The International Monetary Fund (IMF) has said that gender inclusion will not only support economic growth, but can reduce income inequality as well.
The IMF Managing Director, Christine Lagarde, said this in a speech titled: “The Business Case for Women’s Empowerment,” she delivered at a summit in Peru.
According to her, over the past few decades, women all over the world have pushed the boundaries on educational attainment, economic participation, and even political representation.
According to the World Economic Forum’s latest Global Gender Gap Report, Latin America is the region with the largest absolute improvement over the last ten years, followed by Asia and the Pacific region. So in some respect, APEC is leading the way. And yet, this great progress has not been enough to close the gender gap.
Globally, only 55 percent of women have the opportunity to participate in the labor force, compared with 80 percent for men, the IMF boss stated.
Furthermore, she disclosed that women still earn about 50 per cent less than men for the same type of work, and they represent only 20 percent of parliamentarians across the world.
“Clearly, in many places, gender equality remains an elusive goal. The moral case for gender equity is clear. So is the economic case. As countries around the world struggle to grow their economies more quickly and to reduce inequality, tapping into the huge potential of women can be a game changer. I would even go further to say it is a no brainer.
“The work that we have done at the IMF clearly demonstrates that there is a compelling business case for women’s empowerment. And everyone – government, the private sector, and international financial institutions – has an important role to play,” Lagarde added.
While arguing that women empowerment remains a game changer, she said she had said repeatedly that world growth has been too low, for too long, and benefiting too few.
Some countries are facing transitions, such as adjusting to low oil prices; others are contending with the immutable force of population aging and its impact on the labor force and productivity growth, Lagarde said.
In addition, she said women’s empowerment can boost growth and reduce inequality, saying “if we want everyone to have a bigger piece of the pie, the pie has to grow.”
“Our research has shown that increasing women’s labor force participation can deliver significant macroeconomic gains. For example, if Latin American countries raised their female labor participation to the average of the Nordic countries (about 60 percent), GDP per capita could be up to 10 percent higher.
“Gender inclusion not only supports growth; it can reduce income inequality as well. Again, our research has shown that moving from a situation of perfect gender inequality to perfect gender equality is equivalent to reducing income inequality from the levels prevailing in Venezuela to those in Sweden.
“So again, tapping into women’s potential will not only make the pie bigger, but more evenly shared as well. A second reason why women’s empowerment is a game-changer: it can help mitigate the impact of demographics. Many advanced countries, and some emerging economies as well, struggle to raise growth potential in the face of an aging population and shrinking labor force. Women can be part of the solution.
“In Japan, for example, raising female labor force participation to the levels of Northern Europe could boost GDP growth by up to 0.4 percentage points in the transition years. With growth rates in Japan currently hovering around 0.5 percent in this year and next, the economic gains can be massive. The impact of employing more highly educated women on overall productivity growth could be even more significant – by up to 0.4 percentage points per year in Canada,” she said.
Furthermore, the IMF boss said bringing more women into the labor force would expand the pool of talent in the labor market – and boost productivity and growth.
“Many commodity exporters have been hit hard by the decline in oil prices – which is the case for several countries in APEC, and for Latin America more generally. They are now faced with the difficult task of diversifying their economies to generate new drivers of growth.
“Women’s inclusion can help in this case as well. In low-income and developing countries, moving from perfect gender inequality to perfect equality is equivalent to moving from the least diversified economy to one with average export diversification,” she said.