The Case for Gender Parity
There is a clear values-based case for promoting gender parity: women are one-half of the world’s population and deserve equal access to health, education, economic participation and earning potential, and political decision-making power. However, it is pertinent to note that gender parity is also fundamental to whether and how economies and societies thrive. Ensuring the healthy development and appropriate use of half of the world’s total talent pool has a vast bearing on the growth, competitiveness and future-readiness of economies and businesses worldwide.
A variety of models and empirical studies have suggested that improving gender parity may result in significant economic dividends, which vary depending on the situation of different economies and the specific challenges they are facing. Notable recent estimates suggest that economic gender parity could add an additional US$250 billion to the GDP of the United Kingdom, US$1,750 billion to that of the United States, US$550 billion to Japan’s, US$320 billion to France’s and US$310 billion to the GDP of Germany.13 Other recent estimates suggest that China could see a US$2.5 trillion GDP increase from gender parity14 and that the world as a whole could increase global GDP by US$5.3 trillion by 2025 if it closed its gender gap in economic participation by “just” 25% over the same period.15
Given associated government revenue shares in GDP, the latter achievement would also unlock an additional US$1.4 trillion in global tax revenue, most of it (US$940 billion) in emerging economies, suggesting the potential self-financing effects of additional public investment into closing global gender gaps.16 Indeed, compared to general public investment into labour market and education programmes, targeted gender equality promotion has been found to create a particularly strong impact on GDP. For example, targeted efforts to improve gender parity in the European Union could lead to an EU-wide GDP increase of between 6.1 to 9.6%, compared to an estimated 2.2% increase in EU-wide GDP from an equivalent untargeted public investment in improvements in general educational attainment across member states.17
Conversely, limiting women’s access to labour markets is costly, as poor female labour force participation hampers economic growth.18 As a region, East Asia and the Pacific reportedly loses between US$42 billion and US$47 billion annually due to women’s limited access to employment opportunities.19 Research by the World Bank demonstrates that similar restrictions have also imposed sizable costs throughout the Middle East and North Africa20 as well as Sub-Saharan Africa.21
This evident relationship between economic outcomes and gender parity and, in particular, the growing evidence of the positive effect of increasing gender parity on national income, is illustrated in Figure 9 (page 28) on the basis of the Global Gender Gap Index. The method of calculating the Global Gender Gap Index is unique in eliminating the direct impact of absolute levels of any of its constituent variables so that, as a result, any relationship to relative wealth of any of the economies covered by the Index is endogenous to the dynamics of closing the global gender gap.
As detailed in the previous section of the Report, the Global Gender Gap Index takes into account four critical dimensions when measuring the gaps between women and men’s access to resources and opportunities: economic participation, education, health and politics. Across these four different dimensions we see a number of positive interdependencies as well as knock-on and multiplier effects that highlight the multi-faceted nature of the benefits of increased gender parity.
For example, increased gender parity in education lowers infant and child mortality rates, lowers maternal mortality rates, increases labour force participation rates and earnings, and fosters further educational investment in children. The World Bank finds, based on a sample of a wide range of developing countries, that investing in girls so that they would complete education at the same rate as boys would lead to lifetime earnings increases of today’s cohort of girls of between 54% to 68% of countries’ GDP, equivalent to an increase in annual GDP growth rates of about 1.5%.22 Conversely, girls’ exclusion from education considerably hinders the productive potential of an economy and its overall development. In the East Asia and the Pacific region, specifically, it has been estimated that between US$16 billion to US$30 billion is lost annually as a result of gender gaps in education.23 Similar to investments in education, investing in health—and specifically in maternal, newborn and child health—has a significant multiplier effect.24
In the political sphere, women’s engagement in public life has a positive impact on inequality across society at large. The issues that women advocate, prioritize and invest in have broad societal implications, touching on family life, education and health. Women’s engagement in public life fosters greater credibility in institutions, and heightened democratic outcomes.25 In addition, there is a range of evidence—including findings by our Index (see Figure 10)—to suggest that women’s political leadership and wider economic participation are correlated.
Across all countries, making full use of women’s capabilities paves the way to optimizing a nation’s human capital potential. This is evidenced in the strong relationship between the World Economic Forum’s Global Gender Gap Index and Global Human Capital Index, presented in Figure 11. In other words, top performers in the Global Human Capital Index have succeeded in maximizing the development and deployment of their nation’s talent by also narrowing their gender gaps.
Women’s participation in the formal economy, or lack thereof, is also a business issue—costing women, companies and, ultimately, entire economies. Female talent remains one of the most under-utilized business resources, either squandered through lack of progression or untapped from the onset. Business leaders and governments increasingly note that tackling barriers to equality can unlock new opportunities for growth. In the World Economic Forum’s Future of Jobs Survey, 42% of business leaders perceived addressing gender parity in their company as a matter of fairness and equality; yet more than a fifth of those surveyed also highlighted rationales closer to their core business: reflecting the changing gender composition of their customer base as well as enhancing corporate decision-making and innovation.
The combined impact of growing gender parity, a new middle class in emerging markets and women’s spending priorities is expected to lead to rising household savings rates and shifting spending patterns, affecting sectors such as food, healthcare, education, childcare, apparel, consumer durables and financial services.26 With women controlling 65% of global household spending and estimated global consumer spending of currently US$40 trillion27 there are large potential benefits for companies with employees who can understand diverse customer bases.
Additionally, the global economy is currently in transition to a Fourth Industrial Revolution.28 In such a highly interconnected and rapidly changing world, diversity is critical to informed corporate decision-making and business innovation.29 When it comes to leadership positions, companies with top quartile representation of women in executive committees have been shown to perform better than companies with no women at the top—by some estimates as much as a 47% premium on average return on equity.30 Links also exist between having more women directors and corporate sustainability, as well as with economic growth, since more diverse leadership teams can cater to a broader array of stakeholder needs and concerns.31 Unlocking these benefits requires focused action to address the underlying causes of persistent gender gaps in a systemic way.