Analysis of Women's Status in the EU Labour Market
Gender equality is a core EU value under the EU Gender Equality Strategy 2020-2025. With the new Directive on Women’s Quota in Non-Executive and Executive Bodies, the European Union has taken a significant step towards gender equality in corporate governance. This directive addresses the persistent gender imbalance by mandating minimum representation of women in senior roles. While this initiative presents substantial opportunities, it also has notable risks that require careful consideration.
This article delves into both aspects, comprehensively analyzing the directive’s implications. We check what opportunities and risks it will bring and what measures European companies need to undertake.
67.7% of women in the European Union are employed, making up 45% of the workforce. The gender employment gap is at 10.8 p.p., resulting in an annual economic loss of €370 billion. Addressing this issue is essential not only from a social perspective, but also for financial reasons. Improving gender equality can potentially boost GDP to €3.15 trillion by 2050.
Overall, women earn less than men on average — the pay gap is 12.7%. It ranges from less than 5% in Luxembourg, Romania, Slovenia, Poland, Belgium and Italy to more than 17% in Hungary, Germany, Austria and Estonia. According to the European Commission¹, around 24% of the gender pay gap is related to the over-representation of women in low-paying sectors, such as care, healthcare and education. Only 12% of executive roles within FTSE 250 companies are currently held by women.
EU Directive on Women Quota in Non-Executive and Executive Bodies — Background and Objectives
The “Women on Boards Directive” is crucial to the 2020-2025 EU Gender Equality Strategy. The European Parliament adopted this directive to accelerate gender balance in corporate decision-making. This far-reaching law is part of the broader EU strategy for gender equality, which seeks to enhance diversity and inclusion across all sectors. Currently, large EU companies have around 30% female non-executive directors. The highest levels can be observed in Italy (50%) and the lowest in Cyprus (7%).
By July 2026, all big publicly listed companies in the EU must take measures to increase women’s presence on boards. They have to ensure that at least 40% of their non-executive directors are women. Alternatively, female representation of executive and non-executive must reach at least 33%. The directive is expected to significantly contribute to narrowing the gender pay gap and ensuring workplace equality.
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Opportunities and Benefits of the EU Directive on Women Quota
The UE Directive on Women Quota enhances organizational diversity and improves financial performance by ensuring a more equitable representation of women in non-executive and executive roles. It presents several opportunities for companies, organizations, and society at large:
Enhanced Corporate Performance
One of the most compelling arguments for gender quotas is the positive impact on corporate performance. Research consistently demonstrates that more diverse companies are 43% more likely to see above-average profits and that diverse leadership teams are more likely to outperform their less diverse counterparts. Varied viewpoints often result in more robust solutions, better decision-making and risk management. A diverse board is less likely to fall into “groupthink” because its members are less likely to align themselves with one another.
Maximizing Talent Utilization
The new EU directive addresses the underutilization of female talent in executive and non-executive positions. Companies can benefit from a broader talent pool, drawing on the skills, experiences, and perspectives of women who may have previously been overlooked for leadership roles. Thanks to this directive, candidates will be chosen based on merit, regardless of gender. This can be particularly beneficial in industries facing talent shortages.
Social and Ethical Responsibility
The “Women on Boards Directive” fosters a culture of inclusivity and promotes a more equitable distribution of power and influence by reducing systemic biases that have historically marginalized women in the workplace. Companies prioritizing diversity can enhance their reputation and build stronger relationships with customers, employees, partners and stakeholders. Demonstrating a commitment to gender equality can also be a powerful tool for attracting top talent, particularly among younger generations who value corporate social responsibility.
Legal and Compliance Benefits
The new gender equality directive reinforces the importance of adhering to regulatory standards within the UE states. One of the primary legal benefits of this directive is the mitigation of risks and penalties associated with non-compliance. Moreover, by proactively adopting the directive’s guidelines, companies can position themselves as leaders and improve stakeholder trust and confidence. Companies seen as leaders in gender diversity and compliance are more likely to attract socially responsible investors.
Potential Risks of the EU Directive on Women Quota
Implementing the EU Directive on Women Quotas may also present risks that require thorough examination and mitigation:
Tokenism and Performance Pressure
The primary concern about gender quotas is the potential for tokenism, which fails to address fundamental inequalities and hinders genuine efforts towards diversity and inclusion. There is a risk that women may be recruited to meet quotas rather than because of their qualifications and competencies. They can be included merely to give the illusion of diversity. Moreover, tokenism can pressure female executives to prove their worth and resentment among colleagues who may view these appointments as unfair.
Resentment and Backlash
Mandating gender quotas can generate resistance and resentment within organizations. Some may view the directive as an imposition, leading to internal friction and a potential backlash against female appointees. The directive may also inadvertently reinforce gender stereotypes by implying that women need special measures to succeed in leadership roles. This could perpetuate existing biases and hinder the broader acceptance of women as equally capable leaders. This can hinder the intended benefits of diversity. Companies need to manage these dynamics carefully to ensure that the integration of women into leadership roles is both smooth and genuinely beneficial.
Implementation Challenges
Achieving the required gender balance may be challenging for some male-dominated industries, where women have been historically underrepresented. In such sectors, companies may struggle (especially at the beginning) to recruit a sufficient number of qualified female candidates for leadership roles. This scarcity of qualified candidates could lower their selection criteria to meet quota requirements. Firms may need to invest in leadership development programs and succession planning to build a pipeline of qualified female candidates, which can be time-consuming and resource-intensive.
Risk of Homogenization
While the directive aims to increase diversity, focusing solely on gender quotas may overlook other important aspects of diversity, such as ethnicity, age, and socioeconomic background. This may inadvertently lead to the risk of homogenization. Achieving gender equality mustn’t come at the cost of neglecting other essential diversity attributes. A holistic approach to diversity is necessary to gain the full spectrum of diversity required to address complex business challenges.
The EU Directive on Women Quota — Strategies for Success
Implementing the EU Directive on Women Quotas represents a significant step toward promoting gender equality in corporate leadership. However, organizations must adopt comprehensive strategies to ensure success beyond merely meeting the mandated quotas. To mitigate risks and capitalize on the opportunities presented by the directive, companies should adopt a strategic and inclusive approach:
- Merit-Based Selection: organizations must ensure that women appointed to boards are selected based solely on their qualifications and experience. This can be achieved through rigorous recruitment processes and transparency in selection criteria.
- Leadership Development: firms must allocate their budgets to training and mentorship programs to prepare women for leadership roles. This will help build a robust talent pipeline and support the directive’s long-term success.
- Inclusive Culture and Policies: fostering an inclusive corporate culture that values and respects diversity is essential. This includes promoting awareness and understanding of the benefits of diversity among all employees.
- Inclusive Recruitment Practices: organizations should review and revise their recruitment processes to eliminate biases that may hinder the selection of diverse candidates. This allows companies to attract a broader range of talents.
- Monitoring and Evaluation: the HR Department should regularly monitor the directive’s impact on corporate performance and employee satisfaction and use this data to implement necessary adjustments to policies and practices (if applicable).
EU Directive on Women Quota in Non-Executive and Executive Bodies — A Final Note
The EU Directive on women quotas in non-executive and executive bodies, officially known as the “Women on Boards Directive”, represents a bold step towards gender equality in corporate leadership. While it offers significant opportunities for enhanced performance, talent utilization, and social responsibility, it also presents risks such as tokenism, backlash, and implementation challenges. Achieving gender equality in the workplace requires a holistic approach. By adopting strategic measures to address these risks, companies can genuinely benefit from gender diversity.
About the author
As a Partner at Neumann HR Advisory, Joanna Pommersbach offers a unique combination of strategic insight, extensive industry knowledge, and a dedication to achieving excellence. Her comprehensive approach to leadership development and strategic planning consistently motivates and guides organizations striving for significant growth and transformation. Find out more about Joanna’s experience here.
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¹European Commission, The gender pay gap situation in the EU, Access: 21 May 2024,
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European Commission, 2024 Report on Gender Equality in the EU, Access: 21 May 2024,
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European Commission, Commission welcomes political agreement on Gender Balance on Corporate Boards, Access: 21 May 2024,
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European Commission, Women’s situation in the labour market, Access: 21 May 2024,
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Official Journal of the European Union, Directive (EU) 2022/2381 of the European Parliament and of the Council of 23 November 2022 on improving the gender balance among directors of listed companies and related measures, Access: 21 May 2024,
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European Institute for Gender Equality, Gender Statistics Database, Access: 21 May 2024,
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FTSE Women Leaders Review, Achieving Gender Balance, Access: 21 May 2024,
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McKinsey & Company, Diversity Matters, Access: 21 May 2024,
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PwC, Directive for Gender Balance on Listed Company Boards, Access: 21 May 2024,
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Utrecht Review, Gender Quota for Corporate Directors: a Task for the European Union? The Revival of the Directive on Gender Balanced Company Boards, Access: 21 May 2024,
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