"Delivering on the Promise of 2025," Keynote Address by Christine Lagarde, Managing Director, IMF
IMF News, September 6, 2015
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- Published: September 6, 2015
Introduction and context
- G-20 pledge (last November): reduce the gap in women’s labor force participation by 25 percent by the year 2025, estimated to create 100 million new jobs for the global economy.
- Framing: gender equity linked to the post-2015 Sustainable Development Goals and the G-20 pledge—unique moment of opportunity requiring decisive, sustained, and collective action.
- Role of the W-20: remind the G-20 of their commitment and hold them to account.
- IMF’s role: strengthened work on macroeconomic effects of gender gaps, new research on women's role in the economy and legal barriers, and application of research in policy advice to member countries.
Why the 2025 Promise Matters
- Scale and rationale:
- "More than 3½ billion reasons why gender equity matters."
- Empowering women boosts economic growth, raises per capita income, reduces income inequality, and can reduce poverty.
- Quantified macroeconomic estimates:
- If female workers equaled male levels, GDP would expand by:
- 5 percent in the United States;
- 9 percent in Japan;
- 27 percent in India.1
- For Turkey, gender parity in employment could increase per capita income by 22 percent.2
- FAO estimate: giving women the same access to farming resources as men could increase agricultural output in developing countries by up to 4 percent—lifting over 100 million people out of hunger.3
- Distributional effects:
- IMF staff research comparing a Gender Inequality Index to measured income inequality finds that boosting education and employment chances for women could lead to improvements in income equality of a magnitude that historically took decades to achieve.
Implementation: overall approach
- Delivering the promise requires:
- Decisive, sustained, and collective action across G-20, W-20, IMF member countries.
- Applying IMF research to policy advice.
- Focused policy attention on three critical junctures over a woman’s life: education, employment, and family.
Three Key Policy Areas for Women’s Economic Empowerment
- H3: Education
- Individual returns:
- One extra year of primary school boosts a woman’s earning potential by 10 to 20 percent.
- One extra year of secondary school boosts her earning potential by 25 percent.4
- Turkey-specific evidence:
- Proportion of Turkish women with graduate degrees who have jobs exceeds 70 percent.
- In areas of illiteracy, just 17 percent of women can find work.5
- Adding one year of preschool education in Turkey could increase female labor force participation by 9 percent.6
- Policy levers beyond schooling investment:
- Conditional cash transfers for daughters’ school attendance (examples: Bangladesh and Cambodia).7
- Strengthening infrastructure—roads and sanitation—to facilitate girls’ attendance.
- Status: gender gaps in education are narrowing in many countries, but remain significant in many emerging markets and developing countries.
- H3: Employment
- Education alone is not sufficient:
- Example: Japan—women in early-30s typically have more than 14 years of schooling (second only to New Zealand), and on average women have completed more years of education than men.8,9 Despite this, the gender gap in labor force participation in Japan stands at 25 percentage points—compared to just over 10 percentage points on average in major advanced economies.10
- Main barriers and evidence:
- Legal barriers:
- Almost 90 percent of countries have at least one important legal restriction that makes it difficult for women to work.11
- In half of the countries studied, when gender equity was constitutionally granted, female labor force participation increased by at least 5 percent over the following 5 years.
- Pay gap:
- Even with the same education and occupation, women earn just three-quarters of what men earn.12
- Infrastructure:
- Lack of basic transport or energy hinders external work; electrification in rural South Africa increased female labor force participation by 9 percent.13
- Access to finance:
- In emerging and developing countries, 70 percent of female-owned small and medium-sized enterprises are either unserved or under-served by financial institutions.14
- Policy emphasis: increase financial inclusion for women (noted as a priority at the UN Summit on the Post-2015 Development Agenda).
- H3: Family
- Keeping women attached to the labor market through family-related policies:
- Paid parental leave:
- Japan expanded childcare leave benefits from 50 percent to 67 percent of salary.15
- Example employer: paternity leave participation rate in one Japanese insurance company reached 100 percent.16
- Childcare:
- Cutting the cost of childcare by half could increase the number of young mothers in the labor market by 10 percent.18
- Tax reform:
- Replacing family taxation with individual taxation can reduce marginal taxes on secondary earners (often women), encouraging labor force participation.
- Cultural and social role:
- Men’s engagement as partners and fathers is important for enabling women’s empowerment and building stronger societies.17
Conclusion: From Words to Action
- The G-20 pledge to reduce the gender participation gap by 25 percent over the next decade has the potential to:
- Empower women historically;
- Boost growth;
- Raise overall per capita income;
- Tackle poverty;
- Reduce income inequality globally.
- Conditions for success:
- Words must become actions through coordinated effort by the G-20, the W-20, and the IMF's 188 member countries.
Source: "Delivering on the Promise of 2025," Keynote Address by Christine Lagarde, Managing Director, International Monetary Fund, September 6, 2015.