A WORKFORCE TO RECKON WITH
Women are valuable resource for economic development.
MOST societies in the world are patriarchal, and Malaysia is no exception. One need look no further than the top echelons of leadership, be it public or private sector.
At the risk of over-generalising, it has been and still is a man’s world. Men tend to be better educated, have higher social status and earn more. This may or may not be biologically based but social stereotypes and expectations of gender roles certainly play a big part in perpetuating how societies are organised.
That the gap remains wide is clear from the World Economic Forum’s latest Global Gender Gap Report released two weeks ago.
Built on measurements of economic participation and opportunity, educational attainment, health and survival and political empowerment, the Global Gender Gap Index shows very slow progress towards gender equality, which on current policies could take another 83 years.
While things are improving, this has not been without challenges and backsliding. Inequality remains wide in the economic and political sphere. As a region, East Asia and the Pacific is making some of the slowest progress.
For Malaysia specifically, it’s a tale of two sides. In education and health there is virtually no gender gap but economic participation is highly unequal. On the other hand, political participation is almost exclusively male.
Taken together, Malaysia ranks 106th out of the 144 countries covered, just barely above the lowest quartile.
The gender gap exists in Employees Provident Fund member data as well. On average, Malaysian women earn 20% less than men do and roughly the same differential exists for total EPF savings. At least 54% of EPF members are men, indicating a higher proportion of men in formal employment.
Breaking it down by salary decile, wage inequality between men and women is lowest at the very bottom (3.4%), gradually rising to 17.1% at the top decile.
Wage inequality is the highest at the very top with a salary differential of over 30% for the top 1% of salary earners, underscoring the dominance of men in leadership positions. At the industry level, wage gaps are large in mining, construction and manufacturing; by contrast, there is virtually no gender gap in the government or communications sector.
Malaysia’s labour force statistics show stark differences in economic participation.
For 2015, 80.6% of men aged 15-64 were in the labour force, versus 54.1% of women. For the 45-54 age group when an individual’s earnings capacity is at its peak, participation rates were 94.8% men and 68.6% women.
But things are changing, not least because of the changing nature of economic activity. In an industrial age where physical strength still mattered, men’s role as primary workers and leaders became entrenched. As work has shifted to encompass more cerebral and social pursuits, that physical advantage has eroded. Why is gender equality important? Apart from being socially desirable, there are strong economic arguments for improving women’s participation in the economic and political spheres. Research shows that women are better at finance, including in the heretofore testosterone-soaked environment of equity and bond trading floors.
More generally, adding women to the workforce boosts labour supply, overcoming the downdraft from lower fertility and declining population growth. The fact that labour participation rates are lower for women, and generally fall during optimum child-bearing years, suggests economic growth (and household incomes) could be boosted by bringing in and
Research shows that women are better at finance, including in the heretofore testosterone-soaked environment of equity and bond trading floors.
retaining more women in the workforce.
That strategy has been a linchpin of Abenomics, Japan’s attempt at fighting off its own demographic challenges. The strategy met with some success as the participation rate hit a record 64% in 2014, a 6.2 point increase in 10 years. Imagine how much poorer Japan’s growth would have been without that influx of labour (and correspondingly higher incomes).
Another reason why ensuring job and wage equality for women is important is tertiary enrolment rates. As of 2014, women outnumber men in our universities by a ratio of 1.32:1. Intake and graduation levels are even higher, with the latter at a ratio of over 1.50:1. This phenomenon is mirrored in many countries across the globe.
It’s a little dangerous for an economist to make predictions, especially sociological ones, but here’s what I think the impact will be:
> Leaving things as they are effectively reduces the return on our investment in tertiary education. Economic growth will be the poorer for it.
> The principle of assortative mating, where people have been found to tend to marry within their own social class, implies that there will be a reduction in eligible males relative to females unless there is a significant change in how society views gender roles. In other words, marriage rates will drop and so will fertility, while divorce rates are likely to rise.
> In the context of a patriarchal society, this imbalance in gender education levels is also likely to result in increased violence against women, as “disenfranchised” men seek to retain their traditional dominance.
Eventually, society should ideally evolve to a new balance in terms of gender roles, but in the meantime, what can or should be done about gender inequality?
Malaysia already mandates a 30% quota for new members of corporate boards. This has some empirical justification, as the presence of role models improves the willingness of women to take on bigger economic roles.
More generally, we need to strongly enforce laws against gender discrimination in the workplace, including sexual harassment. We also need to provide better and more affordable childcare facilities, including encouraging corporate sponsored facilities as well as spending on publicly run facilities.
One IMF study found formal female employment (as opposed to temp work) raised fertility levels. Cash assistance, on the other hand, was found to increase informal female employment. There should also be some thought given to reintegrating into the workforce mothers who took time off to raise a family.
Neglecting gender equality would be wasting a valuable resource for our economic development. Nurhisham Hussein heads the Economics and Capital Markets Department of the Employees Provident Fund. This is the fifth of a six-part fortnightly series.