May 31, 2018/IMF
EXECUTIVE SUMMARY
The economic and social imperative for women’s economic empowerment is clear. Greater gender equality boosts economic growth and leads to better development outcomes. It contributes to reducing income inequality and boosting economic diversification and, in turn, supports economic resilience. Gender equality is one of the 17 global UN Sustainable Development Goals, which provide a roadmap for ending poverty, protecting the planet, and ensuring that all people enjoy peace and prosperity.
The G7 has emphasized the need for closing the gender gap. The Taormina Leaders’ Summit in 2017 renewed the emphasis on promoting women’s empowerment, which the leaders see as a crucial contribution to promoting sustainable development. In this regard, leaders committed to mainstreaming gender equality into all their policies. This is carried forward by Canada’s G7 Presidency.
Gender inequality persists worldwide. Despite progress, women and men do not have the same opportunities to participate in economic activity, and when women do participate, they do not receive the same recognition, wages, or benefits as men. The World Economic Forum estimates that at the current rate of progress it will take 217 years to close the overall global gender gap in female labor force participation and equal opportunities.
Gender inequality takes different forms. Although the global average female labor force participation rate hovers around 50 percent, the average rate masks significant cross-regional differences in levels, from only about two-fifths of women participating in the labor market in the Middle East, North Africa, and Central Asia to almost two-thirds in sub-Saharan Africa. Gender wage gaps continue to be a global issue. Although some countries have made important progress in closing earning gaps, on average, women’s earnings are about half those of men. Low inclusion of women in the labor market and political positions also reflects unequal opportunities in access to education and health from early childhood and to financial services. It is also impeded by the pervasive presence of gender-based legal restrictions in many countries.
The room for policy intervention is large, and interventions need to be tailored to country circumstances. As recent research, including from the IMF, shows, policies matter for women’s employment decisions even after accounting for personal preferences towards working. Although there is no one-size-fits-all strategy, general priorities include:
• Policies that focus on providing equal opportunities from the start: (i) investing in education and health to provide a level playing field for women to take on economic activities and reduce the gender gap in skills and income; (ii) increasing access to financial services, including digital financial services, to provide women with equal access to resources, which in turn fosters labor productivity; and (iii) promoting equal rights for women in all areas, including the right to property ownership. Developing countries can benefit the most from these policies.
• Measures that support women in balancing work and family responsibilities, such as: (i) providing affordable, high-quality child and elderly care to support a more rapid return to work among women who are “sandwiched” between taking care of children and elderly parents and relatives; (ii) offering publicly financed parental leave schemes to reconcile work and family life and maintain connections to the labor market through a guaranteed return to the job; (iii) establishing flexible work arrangements to allow women to better balance their formal employment with other demands on their time; (iv) removing tax provisions that discriminate against secondary (predominantly female) earners that can potentially generate large efficiency gains and improve aggregate labor market outcomes; and (v) using tax credits or benefits for low-wage earners to reduce the net tax liability thereby increasing the net income gain from accepting a job. These policies can be particularly effective in advanced economies and some developing countries.
With growing recognition that gender equality promotes economic stability and growth, the IMF has scaled up its work in this area and is committed to continue these efforts. Work by the IMF will focus on (i) deepening its understanding of the economic benefits of women’s empowerment, both in the labor market and through more equal opportunities for boys and girls, also against the background of persistent megatrends, including in an environment of rapid technological change; (ii) integrating the analysis into Fund policy dialogue with member countries; (iii) providing customized assistance, workshops, and peer-learning courses in areas such as gender budgeting; and (iv) expanding collaboration with other international institutions on the subject to benefit from complementary areas of expertise.