More Women at Work Boost Economies


The gender gap has for long been considered purely as a social and political argument. Recent studies by McKinsey & Company have, however, demonstrated that closing the gender gap would add up $28 trillion to the global GDP by 2025. This is roughly the size of US and Chinese economies combined. Maybe it is about time we start viewing gender disparity from the perspective of economy.

One may say the gender gap is an issue of the past. The reality speaks differently. Even in today’s world, 40 out of 95 countries have high or extremely high gender inequality. Women, who in fact are half of the world’s working-age population, generate only 37 percent of the world’s GDP.  Their lower representation in paid work largely contrasts with their high participation in unpaid work. Still today, women represent 75 percent of global unpaid work.

So why is the impact from closing the gender gap so large? First, women are pretty much underrepresented in the labor force. They account for only 54 percent of potential incremental GDP. Secondly, women usually tend to work fewer hours than men in labor-force, as many of them engage in part-time jobs. The underlying reasons however vary greatly from country to country. Lastly, women are disproportionately represented in lower-productivity sectors such as agriculture and, underrepresented in high-productivity sectors such as business services.  According to the research, boosting female employment in the higher productivity sectors would add another 23 percent of the total opportunity.

While McKinsey has analyzed the net worth of the gender gap, The World Economic Forum has been monitoring how well each country performs in terms of gender equality for the past 10 years. According to their results, the Nordic countries have some of the smallest gender gaps, however even their progress towards parity has been uneven. Sweden for instance had one of the narrowest gender gaps in the world, yet it was only able to close it by a mere 1% since 2006. On the other hand, Iceland has taken on the lead by making 10 percent progress to the top places, having closed its gender gap at 88 percent in 2015. Analysts estimate that if it were to make similar progress in the next 10 year it will be among the few countries in position to close the gender gap fully.

The progress, however, has not come entirely from the Northern Hemisphere. Iceland’s strong progress could be matched to that of Nicaragua, Bolivia and Nepal. Among these three, Nicaragua leads the way. It managed to close its political gap by 32 percent in the past ten years and its economic gender gap by 16 percent.  Many have been surprised by Nicaragua’s unexpected position just behind the Scandinavian countries.  Seemingly a major reason for Nicaragua’s success is the large participation of women in the political sphere. In fact, women hold more than half of ministerial seats. Another indicator contributing to Nicaragua’s success were the high rates of women enrollment in higher education. Nicaragua is one of the 99 countries, where women are equally or more likely to enroll in university. This certainly boosts the overall ranking, however the reality remains that for most Nicaraguan women, university education remains out of reach.

Nepal is another country, which despite having the 5th largest gender gap in 2005, has now managed to close its gender gap by an incredible 13 percent! These are attributable mainly to significant progress in areas of political empowerment such as followed by sex rate ratio and health life expectancy.  A gender gap expert Meena Poudel, however isn’t that positive. She has stated that despite the past improvements, the country still needs to narrow down its gender gap significantly. According to Poudel, implementation of all the international laws regarding women’s right and their ratification as part of national policy is crucial to Nepal’s success.

The question is – what can businessmen and policymakers learn from these examples? Governments usually seem to gear towards measures such as family leave, childcare assistance, taxation systems, equality at work and quotas.

Research shows that maternity or paternity leave, or any other type of additional leave are strongly associated with women’s participation in the economy in many parts of the world. However, policymakers should remain rational about not exploiting the measure more than needed. Evidence shows that when the available parental leave exceeds two years, women’s overall participation in the economy tends to be lower.

In most countries, women tend to bear the majority of the caregiving responsibilities. A well-established daycare system can therefore be an investment, which allows women to participate and advance in employment. As a result, the efficiency of labor markets improves. A majority of world’s economies (66.7 percent) in fact already have public daycare assistance with government allowance or subvention.

A rather controversial way of dealing with the gender gap issue is taxation. Tax legislation may contain potentially discriminatory provisions that treat men and women differently. Altering the disposable income of men and women can have significant effects on economic choices within families, however many have argued that when striving for equality, unequal tax measures should be left behind.

Both governments and businesses have embraced the equality and quota measures. These are aimed towards preventing a gender-biased discrimination in society and create an environment of support for women, through both obligatory and voluntary quotas. As a matter of fact, a vast majority of the countries surveyed by the World Economic Forum (92 percent) already have a similar legislation in place.

Oftentimes, however, the trigger comes from the companies themselves. Numerous have engaged in leadership in providing work-life balance and supporting environment. As the company image becomes more and more important, businesses have intended to act beyond the government imposed measures of tariffs and quotas. They are increasingly providing support, training and mentorship for both men and women in order to enhance and promote the equality at the workplace. With increasing worldwide presence of multinationals and ongoing globalization, there is now even more hope for the gender gap potential to transform economies, society and demography of many countries.


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