In 2021, the Dutch senate approved a new law the ‘Balanced Male-Female Ratio Act at the top of the business community’. Prompted by the advice of the Social and Economic Council (Sociaal-Economische Raad/SER), a national level tripartite advisory body, the law aims at increasing gender equality on the boards of directors and supervisory boards of large companies in both the public and the private sectors.

Why has the legislation been passed and what does it require of companies?

The law replaces earlier regulations (Article 2:166/267 Dutch Civil Code) in force between 2013 and 2020, based on the 'comply or explain' provision which had been criticised by the SER as insufficient to increase the number of women in top positions. The SER’s report ‘Diversity in the boardroom: Time for acceleration’, underlined not only how the presence of women in these positions was still low, but also that progress was still too slow. Subsequently, the SER advocated for a more integral approach, and firm measures which would allow talents to be better utilized, while at the same time stimulating innovation, creativity and social cohesion.

The law therefore includes two fundamental measures: firstly, it establishes a gender quota for new appointments on companies’ supervisory boards – with very limited exceptions – where at least one third of the board must consist of men and at least one third of women. New board appointments that do not achieve this gender balance will be ‘null and void’ although this would not affect the legal validity of decisions taken by the director. The same quota requirements also apply to newly appointed supervisory directors.

Secondly, the law requires public (NVs) and private (BVs) limited liability companies to set targets to enhance gender diversity in their management boards and among senior executives. Such targets should be “appropriate and ambitious” in making the existing situation more balanced, and are to be determined by the company itself on the basis of the size of the board and of the overall management positions.

To qualify as ‘large’ companies need to satisfy at least two of the following criteria: have a minimum of 250 employees; more than €20m assets; and a net turnover of more than €40m. Approximately 5000 Dutch companies meet these criteria and come under the new requirements.

The bill took effect in January 2022 and large companies have been required to set targets and launch action plans to achieve them, such as establishing affirmative action measures related to recruitment. From 2023 these companies will be required to report to the SER annually on their progress. The reports must include: the number of men and women in leadership positions; their plans to achieve the target; the extent to which the goals set for the previous year have been achieved, and if not, provide a reason why this has not been achieved. The law will be evaluated after five years and abolished after eight years if not renewed.

Will the new legislation advance gender equality in the Netherlands given a range of ongoing challenges?

The new legislation represents a positive development in a country which, despite an active policy approach in the field, still has a substantial gender pay gap [SM1] (14.2% in 2020). This is higher than the European average (13%), and compared to countries like Italy (4.2%) and Spain (9.4%), which do not display more developed institutional efforts and are also characterised by high levels of unemployment among women.

The low presence of women in executive positions (34% in EU in 2020) and the pay gap within them (31% less per hour than male managers in 2018 in EU) are among the factors which explain the persistence of the gender pay gap in Europe. This has informed an ongoing debate on an EU directive proposal which aims to achieve a minimum of 40% quota of non-executive members of the under-represented sex on company boards. However, gender pay gaps result from the interplay of several factors, including the overrepresentation of women in low-paid sectors and precarious and part-time employment. The latter has been a focus of interest in the Dutch context for some time. The Netherlands has long been celebrated for its ‘part-time revolution’, which has been positively correlated with the increase of women’s participation in the labour market from the 1990s, which has contributed to making the Netherlands “the first part-time economy in the world.” Differently from other countries, part-time work in the Netherlands has not been characterized by a strong homogeneity in terms of (poor) working conditions, and has gone through a process of ‘normalization’ which has also seen an increase of men in part-time positions. Still, the percentage of women in part-time work is three times higher than among men (respectively 61% versus 20% in 2021) [SM2] , which is indicative of wider structural inequalities such as employers’ demand for women in part-time positions to cover specific jobs; the persistence of a strong gendered division of labour within the family; and difficulties women experience in juggling paid work and caring responsibilities.

Reflections

While addressing these issues would be more difficult as it would require direct policy interventions into structural aspects of both the labour market and broader social policy, these could go some way to fostering more gender-equal behaviour in paid and unpaid work in the Netherlands. The Netherlands is seen as a more progressive part of the equality project in Europe in various quarters but there remain challenges to including women in key positions.

[SM1]equal_pay_day_factsheet_2022_en_1_0.pdf (europa.eu)

[SM2]Employment patterns (europa.eu)