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November 10, 2015

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Home » Opinion » Foreign Views

Gender inequality costly to world economy

By Laura Tyson and Anu Madgavkar | November 10, 2015, Tuesday | Print Edition

THE high cost of gender inequality has been documented extensively. But a new study by the McKinsey Global Institute estimates that it is even higher than previously thought.

The McKinsey study used 15 indicators, including common measurements of economic equality, like wages and labor-force participation rates, as well as metrics for social, political, and legal equality, to assign “gender parity scores” to 95 countries, accounting for 97 percent of global GDP and 93 percent of the world’s women.

Higher gender-parity scores strongly correlate with higher levels of development, as measured by GDP per capita and the degree of urbanization.

The most developed regions of Europe and North America are closest to gender parity, while the still-developing region of South Asia has the furthest to go. Within regions, however, there are significant disparities, owing partly to differences in political representation and policy priorities.

One conclusion of the McKinsey study is that gender inequality remains significant and multi-dimensional. Forty of the countries studied still exhibit high or very high levels of gender inequality in most aspects of work — especially labor-force participation rates, wages, leadership positions and unpaid care work — as well as in legal protections, political representation and violence against women.

The costs of this inequality are substantial. If women matched men in terms of work — not only participating in the labor force at the same rate, but also working as many hours and in the same sectors — global GDP could increase by an estimated US$28 trillion, or 26 percent, by 2025. That is like adding another US and China to the world economy.

Closing the gender gap in labor-force participation would deliver 54 percent of those gains; aligning rates of part-time work would provide another 23 percent; and shifting women into higher-productivity sectors to match the employment pattern of men would account for the rest.

Given recent rates of progress, it is unrealistic to expect full gender parity in the world of work in the foreseeable future. But countries could match gains in the best-performing economy in their region. That would add up to US$12 trillion to global GDP by 2025, boosting GDP by 16 percent in India and about 10 percent in North America and Europe.

Focus on four areas

To achieve this, the McKinsey study recommends that governments, non-profits, and businesses emphasize progress in four areas: education, legal rights, access to financial and digital services, and unpaid care work.

Smaller differences in educational attainment between men and women are strongly correlated with higher status for girls and women, which helps to reduce the incidence of sex-selective abortions, child marriage and violence from an intimate partner.

To reinforce such progress, legal provisions guaranteeing the rights of women as full members of society should be introduced or expanded. Improved access to financial services, mobile phones, and digital technology is linked to higher rates of female labor-force participation, including in leadership roles, and decreased time spent doing unpaid care work.

Unpaid care work, which includes the vital tasks that keep households functioning, such as looking after children and the elderly, cooking, and cleaning, obviously amounts to a major hurdle to more active participation in the economy.

If men shared such responsibilities more equitably, businesses adopted more flexible and “care-friendly” work schedules, and governments provided more support for childcare and other family-care functions, female labor-force participation rates could rise significantly.

It is certainly in the interest of companies to do more to support gender equality, which expands the pool of talent from which they can select employees and managers. Moreover, more women mean more insight into the mentality of female customers. And, perhaps most important to a company, a growing body of evidence suggests that the presence of women in executive and board positions can increase corporate returns.

One of the highest barriers to gender parity, however, may be deeply held beliefs and attitudes. As Anne-Marie Slaughter emphasizes in her recent book, both men and women undervalue care work relative to paid work outside the home. Likewise, surveys indicate that sizeable shares of men and women worldwide continue to believe that children suffer when their mothers work.

And numerous studies document continued implicit biases against women in hiring and promotion processes, triggering growing interest in Silicon Valley startups that use technology to mitigate such biases throughout their human-resources operations.

 

Laura Tyson, a former chair of the US President’s Council of Economic Advisers, is a professor at the Haas School of Business at the University of California, Berkeley. Anu Madgavkar is a senior fellow at the McKinsey Global Institute. Copyright: Project Syndicate, 2015. www.project-syndicate.org. Shanghai Daily condensed the article.

Foreign Views


 

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