Why the workforce gender gap matters to business
Reducing barriers to adding women to the workforce in Canada could add from $150 billion to $420 billion in gross domestic product over 10 years
In Canada, the proportion of females aged 15 and over who participate in the labour force remains nine percentage points below that of males. And it has stayed this way since the early 1990s.
Why does this matter? Sometimes, labour force participation rates can fall for demographic reasons, such as a rising number of retirees from the workforce or an increase in the population of students enrolled in post-secondary education. This is normal. But there’s cause for concern when labour force participation rates stagnate or fall for what Statistics Canada refers to as “prime-age” workers. Such variations can have wider economic consequences.
So what accounts for the flatlining of women’s participation in the labour market?
It’s a bit of puzzle. Women today are better educated than at any time in history and yet the participation rate gap compared to men has been essentially constant for nearly three decades. This is surprising, given that higher education levels normally are associated with greater workforce participation and a steady attachment to the labour market.
Women and men enter the job market in almost equal proportions, but there’s a drop-off among women when they’re in their prime working years. At the beginning, young females between the ages of 15 and 19 may participate even more than males do in paid work. The drop-off begins in the 20-to-24 age group and reaches a peak between 35 and 49 years.
The gap is not because of a lack of education, skills or ambition among women. Rather, the explanation likely is found in the realms of public policy and organizational human resource practices. Some, but not all, of the participation rate gap reflects the fact that women are still primarily responsible for looking after children and adult dependents. Limited access to paid family leave and lack of quality child care services may be factors causing some Canadian women to drop out of the labour force, whereas the greater availability of those benefits in other developed countries may have led more of their peers to remain employed.
The gap is also linked to women’s dominance in part-time work. To be sure, some women happily opt for part-time employment at certain stages of their lives. Such work is often more flexible and allows a level of control over one’s schedule that may not be feasible with full-time jobs. On the flip side, part-time work tends to be more precarious and is less likely to offer employer-paid benefits. Some individuals, including many women, who work parttime may find it difficult to secure pathways to full-time jobs and career advancement. And those factors can contribute to persistent gender wage gaps.
A nine-point labour force participation rate gap might not seem like much, but consider this: a 2017 study by McKinsey Global Institute estimates that reducing barriers to women’s work in Canada could produce potential gross domestic product gains of $150 billion to $420 billion over 10 years. Even the lower estimate represents a sizable addition to the nation’s economic output.
The consequences of fewer women working affect individuals, families and the business community. A dynamic economy takes full advantage of the available pool of talent and seeks to expand the size of the productive workforce. A decline in the number of labour force participants — particularly of an increasingly better educated cohort — acts as a brake on the economy. By understanding and acting to remove barriers to women’s participation, we can develop a stronger and more resilient economy.