The economic benefits of gender parity

By Anu Madgavkar, Kweilin Elingrud, & Mekala Krishnan

If women were to participate in the economy identically to men, they could add as much as $28 trillion or 26 percent to annual global GDP in 2025, write Anu Madgavkar, Kweilin Elingrud, & Mekala Krishnan in the Stanford Social Innovation Review.

The idea that persistent gender inequality has very large economic costs is increasingly accepted. In fact, new research from the McKinsey Global Institute (MGI) finds that if women were to participate in the economy identically to men, they could add as much as $28 trillion or 26 percent to annual global GDP in 2025. This is roughly the combined size of the economies of the United States and China today.

Even an alternative “best-in-region” scenario—in which countries match the progress of the neighboring country that has made most headway in closing its gender gap—would make a great difference. Such a scenario would add as much as $12 trillion in annual GDP in 2025. That’s equivalent to today’s combined GDP of Japan, Germany, and the United Kingdom. In that scenario, female workers would contribute about double the GDP growth they are currently on track to achieve.

So it follows that taking bold action to increase the economic participation of women is critical for long-term prosperity. What is perhaps less appreciated, though, is the fact that we will achieve economic gender equality only if we also tackle social gender inequality. Women need to be equal partners in society in order for them to be equal participants in work.

Bridging gaps in society and the economy

MGI’s new gender parity score (GPS) illuminates the issue. The GPS uses 15 economic and social indicators of gender equality to measure the progress that 95 countries—home to 93 percent of the world’s female population and generating 97 percent of the global GDP—have made toward gender parity. Using the GPS, MGI has for the first time established a strong link between social and economic equality, as well as the importance of shifting attitudes about the role of women. Of the countries in the study, none that demonstrates high equality on social indicators shows low equality on indicators related to work.

How can the social drivers of inequality accelerate progress toward gender parity at work? We believe that taking strong action on four fronts—education; legal rights; access to financial services and digital technologies; and unpaid work such as child care, caring for the elderly, cooking, and cleaning—would be particularly effective. The four fronts are distinct, but progress on each benefits all.

  • Education. Narrow gender gaps in educational attainment not only help to boost female participation in the workforce but also are strongly correlated with the status of girls and women in the family, and linked with lower prevalence of child marriage, violent abuse by an intimate partner, and improved maternal and reproductive health. Women who have parity in education are more likely to share unpaid work with men more equitably, to work in professional and technical occupations, and to assume leadership roles.
  • Legal protection. At a very basic level, legal rights are linked to the increasing number of women participating in the labor force. But legal provisions that outline and guarantee the rights of women as full members of society also have a beneficial impact on several social indicators including violence against women, child marriage, unmet needs for family planning, and education.
  • Financial and digital inclusion. There is a strong correlation between access to financial services and digital technology with the presence of women in leadership roles, their participation in the labor force, and the time they spend doing unpaid work. Despite rapid digitization around the world, however, some 4.4 billion people are still offline, 52 percent of whom are women.
  • Unpaid work. The lower representation of women in paid work is mirrored by their higher representation in unpaid work. Women do an average of 75 percent of the world’s total unpaid work, including the vital tasks that keep households functioning. However, this contribution is not counted in traditional measures of GDP. Time spent on unpaid work contributes to overall welfare, but could be streamlined through better provision of infrastructure and public services, converted into market-oriented jobs, or more equitably shared between household members. Doing these things would boost female labor-force participation, the hours spent by women on paid work, and their ability to undertake more demanding roles in the workplace.

Who can do what?

Governments are responsible for many of the interventions required to close the global gender gap. For instance, they can and should remove legal barriers to women entering the workforce, and provide basic gender-friendly services (including safe transport, sanitation facilities for girls in schools, and special courts to handle gender-based violence cases).

But companies can also do much more than they have done to date—both within their own operations and among suppliers, distributors, consumers, and communities. Companies should think of their efforts to achieve gender parity not as a cost but as an opportunity. Gender initiatives can deliver significant benefits for organizations in a myriad of ways. They can expand and enhance a company’s talent pool, improve the organization’s understanding of its female customers, and boost the bottom line. There is a considerable and growing body of evidence suggesting a link between the presence of women in executive positions and higher corporate returns.

What actions can companies take? For one, they can develop women’s skills and capabilities through vocational training, as Unilever’s Shakti program has done. The Shakti program has trained more than 70,000 rural women in India to be micro entrepreneurs and sell personal care products, extending the Unilever brand to rural locations in the process.

For another, they can use their business capabilities or products to help create change outside their organizations. Telecom firms Vodafone and Ericsson, for example, have initiatives in place that help educate women, boost their reading skills, and connect them quickly to emergency services if they are subjected to violence.

Companies can also be purposeful about changing attitudes. Verizon’s #inspirehermind campaign, for example, uses digital and social media to try to encourage girls to enter math and science fields, along with partnerships and sponsorships of computer-science training and mentoring sessions for girls in school. Procter & Gamble’s #ShareTheLoad television campaign in India draws attention to the societal belief that laundry is exclusively a woman’s job.

The potential of collaborative efforts

Not surprisingly, some of the most effective programs targeting gender inequality to date involve both public and private-sector players. Consider the Bell Bajao—Ring the Bell—campaign in India, which uses public-service announcements on TV and radio, community-based programs, and even content in popular soap operas to increase awareness of domestic violence. Breakthrough, an NGO operating in India and the United States, is involved in this initiative, as are the multinational Ogilvy & Mather, India’s Ministry of Women and Child Development, and the UN Trust Fund to End Violence against Women.

Meanwhile, in Germany, a group of 11 private sector, government, media, and science and technology organizations (including McKinsey) joined together in an initiative called Chefsache (meaning “CEO priority”), which was launched in July 2015 under the sponsorship of German Chancellor Angela Merkel. The aim is to strengthen awareness of deeply rooted gender stereotypes, and how they influence communication and behavior in the world of work. The initiative will run training programs and events to help business leaders build the skills required to recognize and reshape these perceptions.

Achieving parity between women and men offers very significant economic as well as human and social benefits. Yet in virtually every country in the world, women still fall short of economic and social parity with men. The case for new coalitions between governments, the social sector, and companies that push more aggressive change is compelling.

This article originally ran in SSIR.org

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