Diversity Dividend

Posted on Jul 11, 2017

Diversity Dividend - Broadly Speaking Blog - Man and Woman Figures On Even Scales

“If women do not achieve their full economic potential, the global economy will suffer.”

Diversity Dividend

The $12 trillion gender gap

Bridging the gender gap in the workplace is not just a question of equality, but also a matter of economics.

In 2015 a private sector think-tank, the McKinsey Global Institute, estimated that a massive $12 trillion could be added to global GDP by 2025 by advancing women’s equality.

 

The report’s message was clear. “If women – who account for half the world’s working-age population – do not achieve their full economic potential, the global economy will suffer,” it noted.

A year later McKinsey published another think-piece, once again calling for greater gender equality in a bid to boost the global economy. “At current rates of progress in women rising to the C-suite, it will take more than 100 years to bridge the gender gap in the upper reaches of US corporations,” it pointed out.

Fundamental values

Europe too is increasingly aware of the economic importance of a more gender-balanced workforce. In March, to mark international women’s day, the European Institute for Gender Equality (EIGE) published a study which showed that a more gender-balanced labour market would lead to more jobs being created and an increase in GDP per capita.

The study found that improved gender equality would generate up to 10.5 million additional jobs by 2050 and the EU employment rate would reach almost 80 per cent.

“Equality between women and men is one of the EU’s fundamental values. It is about fairness. Now numbers talk: equality is a driver for economic growth. Gender equality will bring more growth to Europe,” said Vera Jourová, commissioner for justice, consumers and gender equality, speaking at the time of the report’s publication.

Encouragingly, September 2016 figures from Ireland’s Economic and Social Research Institute point to an increase in the female labour market participation rate in Ireland in recent years. There’s room for further improvement though.

Women in workforce up 20pc

In 1992, 48 per cent of women aged 20 to 64 were in the labour force. By 2007, this had risen to 67 per cent, according to the ESRI.

“However, the female participation rate has stabilised since the beginning of the financial crisis. In 2015, 68 per cent of women aged 20 to 64 were in the labour force,” its report noted.

Also, the ESRI predicted that the recent rise in educational attainment among women “is likely to result in a significant increase in the number of women in the workforce over the next five years”.

According to Dr Kara McGann, senior labour market policy executive with business representative body Ibec, increasing the female labour market participation rate is “essential to fulfilling economic potential and competitiveness in Ireland”.

“The macroeconomic gains and benefits of greater female labour market participation can be examined through a number of lenses including general business benefits, the impact on the ageing demographic, and the skills and talent gap challenges,” she said.

Childcare and taxes

However, McGann said there are a number of issues that must be addressed in order to facilitate increased labour market participation by women. She cited a number of challenges such as “the availability of affordable, quality childcare” and “the tax treatment of second earners”.

On the tax point, McCann said there’s “an entry cost effect that reduces the net reward from employment leading to a parent – most often a female -– stepping out of the labour market or reducing to part-time roles in response.”

She believes that Ireland must urgently address the continued imbalance in its labour market. “Failure to urgently address this situation will increase the gender balance issues facing women in business, deprive business of the financial, innovation and problem-solving benefits of diverse teams, cost the exchequer in terms of benefits payments and lost tax revenue and lead to Ireland’s economic competitiveness and growth being stifled,” she warned.

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