Hiring More Women Could Add $7 Trillion to the Economy
Closing the gender gap in labor force participation can raise global economic activity by approximately 7%, a new Moody’s report found. In other words, the disparity between wages and the underutilization of women in the workforce is costing the global economy a staggering $7 trillion.
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The Moody’s report — titled “Close the Gender Gap to Unlock Productivity Gains” — noted that while achieving gender equality is part of the U.N.’s sustainable development goals (which it aims to achieve by 2030), “that target remains a long way off.” With the way things are going, it will take 132 years to reach full parity, the report noted.
What’s more, while gender gaps are present in all sectors, they widen as you move up the seniority ladder. Globally, only 23% of executive roles are held by women.
“The underutilization of women in the workforce, in terms of underutilizing their skills and time, causes an economic loss at the individual and macroeconomic levels,” the authors wrote in the report. “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.”
Report Indicates Gender Gap Exacerbated By Family Responsibilities, Lack of Connections
One of the causes of the gender gap in management positions is the heavier burden of family responsibilities placed on women, coupled with a lack of access to the same kind of connections men have, the report noted. Women may also be more frequently overlooked, and less likely to ask for promotions as compared to their male counterparts.
Commenting on the lack of executive roles held by women, Runa Knapp, chief business development officer at FoundHer, said there simply aren’t enough steps in place to allow women — especially mothers — to reach (and maintain a position in) the executive level in the workplace.
“Just recently we were reading about the number of female execs leaving the tech industry. Many citing a lack of opportunities for advancement, a lack of female role models and a non-supportive working environment,” said Knapp.
The Moody’s report also suggested that women are consistently overqualified for their jobs, a situation the authors referred to as “a consistent ‘underskilling’ of women in the workforce.”
Indeed, while women make a higher upfront investment in education, they tend to land in lower-level and lower-paid positions. The report’s authors found that in most OECD (Organization for Economic Co-operation and Development) countries and major emerging markets, the number of women aged 25 to 64 with a master’s degree or equivalent exceeds that of men.
“Women will help close the gap by continuing to support each other, join boards, find purpose over profit and make that the norm instead of just breaking the glass ceiling,” said Knapp. “FoundHer is just one organization focused solely on elevating women in the workplace. With more organizations realizing women are essential in the workforce and more policies like paid leave, affordable childcare, there’s hope that the gap will shrink.”
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This sentiment echoes the report’s conclusion, which indicated that while shifting social norms is a lengthy and complex process, policies concerning the enactment of flexible working conditions and the provision of affordable childcare — as well as paid maternity and paternity leave — help to drive positive change.
“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,” they wrote.
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