Gender Inequality

Gender equality: a call to action beyond the G20 New Delhi Summit

Wei Shuqun, a 43-year-old female migrant construction worker, works during a shift at a residential construction site in Shanghai July 17, 2013. The construction site is among a new developing residential area located in Jiading district of suburban Shanghai, some 30 kilometres from the city centre. According to data from the World Bank, 68 percent of China's female population aged 15 and above participate in the labour force, compared to 58 percent in the United States, 51 percent in France, and 53 percent in Germany. Around a third of China's millions of rural-urban migrant workers are women and according to an academic paper published 2010, they also earn around a third less than their male equivalents. Picture taken July 17, 2013. REUTERS/Aly Song (CHINA - Tags: BUSINESS EMPLOYMENT SOCIETY CONSTRUCTION)ATTENTION EDITORS: PICTURE 06 OF 29 FOR PACKAGE 'CHINA'S MIGRANT WORKFORCE'. TO FIND ALL IMAGES SEARCH 'RURAL-URBAN SONG'

Gender equality is important to remove barriers to women's economic empowerment, such as unequal access to education and healthcare. Image: REUTERS/Aly Song (CHINA - Tags: BUSINESS EMPLOYMENT SOCIETY CONSTRUCTION)ATTENTION EDITORS: PICTURE 06 OF 29 FOR PACKAGE 'CHINA'S MIGRANT WORKFORCE'. TO FIND ALL IMAGES SEARCH 'RURAL-URBAN SONG'

Ratna Sahay
Professor, National Council of Applied Economic Research (NCAER)
Kehinde Ajayi
Senior Fellow, Center for Global Development
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Gender Inequality

  • Closing gender gaps is 'macro-critical', which means that reducing gender disparities helps achieve higher economic growth, greater economic and financial resilience, and lower income inequality.
  • In emerging markets, this can raise incomes by nearly 25%, which is higher than the yields associated with labour, product, and domestic financial sector reforms, as estimated by the IMF.
  • It's time for all countries to formulate a National Gender Mainstreaming Strategy, with concrete monitorable actions and timelines, and periodic stock-taking exercises.

The G20 Leaders’ Declaration and Gender Equality

Judging by the G20 Leaders' Declaration adopted by unanimous agreement on September 9-10, 2023 in New Delhi, the recently concluded meetings under India’s presidency were a resounding success (The Economist). Notably, the African Union became a permanent member of this exclusive club. This could not have been an easy task given the strong headwinds the world is facing: the tectonic shifts in geopolitics, climate change, the fallout from ongoing conflicts in Ukraine and other regions and the COVID crisis, rising debt levels across most nations, the disruption in global supply chains, the rise in trade protectionism, and the gloomy prospect of global growth forecasted to average a meager 3 percent in the coming years, the lowest medium-term forecast in decades (IMF, World Economic Outlook).

Among the many achievements, the G20 leaders’ commitment to gender equality was remarkable for their focus and breadth of coverage. The declaration focused on women-led development and women’s economic empowerment, recognizing the wide gaps in male and female employment and labor force participation rates, pay gaps, disparities in educational attainments, unequal access to formal finance, the gender digital divide, the prevalence of gender-based violence, inadequate social protection, the need for gender-inclusive climate action, and the insufficient attention to the care economy. Most significantly, it also includes the elimination of gender stereotypes and biases, and a call to change norms, attitudes, and behaviors that perpetuate gender inequality. These are big statements. As a recent CGD blog suggests, successful policy designs can only succeed if they are informed by a sound understanding of relevant social norms and local conditions.

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The Evidence: Closing Gender Gaps has Multidimensional Benefits to Society

It is not surprising that top policymakers are taking notice of gender equality and its multidimensional benefits to society. As elaborated in the IMF’s first gender mainstreaming strategy, strongly endorsed by its Executive Board representing 190 member countries, closing gender gaps and promoting the full, equal, effective, and meaningful participation of women in the economy as decision-makers is macro-critical. In other words, reducing gender disparities helps achieve higher economic growth, greater economic and financial resilience, and lower income inequality. Policymakers are acknowledging that macroeconomic, structural, and financial policies should apply a gender lens to narrow gender disparities or mitigate their negative effects, if they arise, on women.

The evidence on macroeconomic and financial benefits to countries and societies is significant and growing steadily. An estimated 606 million women in 2018 remained inactive in the labor market because they assumed unpaid caring roles in their families. This number rose substantially during the COVID-19 crisis. Closing female labor force participation gaps, currently at nearly 30 percentage points, would raise income in emerging markets and developing economies, on average, by nearly 25 percent over the long term. Interestingly, this is higher than the yields often associated with labor, product, and domestic financial sector reforms, as estimated by the IMF. Higher gender equality translates into higher labor productivity for the whole economy, a cross-country study shows. When underserved have greater access to finance, both men and women benefit from financial inclusion, but inequality falls more when women have greater access. Women in leadership positions and gender diversity on boards of financial institutions are associated with lower non-performing loans and greater financial stability. There are many more examples.

Looking Back

The Beijing Declaration on women’s empowerment was unanimously adopted by 189 countries in 1995. Since then, many initiatives have emerged at the national and sub-national levels, with the involvement of multiple stakeholders—the civil society, multilateral development institutions, national authorities, private sector, donors, academics, and think tanks. To varying degrees, pockets of successes are visible (such as in education outcomes), though clearly not enough. The World Economic Forum’s 2023 report estimates that it will now take 131 years to close gender disparities worldwide, increasing from about 100 years before the COVID-19 pandemic. More recent work by IMF staff shows that the gap in male-female labor force participation rates will narrow but never close under the current policy efforts. This is disappointing. This also means that the UN Sustainable Development Goal 5 which set a 2030 deadline for achieving gender equality and the empowerment of all women and girls appears unreachable. But there is a way forward.

Looking Ahead

The way to make meaningful change moving forward is to mainstream gender and apply a gender lens across all economic activities. Gender policies should not be relegated to ministries of labor and women. They should be integrated in every ministry, particularly the Ministry of Finance, as gender equality benefits the economy. The corporate sector should not view gender equality simply as one component of its Corporate Social Responsibility obligation. It should be embedded in the private sector’s main business activities as there is a business case. More women should be represented in mainstream economic decision-making and more men should participate in finding solutions to removing barriers to women’s economic empowerment. Creating more women entrepreneurs also means creating more jobs. Not least, even greater effort is needed to collect gender-disaggregated data so that better analyses can be conducted to support evidence-based policymaking.

Applying a macro-critical gender lens also means acknowledging that key challenges and opportunities related to upcoming global priorities like climate change, digital technology, investment in infrastructure are inescapably linked to women’s economic empowerment. For example, according to the UNDP, women are disproportionately affected by climate change. Where are their voices on decision-making bodies? Fintech is narrowing access to financial services across countries but not along the gender dimension; yet evidence shows that access to digital services by women increases economic growth and greater gender diversity in the executive board is associated with better performance of fintech firms. If investments in infrastructure are a key national priority, invest in care infrastructure because that will free many women to work, raising employment and productivity.

Finally, applying a macro-critical gender lens means that commitment must translate to action to remove barriers to women’s economic empowerment. These include unequal access to education, health services, infrastructure, assets, and technology, unequal legal rights, violence against women, unequal distribution of unpaid care and domestic work between men and women, and enervating cultural and social norms. Contrary to conventional wisdom, cultural and social norms are not immutable—they can change quickly forced by circumstances such as during World War II when women in industrial countries entered the labour force in large numbers, or through prioritization by a country’s top leadership, as recent evidence from India, Saudi Arabia, and Tanzania, all home to societies with gender-stereotypical norms, shows.

As Finance Ministers and Central Bank Governors convene in October at the IMF-World Bank Annual Meetings in Marrakesh to discuss the most salient economic challenges of our times, we hope that closing gender gaps will feature as a vital solution to the daunting tasks ahead. Removing barriers to women’s economic empowerment has concrete benefits that align with influential policymakers’ mandates. As economies grow, Finance Ministers face fewer challenges because revenues increase, unemployment falls, pressure to increase social spending falls, and servicing public debt also becomes more manageable.

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A Call to Action

It is time for all countries to formulate a National Gender Mainstreaming Strategy, clearly outlining their vision with concrete monitorable actions and timelines, and periodic stock-taking exercises. National financial inclusion strategies, adopted by more than sixty countries, are demonstrating the success of strategic approaches. Each country should launch a gender mainstreaming strategy, with multiple stakeholders’ input, that cuts across all aspects of economic and social life and is owned by all stakeholders–men and women alike. Prioritization of gender equality by leaders at the highest levels will be key to ensuring broad ownership and concerted implementation of these strategies. Moving from global commitment to local action is the next step towards making a tangible difference.

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