At the recently held G20 Summit, a grouping of women leaders from the world’s 20 largest economies counting India, International Monetary fund Chief Christine Lagarde rightly described gender equality as “an absolute economic no-brainer”. Meaning, empowering women is imperative to boost economic growth. Till now, gender equality was looked through moral and cultural prisms. However, the economic case for gender parity is steadily gaining traction. A recent study by Mckinsey Global Institute titled ‘The Power of Parity: How equality for women could drive $12 trillion in global growth’ puts forth some interesting observations in this regard. It reveals that while gender disparity is among worst in India, it also stands to gain the most w.r.t GDP growth if it successfully narrows this wide gender gap.
Here are pointers that explain how national income can surge if women enter the workforce:
Where does India stand: The report suggests that gender inequality in India is “extremely high”. In a rather startling revelation, the report adds that Indian women face the same level of overall gender inequality as their counterparts in Middle East and North Africa (MENA) countries. Joining countries like Egypt, Iran, Pakistan and Saudi Arabia, India is one of the least successful countries in closing the gender gap. However, there is a ray of hope. If India is able to solve its gender imbalance problem, it stands to be the biggest gainer followed by Latin America. India could boost its 2025 GDP by a stunning $2.9 trillion or 60%. For best-in-region scenario, if India bridges its gender gap at the same rate as Singapore, it could add $700 billion (16%) to its GDP. China, on the other hand, could see a mere 12%, an increase in annual GDP in 2025.
What problems does India face: While women account for 50% of India’s population, they generate merely 17% of the country’s GDP. The low economic output by women can be attributed to three factors First, India has the lowest number of women in the labour force. Women account for only 23 to 24% of the labor force. This is in sharp contrast to a global scenario where women comprise about 40% of the labor force. India can boost its GDP by 80-90% simply by increasing its female labor-force participation! At the recently concluded G20 Summit, Christine Lagarde exhorted India to increase its female participation in the labour force “to the same level as that of men”. Second, women are mainly concentrated in low productivity sectors such as agriculture. They are insufficiently represented in higher productivity sectors such as business services. A paradigm shift in employment patterns is extremely crucial. Third, a large part of women’s labor goes into unpaid work— childcare, caring for the elderly, cooking, and cleaning. However, this work is not accounted for as economic output, thereby, widening the workplace gender gap further. Women in South Asia (including India) undertake as much as 80 to 90% of unpaid care work!
What are the solutions: Six important areas must be focussed on, to bridge the gender gap. These are a) financial incentives to women b) investing in women-specific infrastructure such as toilets, mobile apps for safety etc. c) Job creation. In fact, the report reveals that India will need to 6.8 crore jobs to improve parity between men and women. d) Access to education and vocational training e) Change in societal attitudes; f) Better laws, policies such maternal benefits, reducing gender pay gaps. The report: Conducted in 95 countries that are home to 93% of the world’s female population and generate 97% of global GDP, McKinsey has studied gender equality using 15 indicators. A Gender Parity Score (GPS) has been computed to find out the success rate of every country in tackling gender inequality. Gender equality is analysed through two situations — ‘full potential’ and ‘best-in-the-region’ scenarios. A ‘full-potential’ scenario, where women play an equal role in the economy to that of men—could add up a whopping $28 trillion, or 26%, to annual global GDP in 2025. A “best-in-region” scenario in which all countries match the rate of improvement of the best country in their region, could add $12 trillion in annual 2025 GDP. This number is equivalent to the current GDP size of Japan, Germany, and the United Kingdom combined!