Close gender gap to increase global economic activity by $7 trillion: Moody's Analytics

Chennai, March 1 Closing the gender gaps in both labour force participation and management in OECD (Organisation for Economic Co-operation and Development) countries has the potential to raise global economic activity by approximately seven per cent, or about $7 trillion in today's dollars, said Moody's Analytics report.

"Closing the gaps in large emerging economies, including India, would raise that potential further still," the report added.

According to the report, in some countries, progress towards gender equality in the workforce seems to be headed in reverse in the UK, France and Turkey, the share of women in senior and middle management positions declined from 2010 to 2019.

The underutilisation of women in the workforce, in terms of underutilising their skills and time, causes an economic loss at the individual and macroeconomic levels.

Bridging the gender gap in management positions and raising women in the workforce to their potential would raise productivity and economic output across the globe.

This boost to economic activity stems from a rise in the number of people in work, with more women joining the labour force and an increase in productivity, as a greater share of women become employed in more productive managerial and professional roles.

According to the World Economic Forum's Global Gender Gap Index, which measures gender parity across economic, educational, health and political dimensions, at the current rate, it will take 132 years to reach full parity.

Sectors expected to drive future productivity, including information and technology via the increasing digitisation of the economy, have a much lower share of female leaders than other service sectors. This alone suggests that women are primed to miss out on the potential wage and income gains from this rapidly expanding sector.

In all sectors, gender gaps widen as you move up the seniority ladder. Globally, only 23 per cent of executive roles are held by women.

According to the report, this is not connected to the educational qualifications of women as inmost OECD countries and major emerging markets, the number of women age 25 to 64 with a master's degree or equivalent exceeds that of men.

If women achieve higher educational attainment than men but are significantly underrepresented in middle and senior management roles, we can draw two conclusions: The returns on education are lower for women, and this reflects a consistent 'underskilling' of women in the workforce. On average, women make a higher upfront investment in education but tend to land in lower-level and lower-paid positions, employed below their skill level, as measured by their educational accomplishments, Moody's Analytics said.

In conclusion, Moody's Analytics said surveys on the root causes of the gender gap in management point to the heavier burden of family responsibilities carried by women, a lack of access to the same kind of connections as men, women being less likely to ask for promotions, as well as women being held to higher standards than men.

While shifting social norms is a lengthy and complex process, policies such as enforcing flexible working conditions and providing affordable childcare as well as paid maternity and paternity leave help to drive change in the right direction.

This would be particularly beneficial for developing economies, where the economic potential that would be unlocked from improved gender equality is higher than in developed nations," the report said.