Mensch’s nomination 325 to 300, on the grounds that that a woman should hold a post on what is currently an all-male board.  The European Parliament does not have the power to block Mensch from being appointed, but his rejection by the only EU institution that is elected by popular vote sends a strong message of disapproval to the European Council, the body that is ultimately in charge of filling the post.  Both the European Central Bank nomination rejection and the Commission’s gender quota bill indicate that there is a clear concern in European institutions for women to be part of decision-making bodies in Europe.  The question remains, however, as to how to best achieve this goal.

The EU and Boardroom Gender Quotas

The EU plans to issue a proposal next month that would require European companies to appoint women to 40 percent of seats on supervisory boards by 2020. The proposal was made by Viviane Reding, the European Union justice commissioner. The law would apply to all listed companies with more than 250 employees and annual sales of more than 50 million euros ($63 million). Companies that fail to comply with the quotas will be subject to sanctions including fines and could be excluded from state aid and contracts. In 2011, Reding gave European companies a final opportunity to improve their records of gender imbalance in top management positions but there has been only marginal improvement.

In brief, the EU proposal aims to combat the significant gender imbalance that is still seen in many boardrooms across the EU. Specifically, the European Commission issued a report that demonstrated that just 13.7 percent of board seats in the EU belong to women. Furthermore, the report showed that there was only a 1.9 percentage point increase between October 2010 and January 2012. The report also noted that varying rates of improvement have led to highly divergent results within the EU. The legislation requires the approval from the EU’s 27 governments and the European Parliament to take effect.

The gender quota proposal has faced fierce criticism, mainly from conservative politicians and some major technology and manufacturing companies. France, the Netherlands, Italy and Spain have already introduced national quotas. However, Sweden and the United Kingdom are generally opposed to the proposal. For example, Marina Yannakoudakis, a Conservative member of the European Parliament who represents London, argues that the measure is “bad for genuine equality.” Yannakoudakis argues, “Imposing strict quotas, which are both arbitrary and artificial, cuts across the freedom of businesses to make their own decisions and the freedom of women to succeed on merit.”

It will be interesting to see how the EU faces challenges that the plan violates Article 16 of the EU Charter of Fundamental Rights which provides the freedom to conduct a business. However, one unnamed EU official notes that “companies would retain the freedom to choose among the best qualified executive directors to run day-to-day aspects of a business.” Another argument that opponents may consider is that the gender quota plan violates Article 21, a provision that explicitly prohibits any discrimination on the grounds of sex. However, this possible challenge will likely be rejected because Article 23 provides that “the principle of equality shall not prevent the maintenance or adoption of measures providing for specific advantages in favour of the under-represented sex.”

Supporters of the EU measure contend that now is the time to act and that self-regulation has not addressed the gender imbalance. Supporters argue that mandatory quotas are the only way to effectively address the systematic problem of women being underrepresented in management positions. Certain factors support the use of quotas, including: (1) women now have higher graduation rates than men in Europe but their professional careers continue to fall behind those of men; (2) women represent a growing underused pool of qualified workers, thus are an untapped potential for a poor economy; and (3) studies suggest a strong link between gender balance and professional performance. Indeed, supporters often cite Norway as a model of success for the advancement of women in business since the country instituted gender quotas several years ago. Before the Norwegian gender quota was put into effect, women occupied only 7 percent of seats on supervisory boards. Women in Norway now make up 42 percent of the board seats.

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