A UN report co-authored by Haas Prof. Laura Tyson offers a business case for inclusive economic growthBy Laura Tyson and Jeni Klugman
One year ago, the United Nations adopted the 17 Sustainable Development Goals (SDGs), one of which aims for true gender equality by 2030.
Empowering women and girls is morally right and economically smart. Several recent studies confirm that there are substantial economic and human-development costs associated with pervasive and significant gender gaps in economic opportunities and outcomes.
A recent report by the UN Secretary-General’s High-Level Panel, which we authored, identifies actions that governments, businesses, nongovernmental organizations, and multilateral development agencies can take now to close these gaps and accelerate progress toward achieving the SDGs’ overarching goal of inclusive economic growth. The report shows that greater gender equality in a country is associated with better education and health, higher per capita income, faster and more inclusive economic growth, and greater international competitiveness.
A widely cited McKinsey Global Institute study finds that closing gender gaps in labor-force participation rates, part-time versus full-time work, and the composition of employment would add 12–25 percent to global GDP by 2025. Other studies, using a variety of methodologies, find similar prospective gains, especially in low-fertility countries such as Japan, South Korea, and Germany, and in countries (for example, in the Persian Gulf) with low labor-force participation rates for women.
The business case for gender quality is also compelling, because women make substantial contributions to all parts of the value chain. The UN report identifies numerous benefits for companies that have pursued gender equality in employment, pay, and leadership, including the ability to attract, motivate, and retain talented workers and to address complex problems with more diverse teams. And several new studies find that companies with more women in top leadership and board positions have higher financial returns.
Hundreds of millions of women work informally without any protection of their rights either in law or in practice.
More than 90 percent of girls worldwide now finish primary school, and more women than men are now graduating from college in most regions. Yet, despite these gains, large gender gaps persist in all kinds of work—whether paid or unpaid, formal or informal, public or private, agricultural or entrepreneurial.
Globally, only 50 percent of women aged 15 and above are in paid employment, compared with about 75 percent of men. At the same time, women do about three times more unpaid work than men do. When women are paid, their jobs tend to reflect gender stereotypes and provide relatively low earnings, poor working conditions, and limited opportunities for career advancement.
Even when women perform the same or equal-value jobs as men, they are paid less, on average (although the size of the pay gap varies considerably around the world). Women are underrepresented in leadership positions in both business and government. And, compared to businesses owned by men, enterprises owned by women are smaller, employ fewer people, and are more concentrated in sectors with limited opportunities for profit and growth.
The UN report identifies four overarching and interconnected factors that impede gender equality in all forms of work, and at all levels of development: adverse social norms, discriminatory laws and insufficient legal protections, gender gaps in unpaid household and care work, and unequal access to digital, financial, and property assets.
Social norms determine economic outcomes for women in several ways: they shape women’s decisions about which occupational and educational opportunities to pursue; they affect the distribution of unpaid work within households and wages in paid care activities such as nursing and teaching, which employ a high proportion of women; and they reflect and reinforce discriminatory gender stereotypes and implicit biases that limit women’s pay and promotion prospects.
In many countries, adverse social norms are also codified in laws that limit women’s professional choices and their ability to obtain passports, travel outside their homes, start businesses, and own or inherit property. A recent International Monetary Fund analysis finds that this kind of legal discrimination is associated with lower levels of educational attainment for women, wider gender-pay gaps, and fewer women-owned businesses. Moreover, according to the World Bank, 103 countries do not legally mandate gender nondiscrimination in hiring, and 101 do not require equal remuneration for work of equal value in formal-sector jobs.
Hundreds of millions of women work informally, without any protection, either in law or in practice, of their social and labor rights. In India, for example, some 120 million women (around 95 percent of women in paid labor) work informally, as do around 12 million women in Mexico (around 60 percent of employed women). People working informally often have no voice to demand better workplace conditions or pay, and this is especially true for women, who also face sexual harassment, violence, and restrictions on their reproductive rights.
Large gender gaps in unpaid work and care are a major driver of diminished economic opportunities for women. The household work and care responsibilities of women are reflected in a sizable “motherhood pay penalty.” Around the world, mothers with dependent children earn, on average, less than women without dependent children, and less than fathers with similar household and employment characteristics. In fact, there is some evidence of a “fatherhood pay premium”—a positive relationship between a man’s wages and how many children he has.
Reducing and redistributing the time required for unpaid care responsibilities requires investments by both the private and public sectors—in infrastructure, affordable care services, early childhood education, family leave, and family-friendly workplaces. Such investments are beneficial not only for individuals and families, but also for businesses and the economy as a whole, because they increase women’s labor-force participation rates and productivity, create paid jobs in care services, and improve children’s school performance, boosting their future educational attainment levels and productivity.
Drawing on evidence from around the world, the UN report provides numerous examples of proven and possible measures to tackle the constraints on women’s economic opportunities. At the upcoming spring World Bank and IMF meetings, world leaders will be seeking to spur faster, more inclusive growth. They would do well to move gender equality to the top of the list.