Speech

Gender Equality Boosts Economic Growth and Stability

September 27, 2022

Good afternoon, it is my great pleasure to speak to you at the Korea Gender Equality Forum today even if from afar. Korea has been an important partner to the Fund on our gender work, and has made important advances in gender equality over the last ten years.

The war in Ukraine, the COVID-19 pandemic, the current food and energy price surge, and long-standing factors such as climate change have widened already large gender gaps, disproportionately affecting women’s jobs, incomes, and security.

The World Economic Forum expects that it will now take more than 130 years to close gender gaps worldwide, up from about 100 years before the pandemic. Globally, 64 million women lost their jobs during the pandemic (twice as many as men), because women are more likely to work in informal, temporary, and part-time jobs—the types of jobs employers tend to cut first in a downturn—with lower pay and less social protection. And an estimated 80 percent of people displaced by climate change are women (UNDP, 2016).

Eliminating gender disparities that hold women back is the right thing to do. Ensuring equality in opportunities and potential to participate in the economy can be catalytic for a faster recovery from recent shocks, and a strong engine of growth for more resilient, sustainable, and inclusive economies going forward. Gender equality goes hand-in-hand with macroeconomic and financial stability, can stimulate economic growth, boost private and public sector performance, and reduce income inequality.

This applies to Korea as well. With rapid aging and low birth rates expected to reduce Korea’s labor force, higher female labor force participation is critical to boost economic growth. Despite improvements over the last decade, Korea has some of the largest labor market gender gaps among OECD countries, both in terms of earnings and labor force participation.

The gender pay gap, which stood at 32 percent in 2020, is almost 20 percentage points higher in Korea than the OECD average. And women hold only 16 percent of managerial positions compared to 32 percent of comparable countries in 2017.

Although women’s labor force participation rate increased from 53 to 60 percent between 2001 and 2021, there is still a gender labor participation gap of 18 percentage points – compared to a gap of 15 percentage points among OECD countries.

IMF analysis suggests that if Korea’s female labor force participation rose to the same level as male labor force participation by 2035, real GDP would grow by more than 7 percent. 

So, how can Korea harness the full economic potential of its talented women?

Well-designed macroeconomic, structural, and financial policies can support efficient and inclusive outcomes and equitably benefit women, girls, and society in general.

Key measures supported by the Fund to increase Korea’s female labor force participation have focused on retention and redeployment policies.

• To incentivize work retention, we have recommended strengthening the quality and affordability of childcare services, promoting shared parental leave, and broader measures to improve work-life balance, including through a reduction in working hours and more flexible working environments, and mitigating labor market duality.
• Career transition assistance and upskill training targeted to women’s needs and tailored to a broader range of sectors and positions can also help.
• More generally, making the tax treatment of second earners more neutral and introducing benchmarks for employment and leadership of women by corporations could encourage female labor force participation and broaden women’s access to leadership positions.

The Korean authorities have made important progress on some of these reforms. Korea has expanded parental leave and childcare services, reduced working hours for expecting women, encouraged more equitable sharing of childcare duties between spouses, improved work-life balance, and provided more employment services tailored to women. Korea has also expanded employment insurance coverage to self-employed, freelance, and part-time workers.

Since 2005, gender impact assessments have helped ensure that the impact of policies on women is well understood. And since 2010, a gender budgeting system has been an essential tool for designing fiscal policies and frameworks with a gender perspective and reducing gender inequalities—because even measures that are in principle neutral can ultimately affect men and women differently.

The gender policies introduced more recently by the new administration are also welcome. I’m thinking here of expanding parental leave and services with government support and public-private partnerships; and supporting women professionals in new, digital and high-tech industries. These measures are all expected to provide more opportunities to women.

Despite this notable progress, further efforts are needed to prevent labor market and career disengagement, given sizeable remaining gender gaps.

So, what are the priorities ahead?

Korea should take additional steps to support women’s return to the labor force and career reengagement. This will require sector-specific training, further improvements in the quality of childcare, and public education for early school ages.

As some of you may know, our Executive Board recently approved the first comprehensive IMF Strategy for Mainstreaming Gender. The strategy starts from the premise that gender equality has positive macroeconomic benefits. Conversely, the strategy also recognizes that economic and financial policies affect women and men differently, often unintentionally.

Therefore, we now have a framework for integrating gender into the core work of the IMF. This includes our economic surveillance and policy advice, the design of IMF-supported programs, and capacity development such as providing training on topics like gender budgeting. In these ways, we can better support our member countries as they harness the economic dividends of reducing gender inequality.

The IMF has producing research on gender issues for some time. But a systematic approach has never been more urgently needed.

Of course, Fund staff stand ready to continue supporting Korea. Our policy discussion will aim to help identify measures to foster resilience and inclusive growth by narrowing gender gaps and improving women’s economic empowerment.

Our Strategy for Mainstreaming Gender will provide IMF staff with better tools to systematically assess the macroeconomic consequences of gender gaps where they are macro-critical, evaluate the gender-differentiated impact of shocks and policies, and provide granular and tailored macroeconomic and financial policy advice. It also recognizes the importance of collaboration with external partners.

While the vision of the strategy is ambitious, the timeline for its implementation is expected to be gradual and measured. We will take the time needed to get this right. But we are confident that we will succeed in formulating the right policies on gender issues for the benefit of our membership, and especially for women.