The Business Case for Women’s Empowerment

November 18, 2016

Ladies and gentlemen, distinguished guests, good afternoon – Buenas tardes!

It is with great pleasure that I return to Lima, which last year hosted the very successful annual meetings of the IMF and World Bank.

It is also a pleasure to have the opportunity to address leaders from the policymaking and business community in such a dynamic region as APEC – home to 40 percent of the world’s population and about 60 percent of global economic output.

And it is a particular pleasure to talk about a topic that is close to my heart – women’s empowerment.

Isabelle Allende, the famous Chilean novelist, once said: “If a woman is empowered, her children and her family will be better off. If families prosper, the village prospers, and eventually so does the whole country.”

Over the past few decades, women all over the world have pushed the boundaries on educational attainment, economic participation, and even political representation. According to the World Economic Forum’s latest Global Gender Gap Report, Latin America is the region with the largest absolute improvement over the last ten years, followed by Asia and the Pacific region. So in some respect, APEC is leading the way.

And yet, this great progress has not been enough to close the gender gap. Globally, only 55 percent of women have the opportunity to participate in the labor force, compared with 80 percent for men. Women still earn about 50 percent less than men for the same type of work, and they represent only 20 percent of parliamentarians across the world. [1]

Clearly, in many places, gender equality remains an elusive goal. The moral case for gender equity is clear. So is the economic case.

As countries around the world struggle to grow their economies more quickly and to reduce inequality, tapping into the huge potential of women can be a game changer. I would even go further to say it is a no brainer.

The work that we have done at the IMF clearly demonstrates that there is a compelling business case for women’s empowerment. And everyone – government, the private sector, and international financial institutions – has an important role to play.

1. Why Is Women’s Empowerment A Game Changer?

I have said repeatedly that world growth has been too low, for too long, and benefiting too few. Some countries are facing transitions, such as adjusting to low oil prices; others are contending with the immutable force of population aging and its impact on the labor force and productivity growth.

Women can be the solution to these problems. For three main reasons.

First reason: women’s empowerment can boost growth and reduce inequality . If we want everyone to have a bigger piece of the pie, the pie has to grow.

Our research has shown that increasing women’s labor force participation can deliver significant macroeconomic gains. For example, if Latin American countries raised their female labor participation to the average of the Nordic countries (about 60 percent), GDP per capita could be up to 10 percent higher. [2]

Gender inclusion not only supports growth; it can reduce income inequality as well. Again, our research has shown that moving from a situation of perfect gender inequality to perfect gender equality is equivalent to reducing income inequality from the levels prevailing in Venezuela to those in Sweden. [3]

So again, tapping into women’s potential will not only make the pie bigger, but more evenly shared as well.

A second reason why women’s empowerment is a game-changer: it can help mitigate the impact of demographics.

Many advanced countries, and some emerging economies as well, struggle to raise growth potential in the face of an aging population and shrinking labor force. Women can be part of the solution.

In Japan, for example, raising female labor force participation to the levels of Northern Europe could boost GDP growth by up to 0.4 percentage points in the transition years. [4] With growth rates in Japan currently hovering around 0.5 percent in this year and next, the economic gains can be massive.

The impact of employing more highly educated women on overall productivity growth could be even more significant – by up to 0.4 percentage points per year in Canada. [5]

So bringing more women into the labor force would expand the pool of talent in the labor market – and boost productivity and growth.

My third reason for this being a game-changer: greater female economic participation supports diversification .

Many commodity exporters have been hit hard by the decline in oil prices – which is the case for several countries in APEC, and for Latin America more generally. They are now faced with the difficult task of diversifying their economies to generate new drivers of growth.

Women’s inclusion can help in this case as well. In low-income and developing countries, moving from perfect gender inequality to perfect equality is equivalent to moving from the least diversified economy to one with average export diversification. [6]

How? Closing gender gaps in education expands the pool of human capital that is essential for technology adoption and innovation. Closing gaps in labor participation also increases a country’s ability to create and execute ideas – all necessary for diversification.

The bottom line is this: women are the solution to many of the problems confronting countries around the world today . They can be an economic game changer. So the obvious question is: how do we get more women to participate in the economy?

2. How to Get There – A Role for Everyone

The drivers – and impediments – are complex and multi-faceted. Narrowing gender gaps requires a comprehensive agenda and a commitment to gender equity by governments, the private sector, and international institutions.

(i) Governments

There are several ways in which governments can demonstrate leadership here.

A natural place to start is fiscal policy, which we know can be shaped to help achieve gender equality goals.

For example, tax reforms that reduce taxes on a family’s secondary earner – which is almost always a woman! – can encourage more women to join the labor force.

This was the case in Canada in the 1990s, which improved incentives for secondary earners by introducing tax cuts and benefits for families with children. Today, Canada’s female labor participation rate is over 80 percent – above the 74 percent of the United States. [7]

Family support policies also matter. This is particularly important in countries in Latin America that have seen impressive strides in young women’s participation in the labor force. As they reach childbearing ages, policies that preserve their engagement with the labor market will be critical. And there are many examples of policies that have worked.

In Mexico, free or subsidized childcare programs through Estancias Infantiles helped increase the mother’s probability of employment. In Chile, extending the children’s hours in school, through Jornada Escolar Completa, freed up time for mothers to work more hours. [8]

Governments can also lead by leveling the playing field for women. In more than a 100 countries, women face at least one legal barrier to economic participation. In some countries, they have no right to sign a contract, open a bank account, or initiate legal proceedings without the husband’s consent.

In this context, Peru is a remarkable success story. Starting in the mid-1990s, Peru changed the laws that constrained women’s legal rights. A decade later, women’s labor force participation increased by 15 percentage points. [9]

We’ve seen similar positive impact elsewhere too. As an example, after Namibia strengthened women’s legal rights, including the ability to sign contracts, pursue professions, and open bank accounts without a husband’s permission, female labor force participation rose by 10 percentage points.

So small changes in the law can make a big difference.

(ii) The Private Sector

How about businesses? They too can make a difference.

One area where progress is most needed is women in corporate positions and boards. Our research has shown that adding one more woman in senior management or on the corporate board, while keeping the size of the board unchanged, is associated with 8-13 basis points higher return on assets. [10]

So more women in senior positions is good for the bottom line. Despite this, as of April 2015, for every 100 corporate board members of large publicly listed firms in Europe, only 23 were women, and only 4 percent of chief executive officers of these companies were female.

Moreover, empowering women is good business practice. What do I mean by that?

A recent study by Google found that a common feature of its successful teams was the ability to create zones of “psychological safety” – meaning spaces where members spoke in roughly the same proportion and without fear of being embarrassed. [11] In other words, teams that gave voice to all team members, including women – who tend to be more shy and not speak up – were better able to leverage the diversity of views in strengthening business outcomes. [12]

Beyond giving voice, businesses can also promote gender equity by ensuring pay parity for equal jobs, and by giving greater access to maternity leave.

Those involved in the financial industry can also help with women’s financial inclusion. Here, Peru has made commendable strides. Close to 90 percent of firms had access to a bank account in 2014. Yet, with access levels for women at only 22 percent, clearly more can be done to bring more women into the financial network – including those in the informal sector.

(iii) International Financial Institutions

International financial institutions also have a role to play.

To begin with, gender equality and women’s empowerment are now one of the 17 priorities of the U.N.’s Sustainable Development Goals (SDGs) to achieve inclusive growth by 2030.

Accomplishing this goal, however, will require better data and research to help us understand the drivers of women’s empowerment and to monitor its progress. This is where institutions such as the IMF come in.

Over the past few years, we have stepped up our research on gender-related topics. Many of the examples that I mentioned earlier draw on this growing body of research. And we are going further – by operationalizing these findings in our surveillance and program work.

For example, we have begun to incorporate gender-equality goals into our annual Article IV consultations where women’s economic participation can be of material impact. And we have already completed analysis for 13 countries which will help us provide “tailored” policy recommendations on gender equity.

We have also included a goal of raising women’s economic participation in an IMF-supported program with Jordan. We are doing the same with our recently announced program in Egypt, with a focus on improving the safety of transportation for women.

There is much more to be done. But the work has well and truly begun in the quest for gender equity.


APEC countries have made huge strides in improving women’s economic participation over the past two decades. They are now well-positioned to play a leading role in the way forward.

The IMF will be your partner in this great endeavor.

Thank you.

[1] World Economic Forum (2016). The Global Gender Gap Report 2015.

[2] Natalia Novta, Alejandro Werner, and Joyce Wong (2016). Women at Work: Remarkable Achievement in Latin America and the Caribbean.

[4] See Chad Steinberg and Masato Nakane (2012). “Can Women Save Japan? IMF Working Paper 12/248.

[5] See Christine Lagarde (2016). To Boost Growth: Employ More Women. Specifically, a one-percentage point increase in the labor participation of women with an advanced degree could raise Canada’s overall labor productivity growth by 0.2 to 0.4 percentage points per year.

[7] See Christine Lagarde (2016). To Boost Growth: Employ More Women.

[8] Natalia Novta, Alejandro Werner, and Joyce Wong (2016). Women at Work: Remarkable Achievement in Latin America and the Caribbean.

IMF Communications Department


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