Closing the gender gap in Central and Eastern Europe

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Since the transition to a market economy three decades ago, Central and Eastern Europe (CEE) has enjoyed what many have called a golden age of growth. However, the factors propelling that growth—such as labor-cost advantages and strong traditional industries—are losing momentum, and the region needs to find new sources of competitiveness.

Our recent study Win-win: How empowering women can benefit Central and Eastern Europe explores one promising source of growth: closing the gender gap in the workplace. Women account for 52 percent of the overall population in the seven CEE countries we analyzed and more than 60 percent of college graduates. Yet they make up just 45 percent of the labor force.

Our research found that stepping up efforts to close the gender gap in CEE could unlock as much as €146 billion in annual GDP by 2030 (Exhibit 1)—an 8 percent increase over a business-as-usual scenario. This could put the region squarely back on a path to dynamic growth following the COVID-19 pandemic.

By tapping into women’s potential, the region could add €146 billion a year to GDP by 2030.

The report examines the potential benefits of greater gender equality for businesses and society, identifies barriers to progress, and pinpoints a series of actions that could help move the needle toward parity.

The benefits of gender equality

Increasing the participation of women in the workforce would go a considerable way toward solving CEE’s labor shortage. The region currently has 630,000 job vacancies across its constituent countries, and if it returns to its prepandemic (2010–19) growth rate, this rate could increase to more than two million by 2030. This gap would be more than filled by the extra 2.5 million women who would potentially join the workforce if countries in CEE made efforts to close the gender gap. Moreover, the sectors expecting to see the steepest increase in demand for new employees are healthcare and social work, retail and wholesale, and manufacturing. Given that nearly half the female labor force in CEE today works in one of these three sectors, women are well positioned to fill a large proportion of these vacancies.

Improving the participation of women in the workforce is only part of the value that gender parity can deliver, however. McKinsey research conducted over the past decade indicates there is a business case for diversity. For example, our studies have shown a larger share of women in top management positions correlates to better financial performance by individual companies.

To confirm that this correlation also applies to companies in CEE, we augmented data from a five-year global study by McKinsey that looked at more than 1,000 large companies in 15 different countries by adding new information from more than 200 major companies in the Czech Republic, Hungary, and Poland. Our analysis of the entire data pool revealed companies with the greatest gender diversity in their executive teams were 26 percent more likely to experience above-average profitability than those with the least diverse executive teams or no female representation at this level.

Barriers to progress

Although women make up more than 60 percent of college graduates in CEE, only about 37 percent of all managers are female.

The greatest gender inequalities in CEE relate to leadership positions, unpaid work, legal protection, and political representation. Our report focuses on the first two areas: the underrepresentation of women in leadership positions and the challenge of unpaid work.

Although women make up more than 60 percent of college graduates in CEE, only about 37 percent of all managers are female. Women hold about one-fifth of executive roles in CEE and 8 percent of CEO positions; 44 percent of leading companies in CEE do not have a single woman in an executive role (Exhibit 2).

Women in Central and Eastern Europe are underrepresented in leadership positions, despite making up a high share of graduates and the labor force.

Why are there so few women in executive positions in CEE? Our survey of approximately 3,000 employees in the region uncovered the following insights:

Women are as ambitious as men, but they perceive more barriers to promotion. Men and women showed almost the same level of interest in getting promoted (57 percent of women versus 56 percent of men). However, 28 percent of women said that their gender made it harder for them to secure a raise or a promotion. And while 66 percent of men were confident that they could make it to the top leadership positions, only 62 percent of women thought that they could do so.

Women blame themselves; men blame others. Women who thought they were unlikely to make it to the top said that it was because they lacked the necessary skills (43 percent) or the right leadership style (38 percent), or that promotions to top executive positions were not based on merit (33 percent). A far smaller proportion of men said that they lacked the necessary skills for the job (eight percentage points less than for women), and a much larger share said that it was because promotions were not based on merit (ten percentage points more than for women). In other words, women are more likely to blame their own shortcomings for their failure to become executives, while men are more likely to blame the shortcomings of their company.

Unpaid work is a major barrier. In our survey, 27 percent of women pointed to a lack of work-life balance as another reason why they were unlikely to make it to the top. Just one-fifth of men said the same. These findings are supported by a 2018 survey by Eurostat, which found that almost 70 percent of women in CEE perform household chores daily, compared with 22 percent of men. In addition, nearly 40 percent of women provide daily unpaid care work (looking after children, the elderly, or people with disabilities). This is twice as many as men. Essentially, female employees are still working a “double shift.”

The COVID-19 crisis has created additional burdens on women. With many families working and learning at home, both women and men are spending more time on household chores and unpaid care work. But the increased burden has fallen disproportionately on women. More than 40 percent of female respondents in our survey said the pandemic has made them more likely to consider scaling back on their paid work. Among women with children under the age of ten, the figure was as high as 54 percent. At the same time, just 25 percent of men with children under age ten said they considered scaling back, compared with 34 percent of men overall.

Actions to accelerate women’s empowerment

Our report identifies four distinct areas in which policy makers and businesses can take action to improve gender parity:

Develop a shared vision. Closing the gender gap is a complex process, and governments and companies would be well advised to take a structured approach. Ideally, this would include formulating an aspiration, creating an agenda of goals and actions addressing the gaps identified, and measuring and regularly communicating the progress. Broad coalitions between the public and private sectors can be especially powerful here, as shown by the Chefsache initiative,1 a network of public- and private-sector leaders in Germany committed to making gender balance a top management priority, and the Champions of Change program in Australia2 and Poland.3

Launch career-support initiatives. Special support schemes for underrepresented talent could help bring more women into the labor force. Policy makers could identify which industries are growing fastest and which will be most affected by automation; they could then use that information to guide their investment in vocational training schemes. For their part, companies can invest in professional capability building, such as management training programs, and set up sponsorship schemes to help women and other underrepresented groups move up the corporate ladder. Special skills-training courses and recruiting programs for women can help correct the gender imbalance in specific industries.

Support a healthy work-life balance. Progress on gender parity depends on the ability of both women and men to balance their private and professional lives. Governments and companies could make efforts to expand flexible work arrangements (part-time work, remote work, flexible working hours); introduce or expand paternity leave; and improve the availability of affordable, high-quality childcare. Companies could also strengthen their return-to-work programs to help people maintain networks, skills, and knowledge during periods of care leave.

Social norms and attitudes. Shifting the cultural factors underlying gender inequality is a complex undertaking. Our research shows that ensuring the leaders of companies and public institutions are visibly engaged in efforts to reduce the gender imbalance, rather than delegating this work to “diversity officers,” can make a real difference. Leaders should build an understanding of the benefits of diversity and actively tackle gender stereotypes and unconscious bias in recruiting and promotions. Female role models at the highest level are also essential.

Our full report on women in CEE examines the pressing need for change in Central and Eastern Europe and explores what governments and companies can do to help women realize their full potential contribution to the region’s economy. While unpaid work and other burdens borne largely by women represent barriers to progress on gender parity, our view is optimistic. Correcting the gender imbalance in Central and Eastern Europe would radically benefit women in their careers and personal lives—and have a potentially transformative effect on the economies of Central and Eastern Europe.

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