W20 to mind the (gender) gap

Removing legal barriers will help lure more women into the labour force, says the IMF's Christine Lagarde. (Eric Vidal, Reuters)

Removing legal barriers will help lure more women into the labour force, says the IMF's Christine Lagarde. (Eric Vidal, Reuters)

A move to include women in the global economy is not a matter of charity but a necessity if countries are to reach their growth aspirations.

The compelling economic basis for including more women has convinced global leaders to support the formation of the Women-20 (W20) – a group formed to support the G20 nations in fostering greater female participation in their economies.

The W20 was launched this month in Ankara, the administrative capital of Turkey, which currently holds the presidency of the G20.

At the G20 summit last November, leaders pledged to reduce the gap in women’s labour force participation by 25% by 2025. If achieved, it would add an estimated 100?million new jobs to the global economy.

Female participation in the labour force is 56% in G20 countries, compared with 86% for men. Data from the South Africa’s department of women shows that the gap between female and male participation in the local economy is 26%.

The G20 is a consensus-based platform where leaders of the world’s most strategically important economies, including South Africa, meet to discuss policy direction.
Together, the group accounts for 85% of global economic output.

Speaking at the launch of the W20 in Ankara, International Monetary Fund (IMF) managing director Christine Lagarde said: “Women’s empowerment is not just a fundamentally moral cause. It is also an absolute economic no-brainer.”

According to a 2014 Goldman Sachs report, a broad range of economic research shows that investing in women and girls is one of the highest return-on-investment opportunities available in the developing world.

“Our own research has demonstrated that bringing more women into the labour force can provide a substantial boost to per capita income and gross domestic product [GDP] growth,” the report says.

“For example, narrowing the gender gap in employment in the Brics [Brazil, Russia, India, China and South Africa] and N-11 [the “Next 11” countries with the potential of becoming major economies] could boost GDP growth trends by around 0.8% per year on average and push incomes per capita more than 10% higher than our baseline projections for 2030.”

Estimates from the IMF show that if the number of female workers were to increase to the same level as the number of men, GDP in the United States would expand by 5%, by 9% in Japan and by 27% in India.

But governments have a long road ahead in shaping policy to support further female participation in the workforce.

Over the course of a woman’s life, there are numerous opportunities to support her empowerment and the three critical junctures, as listed by Lagarde, are education, employment and family.

“At an individual level, for instance, we know that one extra year of primary school boosts a woman’s earning potential by 10% to 20%. One extra year of secondary school boosts her earning potential by 25%,” she said.

Although having a good education helps women enter the workforce, it is by no means a guarantee of employment.

According to a 2014 report prepared by the World Bank, the Organisation for Economic Co-operation and Development, the International Labour Organisation and the IMF for the G20, over the years women’s educational attainment across the G20 nations has advanced to a degree that gender gaps are now generally reversed.

Among 15-year-old pupils, girls outperform boys in reading competency and lag behind in mathematics, but to a far lesser extent than boys in reading.

In addition, 25- to 34-year-old women are more likely to have completed a tertiary degree than men in the same age group.

Gender differences persist in the chosen fields of study and are much larger than expected on the basis of student performance, suggesting that attitudes play a key role in shaping education choices, the report said.

But a number of countries with highly educated women still have low levels of female labour force participation – including Japan.

“Japanese women who are currently in their early 30s typically have more than 14 years of schooling behind them – second only to women from New Zealand. Moreover, Japanese women on average have completed more years of education than their male counterparts,” Lagarde said.

“Despite this, the gender gap in labour force participation in Japan stands at 25 percentage points – compared to just over 10 percentage points on average in major advanced economies.”

Recent IMF research found 90% of countries have at least one important legal restriction that makes it difficult for women to work. In half the countries, when gender equity was constitutionally granted, female labour force participation increased by at least 5% over the following five years.

Removing legal barriers – such as those preventing women from opening a bank account or having equal property rights – is vital in reaching targets, Lagarde said.

Tax reform is also needed in many countries where the tax system discourages secondary earners – often married women – from working. Replacing family taxation with individual taxation can reduce marginal taxes on these secondary earners and encourage more women to work, Lagarde suggested.

Ensuring women are financially empowered is crucial to delivering on the 2025 objective. But unequal access to finance remains a major hurdle. In emerging and developing countries, IMF data states, 70% of female-owned small and medium-sized enterprises are either “unserved” or “underserved” by financial institutions.

The benefits of supporting women-run businesses could be marked. According to a 2009 Ernst & Young report, such enterprises grow faster than those owned by men. And, according to W20 president Gülden Türktan, women-owned businesses tend to be risk averse and have shown resilience to economic downturns.

When it comes to family, policymakers and employers can help provide affordable, high-quality childcare, Lagarde said. “IMF research suggests that cutting the cost of childcare by half could increase the number of young mothers in the labour market by 10%.”

Paid parental leave helps to maintain a woman’s connection to the labour market, she said.

Türktan said this is the first time a target has been set for women’s inclusion in the job market.

“That which gets measured gets done,” she said. “This is not a very difficult target … we very firmly believe this is possible.”

The establishment of the new W20 group means that global leaders will be held accountable for their commitments to narrow the workforce gender gap, said Ayse Sinirlioglu, Turkey’s deputy undersecretary for economic affairs.

Speaking at the launch of the W20, Turkish Prime Minister Ahmet Davutoglu said its formation indicates a significant shift in mentality.

“Women are seen as an affected side of history. Men are seen as the only ones who run history, who take decisions … Women are those paying the price for decisions taken by men … With this initiative we want to make a radical change,” he said.

“Women should not be an affected object of history, but should be the leading power and leading subject of history,” said Davutoglu.

“History will see, in the coming decades, that this was the right decision. Without women’s participation, there cannot be a future of the global economy.”

In the end, action is what matters, Lagarde said. “Beware of nice words; beware of the silver tongue.

There can be sweet promises; there can be general commitments. What matters is what is delivered.”

Lisa Steyn was hosted by the G20 presidency and Turkish Airlines.

Lisa Steyn

Lisa Steyn

Lisa Steyn is a business reporter at the Mail & Guardian. She holds a master's degree in journalism and media studies from Wits University. Her areas of interest range from energy and mining to financial services and telecommunication. When she is not poring over annual reports, Lisa can usually be found pottering about the kitchen. Read more from Lisa Steyn