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Growth in the Economy = Women

 By Denise Mullen

Women make up half of the world’s population.  Looking ahead, this means half of the potential global labour force consists of women. Potential is the key word. There are many barriers to full labour force participation by women, notably in emerging economies, but also to some extent in the advanced economies too.  But suppose parity is possible.  It could add a total of between $12 trillion and $28 trillion to global GDP by 2025.[1]  Over a 10 year period beginning in 2015, this would be equal to between $1.2 trillion and $2.8 trillion per year.[2] Importantly, this “extra” economic growth would be on top of baseline forecast growth rates, which have been rather subdued of late.

   

Of course, the distribution of this potential growth (Figure 1[3]) varies, depending on a region’s equity reference point (Figure 2).  India, the Middle East and North Africa as well as South Asia are all considered to have extreme inequality in female economic participation. While other regions look better in comparison, they can all do better. These results are consistent with a February 2015 study by the International Monetary Fund,[4] which referenced World Bank data for 100 economies and showed that 90% of countries have labour laws that reflect some form of gender bias, with at least 28 countries having 10 or more such restrictive laws.  

People in North America and Oceania (Australia and New Zealand) consider themselves to be part of relatively gender equal societies, but 72% equal (in terms of work) is not stellar performance (Figure 2).  While these countries as a whole have high health and education scores and decent female labour force participation rates, they do poorly on political participation (35%), and only slightly better than average in terms of physical security (i.e., violence against women, 67%).

Given the positive correlations between gender equality and per capita GDP, the level of competitiveness, and various human development indicators (commonly understood to be measures of life expectancy, educational attainment and standard of living),[5] it would seem that increasing gender equity is good economics.  Instead of worrying incessantly about aging populations and a shrinking labour pool, in North America and Oceania it may be time to focus more attention on the potential to boost GDP by as much as ~$5 trillion over the next 10 years by expanding the role of women in the workforce and the economy.  



[1] The upper end numbers represent full potential and assume women participate in the economy identically to men.  The lower numbers assume a best performing benchmark country in a region that others would rise to.  

[3] Figures 1 and 2 are reproduced from material contained with the McKinsey & Company report referenced in footnote 2.

[4] Fair Play: More Equal Laws Boost Female Labour Force Participation, International Monetary Fund, February 2015.

[5] 2014 Global Gender Gap Report, World Economic Forum.