Paola Subacchi
Research Director, International Economics
Gender-inclusive growth is an area where even modern countries with high living standards and well-educated populations don’t score as well as one would expect.
A father and daughter share a seesaw in a park in Stockholm, Sweden. Photo via Getty Images.A father and daughter share a seesaw in a park in Stockholm, Sweden. Photo via Getty Images.

Last week, the G20 formally established the W20, or Women20, a new initiative to promote gender inclusive growth. This is an important step toward finally taking gender equality seriously. Closing the gender gap and creating more economic opportunities for women is not only a moral issue, it’s smart economics. And it’s a lesson that all countries, including some of the most economically advanced, need to learn. (As the director of Chatham House’s international economics department, I have been involved in setting up the W20 project.)

Raising the number of women in the labour market has a positive impact on growth. According to the Organization for Economic Cooperation and Development (OECD), full convergence in participation workforce rates should increase the annual GDP per capita in OECD countries by 0.6 percentage points, with an equivalent increase in GDP of 12 per cent by 2030. Given the risk that the world economy could be gripped by long-term low growth rates — which International Monetary Fund chief Christine Lagarde has referred to the 'new mediocre becoming the new reality' — it would be foolish not to exploit this opportunity to boost growth. This is particularly critical for countries like Japan, which has an ageing population, low fertility rate — about 1.39 children per woman in 2011 — and approximately 60 per cent of women in paid employment, one third of whom are in part-time jobs.

Active policies and ambitious targets are essential to encourage more women in many developed countries to join the labour market, to ensure that women stand equal chances to get appointed to the top jobs, and to close the pay gap between men and women. The United States is a good example: without policies encouraging women’s participation in the workforce, the United States will continue to be a country where it is more likely that the person running a corporation is named John or David than is a woman. And this is not only a problem for women trying to climb the corporate ladder. The number of women in politics is also low: only 22 per cent of members of Congress are women, while there are almost twice as many men as women in the current administration.

Gender-inclusive growth is an area where even modern countries with high living standards (in relative terms) and well-educated populations don’t score as well as one would expect. In the United States, for instance, where about 40 per cent of the population is college-educated, 62 per cent of women of working age are active in the labour market — compared with 69 per cent in Canada, 68 per cent in Germany, and 74 per cent in Norway. Italy, another advanced economy and a member of the G7, performs even worse: only about 48 per cent of women are part of the labour market. Like Japan, Italy is struggling with ageing population, low fertility and an underperforming economy. All of the countries could be doing better if they increased women’s workforce participation.

The countries that excel at gender equality are the northern European states. For years, these countries have been promoting and implementing policies to narrow the gender gap. These policies stretch from maternity benefits for new mothers to excellent, cheap childcare (an area in which the United States, especially, scores poorly) to gender quotas for corporate boards (as in Norway where 40 per cent of corporate boards must be women as of 2006). These examples show that more active policies are needed to advance women’s rights and empower women in advanced economies. Assuming that being healthy, wealthy and well-educated would be enough to create the same opportunities for women as for men is not enough. In Britain, France, and Germany, for instance, policies to encourage women with children to stay in paid employment have resulted in a significant increase in the female participation to the labour market.

But the global picture is less positive. Between 1990 and today, the women’s participation rate in the global labour force dropped from 57 to 55 per cent. While this reflects a variety of factors, including tighter labour markets in many countries, it also proves that female economic advancement is not a linear process. Assuming that gender equality can take care of itself is fallacious. There is no substitute for well-targeted active policies.

In 2014, the Global Gender Gap Report, compiled each year by the World Economic Forum, assigned the United States a score of 0.75 (a score of 1 indicates perfect equality) and 20th place in the total ranking. This puts the United States behind not just Switzerland and Sweden, but also Nicaragua, Rwanda, Burundi and South Africa. Clearly, gender equality is not only a matter of income and education. Even among the best-educated individuals, gender equality shouldn’t be taken for granted. According to a 2013 study of the balance between the work and life of Harvard faculty, female professors with children spend 20 more hours a week on household duties compared with their male colleagues.

The creation of the W20 as one of the G20 engagement groups — a proposal put forward by Chatham House and Australian National University and championed by Turkey as this year’s chair of the G20 — promises to engage the leading forum for economic and financial affairs on gender equality. Economic growth is, of course, prominent on the G20 agenda. Ensuring sustainable, balanced, robust growth is a challenge for many countries and many policymakers. Now it’s time for governments — of developed and developing countries alike — to get serious about gender-inclusive growth by setting achievable targets and assessing progress.

This article was originally published in Foreign Policy.

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