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Brussels to close the gender gap

In a bid to boost the presence of professional women in corporate boardrooms, the European Parliament is considering the introduction of mandatory gender quotas for the private sector.

Dear women readers: have you ever dreamed of becoming the chief executive officer of a large company? If not, you probably belong to the majority of women who realized in time that it is a waste of effort and concentrate instead on more realistic objectives. If you did, brace yourself for disappointment: unless you are Norwegian, you have less than a 3% chance of becoming a CEO. In Europe, only three out of every hundred women make it to the top, and even some of them attribute their success to sheer luck.

Undoubtedly, this situation needs to be changed. Legislative bodies have long been discussing how to get companies to include more women on their boards. A host of benefits associated with hiring female CEOs have been listed, the findings of research by McKinsey, Deutsche Bank and Goldman Sachs have been presented, but none have proved convincing enough. Some governments and the EU have come up with the idea of asking companies to up the number of female leaders by implementing voluntary quotas. But since volunteering has never been the strong suit of corporations, that did not work either.

It may have been the 100th anniversary of International Women’s Day that shifted attention again to the recurring problem of gender inequalities and raised the question of compulsory quotas. The idea probably comes from Norway, the only country to have made the introduction of quotas mandatory for stock exchange-listed companies in 2008. A little pressure works well in the private sector: in less than three years, the number of female board members has increased to 40% from 25%. With this step, the Scandinavian country has already achieved the ratio targeted by the EU for 2020 and was often cited as a best practice at the European Parliament’s plenary meeting on March 8.

France, on the other hand, was mentioned as a negative example. Although the country introduced quotas six years ago, it did not make them mandatory, and it barely had an effect. In 2009, women comprised only 10% of board members in the country.

Little wonder that many MEPs now admit that without a regulatory system, balanced boards are hard to achieve. They use different arguments, though. Greek MEP Rodi Kratsa-Tsagaropoulou, who is preparing a report on “Women and Business Leadership,” named the reconciliation of work and private lives as a major obstacle. Alexandra Föderl-Schmid, editor-in-chief of Austrian daily Der Standard, believes women have to deal with other hurdles, such as an ingrained corporate culture. Silvana Koch-Mehrin, vice president of the European Parliament and president of the High-level Group on Gender Equality and Diversity, welcomes the system as “quotas are preferred to change the attitude and overcome the gender pay gap.”

Strangely enough, it is often women who oppose such initiatives, claiming appointments should be merit-based, not gender-based. A survey of nearly 27,000 people from 27 member states shows that only one-fifth of those questioned, both men and women, would approve of mandatory quotas. (The result for Hungary was 15%.)

Many female leaders are also against the measure. In Australia, where 27% of private company senior positions are held by women, ahead of the global average of 20%, liberals are explicitly against enforced quotas. Numerous European businesswomen have also expressed their concerns, often in public.

They do so even if according to McKinsey – a global market researcher that has conducted three studies on female -related issues since 2008 and which served as a key reference for the EU to advance the issue –, there is a strong link between the presence of women in executive committees and better performance.

The EU is showing some signs of willingness to enforce change. In March, Viviane Reding, Commissioner for Justice, Fundamental Rights and Citizenship, called for self-regulation within the private sector. However, if that fails, she promised to enforce legislation before the end of the current election cycle.

Taking a look at Norway, where out of 611 companies, 470 did not have a single female board member in 2002 and about 6% of all board positions were occupied by women, enforced quotas are probably a good way to boost female representation. But they won’t remedy the root of the problem. Norway excels due to its generous welfare system. Women are allowed to go home to breast-feed during the workday. Maternity leave on full pay lasts a year and free childcare is widely available. In the post-crisis era of austerity, these measures are unlikely to take place Europe-wide anytime soon.

So women have to stand up for themselves. “There must be a political will, but there is also a need for a strong civil society to put pressure on politicians,” Eva Britt-Svensson, chair of the European Parliament’s Committee on Women’s Rights and Gender Equality, told the Budapest Business Journal. “We need to have good examples.”

Her country is a good one for setting an example. Sweden is the only country where, without enforcement, women account for 27% of board positions at large firms. At the moment, this is just the exception to the rule. ZsV