14.09.2022

IMF: IF MORE WOMEN WORK, WORLD PRODUCTION WILL INCREASE BY 35%

Too many women are deprived of economic opportunity, which is not only unfair, but harms growth and sustainability for all. We know that in countries with greater gender inequality, closing the gap in women's labor force participation alone can increase economic output by an average of 35%. This is noted in an analysis by a joint team led by IMF Managing Director Kristalina Georgieva, Antoinette Sayeh, IMF Deputy Managing Director, and Ratna Sahai, Senior Gender Advisor, entitled "How to overcome the gender gap and to develop the world economy'.

However, progress has been slow, and shocks such as health and climate disasters, social unrest and war continue to exacerbate gender inequality, directly affecting women's lives and livelihoods or preventing them from attending school and working.

According to the report, appropriate economic and financial policies can help reverse these negative outcomes by improving economies by supporting recovery and building resilience against future shocks. In other words, a dividend for women is a dividend for everyone.

For example, while the pandemic has set women back everywhere, it has also led to policy innovations. Several emergency pandemic relief programs targeted women and brought more people into social safety nets. This makes it easier to provide targeted assistance to deal with the current spike in food and fuel prices. For policymakers, there are proven solutions for taking gender-responsive macroeconomic action.

First, to increase investment in women's human capital. The gains from ensuring women's equal access to food, health and education are particularly large in countries with emerging and developing economies. Consider cash transfers that help families afford the basics in countries with less developed social safety nets. At the start of the pandemic, Brazil introduced the "Emergency Aid" cash transfer program, which provided double aid to female-headed households. IMF staff estimates that without Emergency Assistance, the poverty rate among these households would have increased from 11 percent to over 30 percent, but instead fell to about 8 percent. And Egypt recently extended cash assistance to low-income single mothers, helping them keep their children healthy and in school. In Togo, mobile technology helped speed up emergency financial aid during the pandemic, with women particularly benefiting.

The second proven solution according to the IMF report is to enable women to work outside the home or start their own businesses. Reforms in taxation, public spending, financial infrastructure and regulations, and in labor markets can also help. Providing access to quality and affordable childcare frees up more women to work and also directly creates jobs. In Norway, the expansion of universal child care increased the probability of mothers being employed by 32 percentage points. In emerging and developing economies, access to mobile phones and the Internet opens the door to economic opportunity. For example, IMF studies show that traditional and digital finance help close the gender gap in access to financial services, including microcredit – leading to lower income inequality and higher growth.

The third area is the fight against prejudice. Out of 190 countries surveyed, the World Bank found that women were legally equal to men in only 12 countries. According to the Organization for Economic Co-operation and Development, gender-based discrimination in social institutions costs the world economy $6 trillion. But in recent years, states have reduced those costs through social and legislative action, such as limiting child marriage, criminalizing domestic violence and increasing the number of women in elected office.

Fourth, increasing the representation of women in leadership positions is also critical. IMF analysis shows that a greater presence of women in financial institutions and in financial policy-making goes hand in hand with greater financial resilience. And in fintech companies and the corporate sector, higher numbers of women in leadership positions are associated with better results and profitability, respectively.

The IMF has been supporting its members in introducing and improving gender equality policies for years. The Executive Board recently endorsed the IMF's first comprehensive Gender Mainstreaming Strategy to help members adapt gender equality policies to their unique circumstances. The strategy recognizes that macroeconomic and financial policies affect women and men differently, albeit often unintentionally.

For example, Egypt expanded preschool education and improved public transportation safety under an IMF-supported program, thereby helping women reach their workplaces. And Sao Tome and Principe, with the support of an IMF program, launched a gender budgeting initiative—the use of fiscal policies and institutions to promote women's equality across government programs.

Under the new strategy, over the coming years the Fund will work with 190 member states and external partners to broaden the scope of its policy recommendations and bring greater rigor to its analysis to help more countries prepare and implement policies to support gender equality. Over time, gender-responsive macroeconomic and financial policies will lead to higher growth, greater economic stability and resilience, and reduced income inequality—a dividend not just for women, but for all, the report concludes.