The Strategist

The Global Economy Can Grow by 20% With Help of Women

09/29/2015 - 16:07

Full participation of women in employment would increase the size of the world economy up to 20% by 2025, estimated McKinsey’s analysts. A more realistic scenario would be not elimination, but gradual reduction of existing gender disparities by investing in the education of women and the creation of jobs for them in highly productive sectors. All this would make 8%-increase of global GDP by 2025.
Women make up half the world's working-age population, yet they account for only 37% of the GDP generated. After analyzing the statistics of 95 OECD countries, producing 97% of world GDP, analysts at McKinsey concluded that real gender equality in the world is still far out of reach. In fact, no region have the equality: in India, the Middle East and South Asia, women are involved in the creation of about 20% of GDP; in North America the figure is 40%.

The report notes that the inequality arises from the fact that women are less active in the labor market, more often work part-time. Besides, comparing to men, women are employed in low-productivity sectors of the economy - for example, in agriculture - more often. In addition, women perform 75% of the unpaid work - caring for children and the elderly, cleaning, cooking. Some of this homework, analysts suggested, may be paid or shared equally between men and women. The cost of such work are estimated at $ 10 trillion a year - about 13% of world GDP.

The researchers modeled what would happen if the situation was changed and got the two scenarios. "Ideal" means the full participation of women in the economy and leads to an increase in global GDP by 20% (to $ 28 trillion). This result emerged from the simulation of three factors:

- In the labor market, women act as active as men (54% of this growth)

- Full time

 -Transition from low-productivity to high-yield sectors (production, business services - 46%)

Second, "relatively realistic" scenario is calculated based on the slow growth of women's participation in labor relations and employment in highly productive sectors. This would add 8% to the world's GDP ($ 12 trillion). The report specifies that such a path would require an investment of $ 3 trillion, aimed at education and job creation in high-yield sectors (the ideal scenario’s price was not calculated).
The report does not consider the applications of legal regulation of gender equality. It should be noted that among the world's largest economies, only the USSR ( since 1920) and China (since the 1950) had been establishing forced equality in the labor market. However, due to historical circumstances (recovery from the civil war), there is no reliable estimates on how access for women to the labor market affected the dynamics of the GDP in this period. Measures that would help women achieve equality depend on the region, the report says. Among the options are favorable public attitude, infrastructure and technology development (kindergartens, safe transport), vocational training programs. Researchers believe that the fastest real result - growth of about 13% as per "relatively realistic" scenario - can be achieved in India and Latin America.