The Business Case for Women’s Empowerment

IMF News, November 18, 2016

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Authors: Christine Lagarde
Published: November 18, 2016

Overview

Context: Remarks by Christine Lagarde, IMF Managing Director, at the APEC CEO Summit, Peru, November 18, 2016.
Core message: Tapping the potential of women can boost growth, reduce inequality, mitigate demographic challenges, and support economic diversification.

Why Women’s Empowerment Is a Game Changer

Key statistics and findings:
- APEC: home to "40 percent of the world’s population and about 60 percent of global economic output."
- Global labor force participation: "55 percent" of women versus "80 percent" of men.
- Women’s earnings: "about 50 percent less than men for the same type of work."
- Women in politics: represent "only 20 percent of parliamentarians across the world."
- If Latin American countries raised female labor participation to the average of the Nordic countries ("about 60 percent"), "GDP per capita could be up to 10 percent higher."
- Moving from perfect gender inequality to perfect gender equality is equivalent to reducing income inequality "from the levels prevailing in Venezuela to those in Sweden."
- Japan: raising female labor force participation to Northern Europe levels could boost GDP growth "by up to 0.4 percentage points in the transition years."
- Japan’s near-term growth context: "growth rates in Japan currently hovering around 0.5 percent in this year and next."
- Canada: employing more highly educated women could raise overall productivity growth "by up to 0.4 percentage points per year."
- Diversification: 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."

How to Get There — A Role for Everyone

Overarching point: Narrowing gender gaps requires a comprehensive agenda and commitment by governments, the private sector, and international financial institutions.

Governments — policy levers and evidence:
- Fiscal/tax policy: "tax reforms that reduce taxes on a family’s secondary earner" can encourage female labor force participation.
- Canada example: 1990s tax cuts and benefits for families with children contributed to a female labor participation rate "over 80 percent" (compared with "74 percent" in the United States).
- Family support policies: Mexico’s Estancias Infantiles (free/subsidized childcare) increased mothers’ probability of employment; Chile’s Jornada Escolar Completa freed up time for mothers to work more hours.
- Legal reform: "in more than a 100 countries, women face at least one legal barrier to economic participation."
- Peru: mid-1990s legal changes led to a "15 percentage points" increase in women’s labor force participation a decade later.
- Namibia: strengthening women’s legal rights saw female labor force participation rise by "10 percentage points."
- Conclusion: "Small changes in the law can make a big difference."

The Private Sector — business benefits and practices:
- Corporate leadership: adding one more woman in senior management or on the corporate board (keeping board size unchanged) is associated with "8-13 basis points higher return on assets."
- Board and CEO representation (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."
- Team dynamics: Google study — successful teams created "zones of 'psychological safety'" where members spoke in roughly the same proportion, enabling better use of diverse views.
- Workplace policies: ensure pay parity for equal jobs; expand maternity leave; improve women’s access to financial services.
- Peru financial-inclusion data: "Close to 90 percent of firms had access to a bank account in 2014," yet women's access levels were only "22 percent."

International Financial Institutions — research, operationalization, and programs:
- SDGs: "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."
- IMF role:
- Increased research on gender-related topics; many examples cited draw on this research.
- Operational steps: incorporating gender-equality goals into Article IV consultations where women’s economic participation can be of material impact.
- Completed analysis for "13 countries" to provide tailored policy recommendations on gender equity.
- Program examples: included a goal of raising women’s economic participation in an IMF-supported program with Jordan; similar goal in the recently announced program in Egypt, with a focus on "improving the safety of transportation for women."

Conclusion and Takeaway Messages

APEC countries have made significant progress in women's economic participation over the past two decades and are positioned to lead further advances.
The IMF positions itself as a partner in advancing gender equity through research, policy advice, and program support.
Bottom line: increasing women’s economic participation can make the economy larger, more equitable, more resilient to demographic change, and better diversified.

Source: Speech by Christine Lagarde, "The Business Case for Women’s Empowerment," APEC CEO Summit, Peru, November 18, 2016.

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