Why We Need an Equal Global Workforce
Why We Need an Equal Global Workforce
How Gender Inequality Strains Growth
Increasing women’s labor participation is not just about fairness, writes James Hairston. It’s good for business.
As we celebrate International Women’s Day every country in the world must address economic gender inequality. It’s true that women entered the labor force in increasing numbers over the past few decades, but barriers to full and equal economic participation persist in advanced and developing economies alike. Women in advanced economies are underrepresented in positions of leadership and high-growth industries, are paid less, and take on more family responsibilities than men. Developing countries must address the same issues while pursuing parity in education, reforming social-protection systems, and reducing high levels of informal employment among women.
It is clear there is still a lot of work to be done on gender parity when you consider that women held only 19.5 percent of all seats in national parliaments around the world last year, or that they earned an average of 16 percent less than men throughout the 34 Organisation for Economic Co-operation and Development member countries.
But fairness aside, there are clear economic reasons to pursue these policies. An economy grows faster when its tax base widens and labor-force participation increases. And greater female labor-force participation reduces poverty risks not just for individuals but also for families. Improving the lives and economic prospects of women has the power to transform families, communities, and countries.
“Women make up one-half of the brain power of the human capital that’s available to an economy,” said Saadia Zahidi, head of the World Economic Forum’s Women Leaders and Gender Parity program. “If that one-half is not fully integrated into a particular country’s development and into its development over time, it’s fairly evident that there would be a detrimental effect.”
This is why countries at every stage of development must work to eliminate barriers of workforce entry and advancement facing women. In corporate America, for instance, women are an estimated 53 percent of new hires. But the promotion ladder becomes increasingly “leaky” at every level, with women representing 26 percent of senior executives and only 2 to 3 percent of Fortune 500 CEOs, according to a recent McKinsey study.
Having largely closed the educational-attainment gap, employment policies in advanced economies must ensure that women and men are paid equally, are equally incented to take on family and child care responsibilities, and have equal opportunities to rise to the top of their fields in the public and private sectors.
Policymakers in the developing world must enact policies that facilitate a smooth transition from school to work for women, reduce occupational segregation, and help women transition from informal forms of employment to more stable and secure employment arrangements. Informal employment is still the main source of jobs for women in most developing countries but informal work is not regulated or protected by the state. Women are disproportionately involved in the most vulnerable forms of informal employment, exposing them to unsafe working conditions and putting basic rights at risk.
Access and control of capital is also an important issue. Women’s entrepreneurial activities are hampered by gender-specific constraints such as social conventions, legal and institutional impediments, unequal employment opportunities, work-life balance, and consequently restricted access to finance. In all countries women are still a minority of those that start new businesses. But entrepreneurship barriers are highest in the world’s least-developed regions where a significant proportion of married women have no say in how their own earnings are spent. Thirty-four percent of women in Malawi have no say in how their cash income is spent. That figure is 18 percent in India.
To be sure, there are complex cultural and institutional reasons for the gaps in economic participation between men and women around the world. But they are surmountable. For evidence, we need only look at the progress made in closing disparities in global health and education.
A 2011 World Economic Forum study of 135 countries—representing over 90 percent of the world’s population—showed that 96 percent of the gap in health outcomes between men and women and 93 percent of the gap in educational attainment have been closed worldwide. This represents significant progress over the course of the last several decades.
Shifting to economic indicators, however, the study found that only 59 percent of the economic outcomes gap—disparities in salaries, labor-force participation, and career advancement—has been closed between men and women.
“[E]conomic orders do not perpetuate themselves,” said Secretary of State Hillary Clinton at last September’s Asia-Pacific Economic Cooperation summit. “They are made and remade through countless decisions, small and large, by economic policymakers, political leaders, and business executives.”
Secretary Clinton is correct. It is time for world leaders to do away with an economic order that limits growth potential by putting half of the world’s population at a disadvantage in the workforce. Getting rid of outdated attitudes about who works and who cares for families is a good place to start. Reforming workforce policies and social protection-systems to put men and women on equal footing is even more important.
These should be top policy priorities during the other 364 days of the year and not just on International Women’s Day.
James Hairston is a Research Associate in Economic Policy at the Center for American Progress.
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