The Economic Power of Women’s Empowerment, Keynote Speech By Christine Lagarde, Managing Director, International Monetary Fund
IMF News, September 12, 2014
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- Authors: Christine Lagarde
- Published: September 12, 2014
1. Women’s economic exclusion and its costs
- Global gender gaps in labor force participation range from 12 percent in the OECD economies to 50 percent in the Middle East and North Africa.
- Japan: female participation rate is 65 percent, 20 percentage points lower than males.
- Global gender wage gap: women earn only three-quarters as much as men (even with same education and occupation).
- Japan: gender wage gap of 29 percent.
- Women are overrepresented in less secure jobs (informal, temporary, or part-time).
- Leadership representation:
- Women make up only 5 percent of Fortune 500 CEOs.
- Women account for only 24 percent of senior management positions globally.
- Japan: 9 percent of senior management positions.
- Women account for 70 percent of global consumer spending.
- Eliminating gender gaps in labor force participation can raise income per capita; example for Japan:
- Raising female labor force participation to the average level of the G7 could raise income per capita by 4 percent—permanently.
- Raising participation to levels of Northern Europe would give Japan a further 4 percent.
- Firm performance evidence:
- Fortune 500 companies with the best records of promoting women have been shown to be 18 to 69 percent more profitable than the median firm in their area.
- In Japan, firms with the most women managers reported returns on equity exceeding 10 percent; firms with the least women managers had low or negative returns on equity.
2. How to unleash women’s economic potential
- Three main levers: economic policies; laws and institutions; societal and business culture.
- Economic policy measures (examples and evidence):
- Move from family to individual taxation.
- Provide more affordable child-care and parental leave.
- Allow for more flexible working arrangements.
- Sweden devotes a full one percent of GDP to childcare and pre-primary spending (three times more than Japan) and takes workplace flexibility seriously—correlates with very high female participation.
- Netherlands: giving part-time work the same status as full-time work increased female labor participation.
- Chile: female labor force participation rose by 20 percentage points over the past quarter century, linked to increased social spending on early childhood education and childcare and increased maternity leave.
- Law and institution reforms (preliminary IMF study spanning 100 countries):
- Gender gaps are lower when men and women are treated equally under the law in inheritance, property, and economic opportunity.
- Key legal measures: equal property rights for married women; default joint titling for married couples; women’s freedom to pursue a profession, get a job, or open a bank account.
- Rwanda: legal guarantees for equal land ownership and inheritance, constitutional gender equality, and 30 percent quotas for women in leadership positions—Rwanda had 53 percent women in parliament in 2013 and has made progress in reducing poverty and inequality.
- Saudi Arabia: identified legal and institutional obstacles (restrictions on travel, participation in sectors, unequal property and inheritance rights); some movement forward but scope to do more.
- Morocco and Tunisia: enshrined gender equality into new constitutions (Tunisia already had many women’s rights since independence).
- Cultural and business-culture changes:
- Promote diversity and “dare the difference”; use mentors and role models.
- Companies should make work environments more flexible, move from long-hours/lifetime-employment norms to output- and performance-based systems, encourage parental leave for both men and women, and promote more women to higher positions to create mentors and role models.
- Example of individual encouragement: Fusae Ichikawa encouraging Sadako Ogata—illustrates power of mentorship.
3. Female economic empowerment in Japan
- Demographic challenge:
- Japan’s working-age population will fall from a peak of 87 million in the mid-1990s to 55 million by mid-century.
- Expected growth potential is only about 1 percent over the medium term.
- Potential impact of empowering women:
- Measures to empower women can add ¼ percent to growth each year if implemented aggressively—helpful but short of the 1 percent boost Japan needs for Abenomics to fully succeed.
- Labor market dynamics and barriers:
- Around 60 percent of women leave work when they have their first child.
- Employers reluctant to hire women into career-track sogo shoku roles due to expected dropout, leading to two-tier employment (sogo shoku vs ippan shoku).
- Corporate culture issues: long hours, face time expectations, pay tied to seniority, exclusive “boys” networks.
- Policy actions under discussion or recommended:
- Increase availability of childcare (government pledged to create 400,000 new spaces by 2018); reduce red tape and allow more private providers.
- Consider skilled immigrants to fill caregiving roles for children and elderly as Japan ages.
- Remove tax disincentives for women to work, extend parental leave, and better target child care allowances.
- Business and cultural actions recommended:
- Encourage flexible work arrangements and performance-based evaluation.
- Encourage both men and women to take parental leave.
- Take more risks promoting women to leadership to build mentors and role models.
- Encourage new social norms where men participate more in caregiving (cultural reference to Tasogare Seibei—the Twilight Samurai).
4. Conclusion and call to action
- Japan has historical examples of powerful women leaders, educators, artists, and cultural figures demonstrating women’s capacity to contribute.
- The speaker’s call: “dare the difference and bet on women”—inclusion of women will boost growth, social cohesion, and national vitality.
- Closing exhortation: unlock doors and opportunities for millions of capable Japanese women; when women shine like the sun, their radiance will be forever undimmed.
Source: The Economic Power of Women’s Empowerment — Keynote Speech By Christine Lagarde, Managing Director, International Monetary Fund, Tokyo, September 12, 2014.