The economic case for addressing the gender gap
We are facing a global context of slow growth and weak recovery — with low productivity growth, half-performing engines of trade and investment, and slowing growth in the EMEs.
The long-term impact of the crisis is low levels of investment, long-term unemployment, and reduced labour market participation, resulting in reduced potential output, i.e. the ability of our economies to grow over the long-term.
We need a bold policy response. We must harness all sources of growth, including raising women’s participation in the labour market.
These factors have motivated the OECD to push very hard for gender equality and call vigorously for concrete commitments (such as the G20 25×25 target) in this area.
Women are less likely to study engineering, manufacturing, and construction
Let’s start with an overview of the various dimensions of this gender gap, beginning with education.
- In most OECD countries, including Italy, young women now obtain a higher level of educational attainment than young men. In fact, in many OECD countries there are serious concerns about boys dropping out of school and not reaching the baseline level of performance in reading science and maths, while in other (typically developing) economies, keeping adolescent girls in school remains a challenge.
- Men and women also tend to make different choices in field of study. Across the OECD on average, only 24% of graduates in engineering, manufacturing and construction are women. OECD research finds that these outcomes are not linked to ability as much as to attitudes: young girls, even when they are good at math, have less self-confidence than boys in their own math problem solving ability. Girls often express strong feeling of anxiety towards mathematics.
- Italy is doing better than the OECD average in the female share of graduates in engineering, manufacturing and construction, but Italy is still far from reaching equality: only 34% of graduates in these fields are women.
With evidence from OECD PISA work and OECD Education at a Glance in hand, the OECD continues to raise this issue on the international leadership agenda: The OECD contributed to the G7 Ise-Shima Summit, and the Leadership declaration includes a commitment to empowering women and girls – including through capacity-building (such as education and training) and by promoting the active role of women in Science, Technology, Engineering and Mathematics (STEM) fields.
Female labour force participation rates and gender gaps differ across the OECD
Although young women are doing very well in years of schooling, and often exceed the educational attainment of young men, we still see women lagging behind men in the labour market. This represents a lot of lost potential.
Female labour force participation (FLFP) rates differ enormously across OECD countries.
- The lowest FLFP rates are in Turkey, Italy and Mexico. Italy has significant room for improvement with a prime-age FLFP rate of 55%. The gender gap in LFP is also relatively large in these countries. In Italy, the gender gap is nearly 20 percentage points, compared to an OECD average gap of 12 percentage points.
- In contrast, in countries such as Denmark, Norway, Switzerland, Sweden, and Iceland, more than three-quarters of women are in the labour force. Women’s rates in these countries are comparable to men’s.
- If we consider the intensity of participation, gender gaps would be even larger because women are more likely than men to work part-time, especially in some European countries. For example almost 4 out of 10 employed women in Germany work on a part-time basis.
Gender pay gaps are substantial across countries
Gender gaps also persist in pay. Across countries, women still earn less than men. The median hourly gender pay gap in OECD countries in 2014 was is 12.5% on average.
- Gender pay gaps are relatively low in Italy, Mexico and Turkey, but remember that pay gaps only concern those women who are in paid work: in these countries, many women with childcare responsibilities are not in employment, and women who do work may have relatively high earning potential.
- Many factors drive the gender pay gap, including:
- high rates of workforce withdrawal and career interruption among young and childrearing-age women;
- low-paying jobs;
- gender segregation in occupation and sectors;
- the under-representation of women in senior management and on company boards;
- high levels of informality; attitudes and social institutions;
- and discrimination in hiring, pay, and promotions.
The 2013 OECD Gender Recommendation on Education, Employment, and Entrepreneurship
To help close gender gaps, in 2013 OECD countries agreed to a set of policy measures to promote gender equality in the “3 Es”: Education, Employment, and Entrepreneurship. Let me mention a few noteworthy examples:
In education, public policies should:
- Help ensure more gender-equal representation across fields of study, by reviewing teaching material and practices against stereotyped representations;
- Help teachers become aware of unconscious gender bias, and provide better information to boys and girls about educational pathways and potential pay;
- Raise the profile of career opportunities and role models. For example, in the United States, the Department of Education’s “Race to the Top” programme prioritizes improving STEM achievement overall and within under-represented groups – including women and girls – in awarding grants to states.
To reduce gender gaps in employment:
- Family-friendly policies, particularly access to childcare and paternity leave, are important policy levers to support working parents and help close gender gaps in labour markets.
- More and more countries are introducing paid leave for fathers to incentivize them to contribute to childcare for babies and very young children. About 3/4 of OECD countries now offer paid leave reserved for fathers. On average across the OECD, fathers are entitled to eight weeks of leave, measured as the total weeks of paid paternity and parental leave that can only be taken by the father.
- Gender gaps persist in entrepreneurship, especially when it comes time to grow the business and hire employees. Policy actions to promote female entrepreneurship include ensuring equal access to finance; reducing barriers and administrative burden on firms; and support for training programs, awareness campaigns and networks for female entrepreneurs
Promoting equality at the highest levels of the private sector
One example of “policies in action” are gender targets, quotas and disclosure requirements to get more women into senior management and executive levels. These measures have been helping to close gender gaps at the upper levels.
As the chart shows, only about one in five board seats on listed companies across OECD countries are occupied by women. Finland, France, Norway, and Iceland perform the best, with over 30% of board seats held by women. Italy also does relatively well, at 26%, in part due to the 2011 introduction of quotas for women on boards.
- Norway was the first to introduce board quotas in 2005.
- Italy also introduced a temporary and gradual quota. A team of researchers recently published a paper showing that the reform was associated with more female board directors and higher levels of education on the board. On the other hand, they found no effect on firm performance.
Note: The 2013 Gender Recommendation does not call for quotas, but calls for more research on the effects of quotas. The Recommendation calls to increase the representation of women in decision-making positions by:
- Encouraging measures such as voluntary targets, disclosure requirements and private initiatives that enhance gender diversity on boards and in senior management of listed companies;
- Complementing such efforts with other measures to support effective board participation by women and expand the pool of qualified candidates;
- Continuing to monitor and analyse the costs and benefits of different approaches – including voluntary targets, disclosure requirements, and boardroom quotas – to promote gender diversity in leadership positions in private companies.
Promote gender equality in public and private leadership
Women are also under-represented in public life. Women are still a minority in parliaments, ministerial positions and the judiciary. This means that women’s voices are missing where important decisions are being made.
On average, across OECD countries, women occupy around 28% of seats in parliaments, though this is an eight percentage point improvement compared to 2002.
2015 OECD Recommendation on Gender Equality in Public Life
Because it is so important to ensure gender equality in governance and public leadership, in 2015 OECD countries agreed to a set of policy measures to promote gender equality in public life.
Affirmative action measures such as gender quotas and parity principles are being used to accelerate women’s representation in all levels of government or as political candidates in various OECD countries and beyond. In Mexico, for example, quotas and the subsequent introduction of the parity principle in the Constitution have strongly influenced increasing women’s access to elected bodies, both at the federal and state level.
However, quota requirements in the electoral law are not sufficient to increase women’s representation in politics. Other measures laid out in the 2015 OECD Recommendation on Gender Equality in Public Life public life include:
- Ensuring that women have leadership opportunities (e.g., participate in committee work as chairs);
- Ensuring a gender-sensitive work environment; and
- Fixing holes in the “leaky pipeline”. In getting more women into any type of public or private leadership role, it is important to ensure that all well-qualified women can make it to the top – for example by providing childcare supports, flexible workplace practices, and reasonable work hours.
Ongoing work on Gender
The OECD has a broad portfolio on gender. The cost of gender inequality is too high – we cannot afford to ignore this issue.
We are currently preparing a “progress report” which will evaluate how countries are doing in implementing the policy measures put forth in the 2013 Gender Recommendation. This progress report will launch in 2017.
Other OECD work includes the Gender Data Portal, Gendernet, the Index of Social Institutions and Gender (SIGI), and a series of country gender reviews. We have completed our gender review of the United States, and will soon launch our gender reviews of Germany and Mexico.
Ending violence against women
The OECD is strongly committed to drawing attention to, preventing, and ultimately ending violence against women.
Violence against women is not only a violation of basic human rights, but it has a high financial cost: OECD estimates suggest that discriminatory social institutions – including violence against women – cost the global economy approximately 12 trillion US dollars a year.
To end gender-based violence, we must target root causes. The OECD is addressing gender-based violence as part of a holistic and ambitious gender equality agenda to empower women and girls in all spheres of their lives. As part of this Call to Action:
- First, we will focus on data. Data on the prevalence and incidence of gender-based violence remain scarce. Statistics on how much money is going to combatting violence against women are also inadequate. The OECD is working to fill these data gaps.
- Second, we will focus on policies to tackle the root causes of violence against women. The OECD Social Institutions and Gender Index, or SIGI, looks at the laws, attitudes, social norms and practices that drive violence against women. Across the 160 countries included in the SIGI, one in three women agree that domestic violence is justified; in some countries, this climbs close to 90%. Our research reveals that such discriminatory social institutions cost the global economy approximately 12 trillion U.S. dollars.
- Third, we will drive collective action to improve the response to gender-based violence on the ground. The OECD supports countries and UN agencies to address the risks and threats that fuel crises around the world. We will work with members to put gender front and center in these efforts.
The G20 Gender Target
In the context of 1) slow growth and reduced potential growth and 2) a lingering under-utilization of women’s skills and competences in the labour market, the OECD worked hard, along with the G20 membership, to build a powerful agenda aimed at reducing gender gaps in labour markets. This work culminated in the “25 by 25” target.
- The US Sherpa asked the OECD, with other institutions, to document how much gender participation would add to growth. We patiently built the case. The issue was transferred to the WG on Employment of the G20 where our Director for Employment, Stefano Scarpetta, led the charge for the analytical substance and definitions, and convincing experts that it was not only necessary but possible. We had to show how achieving this target would contribute to reaching the Brisbane “2 in 5” objective which was the sort of cornerstone of the Australian Presidency in 2014.
- These efforts were supported by the US and the Australian G20 Presidency, but also by Japanese Prime Minister Shinzo Abe, who unveiled domestic policies to encourage more women to return to work after the birth of their first child.
In the end, we brought it to the leaders’ table when discussing the Communiqué in Brisbane. G20 members agreed to implement measures across a range of key policy areas, subject to national circumstances, including to (G20 LEMM Declaration, 2014):
Gender in the G7
Gender equality is also a key component of the G7 agenda. In 2015, under the German presidency, G7 countries adopted principles to improve female entrepreneurship, and in 2016 the Japanese presidency has focused on improving women’s representation in STEM.
The OECD supports these efforts, and we stand ready to support the Italian presidency as well.