Women can boost economic growth
IN MANY countries, public debate about gender equality focuses mainly on women’s access to top positions and high-powered career opportunities. But the “glass ceiling” is only a small part of the issue. The broader question is whether women have the same opportunities as men to participate in labour markets in the first place. In other words, are women empowered to contribute fully to global economic growth and prosperity?
Unfortunately, the International Monetary Fund’s (IMF’s) latest study by its staff, “Women, Work, and the Economy”, shows that progress towards levelling the playing field for women has stalled. This is bad news for everyone, because it translates into lower economic growth — as much as 27% of per-capita gross domestic product (GDP) in some countries.
Around the world, the number of women in the workforce remains far below that of men; only about half of working-age women are employed. Women account for most unpaid work, and when they are paid, they are overrepresented in the informal sector and among the poor. They continue to be paid less than men for the same jobs. And in many countries, distortions and discrimination in the labour market restrict women’s chances of equal pay and rising to senior positions.
The potential gains from a larger female workforce are striking. In Egypt, for example, if the number of female workers were raised to the same level as that of men, the country’s GDP could grow by 34%. In the United Arab Emirates, GDP would expand by 12%, in Japan by 9%, and in the US by 5%. According to a recent study based on data from the International Labour Organisation, of the 865-million women worldwide who could contribute more fully to their economies, 812-million live in emerging and developing countries.
Raising women’s labour-market participation rate boosts economic performance in a number of ways. For example, higher incomes for women lead to higher household spending on educating girls — a key prerequisite for faster long-term growth. Employment of women on an equal basis with men provides companies with a larger talent pool, potentially increasing creativity, innovation, and productivity. And, in advanced countries, a larger female labour force can help to counteract the effect of a shrinking workforce and mitigate the costs of an ageing population.
So what underlies the persistence of gaping inequality and stalled progress? Legal, regulatory and social discrimination against women in many countries still prevents them from seeking paid work in the formal sector. As a result, women dominate the informal economy, where jobs are often transient and earnings are low. In addition, tax systems and socialwelfare programmes in many countries are designed in ways that discourage women from working.
Against this background, government tax and spending policies, as well as labour-market regulation, should be reformed to help boost female employment. For example, taxing individual rather than family income would encourage women to seek employment. Linking social-welfare benefits to participation in the workforce, training, or active labourmarket programmes also can help, as can affordable, high-quality childcare and greater opportunities for paternity and maternity leave. In Brazil, for example, the share of women in the workforce has risen sharply over the past 20 years, from about 45% to almost 60%, owing in part to family-friendly policies.
Women benefit when flexible work arrangements are introduced and the barriers between part-time and full-time work contracts are lowered, as the Netherlands has successfully done. In developing countries, accessible water and better transportation systems in rural areas can help women manage their time better. Establishing and upholding equal property and inheritance rights can increase women’s access to credit and other productive resources, and creating greater awareness of legal rights in general will help reduce discrimination.
We urge policymakers to take action and implement policies aimed at removing the obstacles that block women’s participation in the workforce.
Especially now, with the growth outlook uncertain in much of the world, policies that encourage more women to enter the workforce certainly can help. Women are ready, willing and able. Take my word for it.