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Home Opinion Time to add gender equality to the growth agenda
Women • Growth • Economics

Time to add gender equality to the growth agenda

Mari Kiviniemi - 09 April 2015

Women’s equality is not just a matter of fairness. It is key to a nation’s economic performance and sound governance

It is now seven years since the financial crisis struck, wreaking economic and social devastation. We are still dealing with the legacies: low growth which is only slowly picking up; way too high unemployment; and worrying levels of inequality. Together, these have contributed to a decline in citizens’ trust of the very institutions that we see as the only legitimate vehicles for the policy reforms needed to unlock stronger, fairer, greener growth.

Rising inequality is first and foremost an ethical, social and political concern. It undermines the capacity of individuals to engage with one another, to benefit from the fruits of progress and weakens the very basis of our democracies. But there is now a growing body of evidence proving that inequality also has significant economic costs and restrains a broad-based sustainable recovery. The OECD has recently published a paper that confirms that when income inequality rises, economic growth falls. We estimate that an increase in inequality similar to that seen in the OECD over the past two decades – three Gini points, on average – reduces economic growth by about one-third of a percentage point per year. After 25 years, the cumulative loss in GDP would be in the order of 8.5 per cent. We also found that lack of investment in education for the poor is the main factor behind this effect. It is important not to see these figures as some disconnected data. Behind those numbers, people’s ability to participate fully in society is put at risk. This is why the equalities agenda should stand high on the agenda of governments and policymakers.

We need to understand what is happening in our economies, so as to put them back on the right track. We need to look at all the dimensions – social, economic and environmental – that impact on people’s daily lives. Breaking the cycle requires the contribution of both macro and structural policies. Macro policies are necessary, but alone they are not enough. Structural policies are also needed to strengthen economic performance and to support, growth but also make it more inclusive. An ambitious policy agenda must therefore address both the ‘productivity puzzle’ while at the same time ‘bringing people on board’.

This multidimensional approach is at the very heart of the New Approaches to Economic Challenges and Inclusive Growth initiatives, which are now at the core of the OECD’s advice. There is also a need for a greater focus on job quality – not just more jobs, but better jobs, too – and to encourage investment in education and life-long learning to ensure people have the skills they need for the jobs they want.

These inclusive policies are and should be for all. Unfortunately, half of the globe’s population requires particular policy attention: women.

First, it is a question of fairness. Women may have similar rates of paid employment as men but this does not mean that they are paid the same or that they have the same opportunities for career advancement. Across OECD countries, women working full-time earn on average 16 per cent less than men, although there is substantial variation among countries.

Women do not stop working when they leave the office. At home, women still bear the brunt of unpaid work, such as caring for children and household tasks. If women and men were to share unpaid tasks equally, women would gain five hours of free time per week.

Second, it is a question of economic performance. There can be no long-term, robust growth without gender equality, a critical ingredient of any strategy for resilient and more inclusive growth.

Investment in women boosts economic development, competitiveness, job creation and GDP. Let me give you just one telling example: we estimate that, on average, across the OECD, a 50 per cent reduction in the gender gap in labour force participation can lead to an additional gain in GDP of about six per cent by 2030, with a further six per cent gain (12 per cent in total) if complete convergence occurs.

Third, it is a question of sound governance. In the public sector, data point to lower levels of inequality, additional confidence in government, and increased spending on health in countries with a larger number of women ministers or in legislatures. Ensuring that decision-making bodies reflect the diversity of the societies they represent guarantees a balanced perspective in designing and implementing these rules, and enables an inclusive approach to policy-making and service delivery.

OECD findings from our report Women, Government and Policy Making in OECD Countries suggest that despite notable progress, on average, women represent less than one-third of decision-making posts in all branches of power in OECD countries.

They also point to a range of internal and external barriers to women’s leadership in public life, although these obstacles are common to the whole workplace environment. Internal barriers, linked to women’s capacities, are mainly due to gender-stereotyping. Changing women’s perception of their own capacities, beginning at an early age, is catalytic to quashing stereotypes and gives girls who are to become women the encouragement they need to pursue leadership positions and work in areas typically considered to be a man’s domain.

External barriers to women’s empowerment are linked to systems that are not adjusted to women’s or family’s needs. In overcoming these barriers, both the law and policymakers play a major role, especially by making effective use of existing tools such as gender impact assessments.

A whole-of-government approach is crucial to advancing the role of women. For example, OECD Recommendation on Gender Equality in Education, Employment and Entrepreneurship identifies good practices and policy avenues that can support governments in improving gender balance. We are also preparing a forthcoming OECD Recommendation on Gender Equality in Public Life which focuses on three main areas: good governance and accountability for gender equality; closing leadership gaps in public life; and equal access to public employment. By implementing them, governments can improve the gender balance in public life and empower women to serve in key decision-making positions.

I believe it is up to each and every one of us to engage with, and embrace, this effort. Men and women should share their experiences with the younger generation to empower them and overcome social biases and clichés. We also need more role models, and to make sure that we work together to make sure that gender finally becomes a strength and an asset for our societies to be more inclusive, resilient and equal. The OECD stands, in this regard, ready to help policymakers develop better policies for better lives.

Mari Kiviniemi is deputy secretary-general of the Organisation for Economic Cooperation and Development and a former prime minister of Finland

This is a contribution to Policy Network's work on Social Policy and Changing Welfare States.

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The Policy Network Observatory promotes critical debate and reflection on progressive politics. It is centre-left orientated but determinedly challenges social democracy. It is pro-European but restlessly questions EU institutions and practices.

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