The share of female executives in small and medium-sized enterprises has risen for the first time in four years, but it remains on a low level. A current KfW study provides updated figures. KfW economist Dr Jennifer Abel-Koch explains the reasons for the increase.
Ms Abel-Koch, how has the share of women at the helm of small and medium-sized companies in Germany developed?
Abel-Koch: After four years with no increase, the proportion of SMEs headed by a woman increased slightly in 2018. Women are at the top of 16.1% of the roughly 3.81 million small and medium-sized enterprises. That means they occupy the executive chair of around 613,000 SMEs, 33,000 more than the year before.
What is facilitating this growth?
One bright spot is the increased level of female entrepreneurial drive. The number of female business start-ups grew by four per cent in 2018, and the share of women in overall start-up activity increased to 40 per cent. This is having a positive effect on the number of female executives. At the same time, we are observing a shift in the SME sector towards more service providers. That, too, is driving the share of female managers of small and medium-sized enterprises.
“Around 85 per cent of female executives head a service-providing enterprise.”
Are women more likely to be found in management positions in the services sector?
Some 85 per cent of female executives are at the head of a service provider such as architecture and engineering firms, law firms or tax and management consultancies, for example. But women managers are also more likely to be found in retail and wholesale, personal services such as nursing, training and education, and in the catering and hospitality industry. Women seldom occupy management positions in manufacturing industries such as mechanical or automotive engineering or pharmaceuticals.
So has the decline stopped?
The decline appears to have ended, but the percentage of women-managed enterprises is still well below the peak level of 2013. Also, considering that women make up more than half of all employees in the SME sector, the rate of 16.1 per cent female executives is low. Yet fewer than 10 per cent of all small and medium-sized enterprises actively pursue a policy of promoting female employees. The German business community should make much more use of women’s potential, particularly with the aim of addressing the shortage of skilled labour and management successors in the SME sector.
Published on KfW Stories: 3 March 2020