According to a new Moody’s report, closing the gender gap in labor force participation can boost global economic activity by about 7%. In other words, wage disparities and underutilization of women in the labor force cost the global economy a whopping $7 trillion.
The Moody’s report, titled “Close the Gender Gap to Unlock Productivity Gains,” noted that while gender equality is one of the United Nations’ sustainable development goals (which it aims to achieve by 2030), “that target remains a long way off.” If current trends continue, it will take 132 years to achieve full parity.
Furthermore, while gender gaps exist in all industries, they widen as you move up the career ladder. Women hold only 23% of executive positions globally.
“The underutilization of women in the labor force, in terms of underutilization of their skills and time, causes an economic loss at the individual and macroeconomic levels,” the report’s authors wrote. “Bridging the gender gap in management positions and empowering women in the workforce to reach their full potential would boost global productivity and economic output.”
The gender gap is exacerbated by family responsibilities and a lack of connections.
According to the report, one of the causes of the gender gap in management positions is the heavier burden of family responsibilities placed on women, combined with a lack of access to the same kinds of connections men have. Women may also be overlooked more frequently and are less likely to request promotions than their male counterparts.
Runa Knapp, chief business development officer at FoundHer, stated that there simply aren’t enough steps in place to allow women — especially mothers — to reach (and maintain a position in) the executive level in the workplace.
While women make a larger initial investment in education, they tend to end up in lower-level and lower-paying positions. The authors of the report discovered that in the majority of OECD (Organization for Economic Cooperation and Development) countries and major emerging markets, the number of women aged 25 to 64 with a master’s degree or equivalent outnumbers men.
This sentiment is echoed in the report’s conclusion, which states that while changing social norms is a lengthy and complex process, policies enacting flexible working conditions and providing affordable childcare — as well as paid maternity and paternity leave — help to drive positive change.
“This would be especially beneficial for developing economies, where the economic potential that improved gender equality would unlock is greater than in developed nations,” they wrote.
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