A Review of “Pursuing Women’s Economic Empowerment – A study by the IMF”

Gender Equality is one of the 17 UN SDG’s, which provides a framework for eliminating poverty globally, ensuring that all human beings enjoy prosperity and peace and protecting planet Earth.

An economic perspective, why does Gender Equality matter?

Gender Equality promotes economic stability and boosts growth. Studies have suggested that gender inequality has not just macroeconomic but development-related implications as well. In recent studies by the IMF, a 30 percent boost in Pakistan’s GDP could materialize if we closed the gender gap. Gender equality will also lead to a greater equality in the overall income distribution for a country. Gender wage gaps are directly correlated to income inequality, higher gaps in the labor force participation between men and women which then ultimately results in inequality of earnings between the two genders. Higher income inequality can undermine the sustainability of growth for an economy. Additionally, women also work in the informal work sector (due to inequality of opportunities, unequal access to education, health and finance) where earnings are much lower. Evidence from Europe suggests that greater female representation in senior management positions could boost potential output because it will improve firm profitability and also support corporate investment. Lower gender inequality also contributes to other development outcomes such as improved health outcomes for women and children.

How far have we come on Gender Equality? Some Facts:

The report highlights that access to equal opportunities for both genders has increased, but sizeable gaps still remain for example in education. The last three decades have seen a steady decline in gender differences in school enrollment in all regions and trends are showing women in all regions except Africa are more likely to be enrolled in tertiary education than men.

Globally, health indicators have also improved substantially. There has been a significant decline in maternal mortality rate in Middle East and Central Asia whereas the Sub-Saharan Africa has the highest rate of mortality. Similarly, the adolescent fertility rates have declined in all regions from 1980-2014, with Sub-Saharan Africa having the highest average rate. High fertility rates have been shown to be correlated with lower economic activity for women. Due to the  high adolescent fertility rates, girls are unable to go to schools which increases gender gaps in education. Subsequently, later on these girls will not enter the labor market which can increase the gender gap in economic participation and wages.

Financial access has improved for both the genders – but even in this category, the gender gap is systematic and persistent. Globally, 72% of men have formal bank accounts whereas only 65% of women have formal bank accounts. Larger gaps can be seen in developing countries Legal restrictions also bar women from participating fully economically and politically. The Women, Business and Law report of 2018 stated that 2.7 billion women globally face legal restrictions when it comes to having access to jobs and choice of jobs as men. Husbands can prevent their wives from working in 18 countries and while in 59 countries no laws of sexual harassment exist at workplace.

The report pointed out that there have been mixed developments in equality of outcomes; as globally in the labor market there have been reductions in gender inequalities. Good progress has been made in increasing female participation rates in corporate leadership and political positions worldwide as well decreasing the gender wage gaps in many countries. However, the female labor force participation rate varies worldwide, and even where the participation rate is higher for women the quality of jobs differs for both the genders. In most countries, women are only involved in the informal sector which does not  pay well and exposes them to vulnerable conditions. The World Economic Forum (2016) concluded that women’s earnings in the informal sector are about half of those for women on average. However, in some countries such as Libya in sub-Saharan Africa, the female to male estimated earnings have reached parity.

Policies to foster women’s economic participation

The room to implement policies that will foster and enhance women’s participations in economic activities is large. The need to work for women varies across different regions and countries because of development needs and income but even after accounting for personal preferences towards working, policies can play a pivotal role for women’s employment decisions. In general, low income and developing countries can benefit the most from policies that look to invest in education, health, increasing financial inclusion, promoting equal rights for women and infrastructure. To ensure there is greater protection for women in the informal sector, unconditional cash transfers can play an important role.

Studies and empirical evidence has shown that educational attainment correlates positively with higher female participation in the workforce. Studies have been done in Nigeria and Pakistan to see if conditional cash transfers can increase female employment rates. Furthermore, in Turkey only 17% of women who were illiterate, participated in the work force but the participation rate exceeded about 70% amongst those women that held graduate degrees. These studies make a good case for an increase in education levels for women as it directly correlates to more female economic participation.

Similarly, investing in adequate healthcare for women especially in developing countries can go a significant way in increasing their economic opportunities.

Developing countries which have invested in infrastructure by making available safe transportation, building better roads and mobile networks can aid women in accessing work at different levels and regions. A great example of this is that of Mexico which introduced female only public transportation buses so that women could travel freely and safely. Better access to infrastructure in some instances can also lead to a better performance in other social indicators for example in India, providing sanitation facilities can help protect girls from gender based violence and this can lead to an increase in school attendance.

Additionally, greater and equal access to finance including digital financial services could have an impact on labor productivity and can then lead to more equal incomes across countries.

Revising laws against discrimination, equal property rights and female inheritance legislation and promoting equal rights for women can have an upward effect on labor participation rate for women. Countries such as Namibia, Malawi and Peru reduced gender discrimination to revise their legal frameworks and in the decade following these changes, these countries experienced extensive increases in female labor participation rates.

Policies that invest in elderly and child care and parental leave will provide flexibility for working women as the responsibility of taking care of children and elderly mainly falls on their shoulders. If high quality and affordable child and elderly care is provided it will enable women to return to the work force much sooner than before. For example, in Mexico, one third of the women aged between 25-44 spend about 40 hours per week taking care of children, disabled, elderly and dependent individuals. Offering parental leave schemes can help women keep a balance between work and family life. In developed economies, 26 weeks of paid parental leave is provided and all of the OECD countries offer paid parental leave except for the US and Korea.

Policies that offer both maternal and paternal leave can also help shift gender norms as this enables fathers to take as much responsibility of caring for their children as mothers. Sweden has employed a ‘use-it-or-lose-it’ parental leave allowance which promotes equal sharing of leave. Policies that cater to flexible work arrangements like park time work benefit both men and women as they can balance their paid work and family commitments. Due to the traditional division of labor, these policies can be more important to women as it  allows them to return to and remain in the work force. . Removing tax burdens on female secondary earners by replacing family taxation with individual taxation can improve aggregate labor market outcomes.

The report concludes that achieving gender equality needs to be a coordinated effort between the various levels of government and the non-governmental actors as well. Canada’s alternative federal budget is a good example of how the civil society and its institutions are working in unity to ensure a gender perspective in fiscal policies. In Germany and Spain, gender budgeting initiatives are allowed to be discussed at the local level. The federal government in Mexico disseminated resources to be invested in women’s economic and health empowerment programs and locally the Mexico City initiated a program for safe transportation for women. Gender inequality persists worldwide and can take different forms. It is imperative for economic growth to enhance women empowerment. Gender equality needs to be mainstreamed in policies as leaders have now come to see its contribution to promoting sustainable development.