More Women in the Workforce Could Raise GDP by 5%
Nearly one billion women are poised to enter the global economy in the coming decade. That's a hard fact. The question is whether theirs will be a story of economic empowerment or missed potential. A new study from Booz & Co., "Empowering the Third Billion: Women and the World of Work in 2012," suggests concrete steps that governments and employers can take to tilt the scales toward success.
This study sharply contrasts with many of the existing indices that measure women's potential, which tend to paint a gloomy picture of victimhood, especially in emerging markets. For example, the aim of the World Economic Forum's "Gender Gap Index" is to provide "a framework for capturing the magnitude and scope of gender-based disparities around the world." While its benchmarks for national gender gaps on economic, political, educational, and health-based criteria are extremely valuable, it is essentially a compilation of the barriers to women's advancement. Similarly, UNESCO's "Gender Equality Index" (PDF) spotlights disparities in educational opportunities and adult literacy, certainly creating greater awareness among a global audience of the challenges women face but at the same time enhancing the magnitude of the problem without offering any solutions.
What I find so provocative about the Booz study is that it focuses exclusively on women in the workplace and examines the issues that hold them back from achieving their full business potential. What I find exhilarating is that it takes this a step further — by pointing out the specific levers to be pulled so that women can actually make a difference to their country's economy.
Many of the issues that the Booz index identifies are ones that were spotlighted in the Center for Talent Innovation's research on women professionals in emerging markets. While CTI research focused exclusively on the BRIC nations (Brazil, Russia, India and China) and the UAE, the Booz study covers a wide swath of 128 countries ranging from Italy to Indonesia, from Singapore to Syria, from Canada to Chad.
Yet both our work and the Booz study find that the two basic issues that hold educated women back from achieving their full potential are the same:
The care economy. Women are the primary caregivers for children, the elderly, and the sick, and this burden hampers their economic development. The Booz study notes that women in OECD countries spend about 2.4 hours each day more than men on such unpaid work. CTI research found that eldercare obligations far outweigh childcare responsibilities in India and China, where 94% and 95% of our survey respondents, respectively, care for their parents, with more than half contributing a significant percentage of their annual income (23% and 18%, respectively) to parental support.
Eldercare is an especially potent drag on women professionals, hitting them just as their careers are reaching their full potential. Cultural insistence that a daughter's first duty is to her parents causes many women to either cut back on their career ambitions or leave the workforce altogether. This issue has long been ignored, but with increasing longevity, eldercare issues will loom ever larger in the coming decades.
Inclusion. Once women begin to move ahead on their career path, their forward momentum can be derailed by a number of factors. The Booz study spotlights such levers as the pay ratio between men and women, the number of female leaders who serve as political, social, and business role models, and even how easy it is for women to win financial credit for their entrepreneurial dreams. These add up to whether women feel their career ambitions are supported or disdained. CTI research finds that women in emerging markets routinely encounter bias in the workplace severe enough that large numbers (55% in India, 48% in China, and 40% in Brazil) disengage or consider dropping out altogether.
Both of these problems can be addressed by employers who recognize that high-potential women are being sidelined by these issues. If companies want to see their talented women reach their maximum potential, they will have to recognize the magnitude of the child- and eldercare problems and help provide high-quality, accessible care solutions. Further, companies must recognize whether their work environment is holding back rising female stars, and create procedures and programs that protect, support, and sustain women's ambition.
Even small breaks in these barriers can lead to dramatic economic benefits. Booz estimates, for example, that if female employment rates were to match male rates in the United States, overall GDP would rise by 5%. In Japan, such initiatives could increase GDP by 9%. In developing economies, the effect soars into the double digits.
At the end of the day, we're all searching for a path to global economic recovery. Political and corporate leaders must recognize that women are the solution. Rather than wringing their hands over the issues, why not implement actions that enable women to achieve their power and potential in the marketplace?