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IMF urging political leaders to close the gender gap.

Closing gender gap to improve world economy

Closing gender gaps can help countries recover from the global economic crisis, a report from the International Monetary Fund (IMF) says. However, without a significant step up in policy efforts, gender gaps may in fact never close, the IMF says in a research paper.

Narrowing the gap between the share of men and women who work is one of the very important reforms policymakers can make to revive economies amid the weakest medium-term growth outlook in more than three decades, the IMF report says.

“With global growth predicted to languish at just 3% over the next five years and with traditional growth engines sputtering, many economies are missing out by not tapping women’s potential”, IMF says in a blogpost presenting the report. 

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The report shows that only 47% of women are active in today’s labour markets, compared with 72% of men. The average global gap has fallen by only 1 percentage point annually over the past three decades.

“To blame are unfair laws, unequal access to services, discriminatory attitudes and other barriers that prevent women from realizing their full economic potential. The result is a shocking waste of talent, leading to losses in potential growth”, the IMF blog says.

“We estimate that emerging and developing economies could boost gross domestic product by about 8% over the next few years by raising the rate of female labour force participation by 5.9 percentage points—the average amount by which the top 5% of countries reduced the participation gap during 2014-19. That’s more than the economic “scarring,” or output losses, inflicted on countries by the pandemic.

The blog says that policymakers can of course lift growth in many ways, from governance reforms to strengthen institutions, to financial reforms to unlock capital for investment.

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“Complementing these reforms with measures to narrow gender gaps would greatly amplify these returns.”

“Our analysis of three decades of data shows that countries have made progress increasing women’s participation, but economies of all income levels experienced several setbacks—a result of shocks, crises and policy reversals.” 

“The pandemic, for example, eroded progress closing gender gaps, especially for women with young children. Setbacks like this cause scarring that slows and often reverses progress toward gender equality.”

“As a result, gender gaps in labor force participation will narrow but never close if countries continue on their present policy path. Gaps would remain large for most countries, exceeding 16 percentage points in one out of ten countries.”

The IMF blog says that countries must step up efforts to break down barriers to women’s participation in the labor market—such as limited access to education, health, assets, finance, land, legal rights, and care services. 

“They should systematically take account of how macroeconomic, structural, and financial policy packages impact women.” 

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The World Economic Forum (WEF) recently estimated that it will take 131 years to globally reach full gender parity if improvements continue at the present modest speed.   

 “While the global parity score has recovered to pre-pandemic levels, the overall rate of change has slowed down significantly. Even reverting back to the time horizon of 100 years to parity projected in the 2020 edition would require a significant acceleration of progress”, the WEF says.

“Over the past century, the proportion of women in paid work has tripled in many high-income countries. This is one of the biggest societal and economic changes in the labour market in modern times, but significant gender differences remain. It was first in the 1980s that a researcher adopted a comprehensive approach to explaining the source of these differences”, the Swedish Nobel Prize Foundation said when US professor Claudia Goldin was awarded the economy prize in memory of Alfred Nobel.

She has “advanced our understanding of women’s labour market outcomes”, the Swedish academy of science said, describing why she gets the award.

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