‘Women empowerment critical to economic growth’

THE Managing Director of International Monetary Fund (IMF), Christine Lagarde has described women empowerment as a critical aspect of economic development and growth.

Speaking at the inaugural gathering of Women’s 20 (W-20), in Ankara, Turkey at the weekend, Lagarde said empowering women boosts economic growth.

She recalled that in November 2014, the G-20 pledged to reduce the gap in women’s labour force participation by 25 percent by the year 2025. The IMF boss estimated that the development which would have the benefit of creating an estimated 100 million new jobs for the global economy.

Lagarde said: “That was the Promise of 2025. Today, I want to focus on how to deliver on that promise. Certainly, it represents a major challenge.

But with so much attention focused on gender equity by the post-2015 Sustainable Development Goals this year, and by the G-20’s pledge from last year, we clearly have a unique moment of opportunity.

We must seize it”. Speaking on why the 2025 meeting is crucial, the IMF boss said by the latest estimate, there are more than 3½ billion reasons why gender equity matters, adding that “If those are not enough, let us reflect a little more why this issue is so important”.

Lagarde who spoke on sundry issues told the gathering that IMF has estimated that if the number of female workers were to increase to the same level as the number of men, GDP in the United States would expand by five percent, by nine percent in Japan, and by 27 percent in India.

She said: “These estimates, while of course tentative, are significant and large enough to be taken seriously. This applies particularly to countries where potential growth is declining as the population is ageing. “Secondly, getting more women into secure and well-paid jobs raises overall per capita income.

For Turkey, it has been estimated that gender parity in employment could increase per capita income by 22 percent. The same kind of gains are also possible for many other countries. “Thirdly, greater gender equality not only raises absolute income, it also helps to reduce income inequality.

A forthcoming paper by our staff examines this relationship by comparing a so-called Gender Inequality Index to measured income inequality.

The results have been quite striking—it suggests that a boost to education and employment chances for women could lead to improvements in income equality of a magnitude that historically took decades to achieve”, Lagarde said.

Besides, she noted that female empowerment can reduce poverty, adding that, the Food and Agriculture Organization has estimated that giving women the same access to farming resources as men could increase agricultural output in developing countries by up to four percent—lifting over 100 million people out of hunger. “So, to sum up, boosting growth, raising overall incomes, reducing inequality, and tackling poverty: that is why the promise of 2025 is so important.

We all recognize, however, that setting a goal and achieving it are two very different propositions. To deliver, we need decisive, sustained, and collective action.

This is where the W-20 can make a difference: Reminding the G-20 of their commitment—and holding them to account. “The IMF supports this effort.

In recent years, as you may know, we have strengthened our work on the macroeconomic effects of gender gaps. This has included new research, for example, on women’s role in the economy and legal barriers to female participation.

Perhaps even more importantly, we are now looking to apply this research in our policy advice to our member countries. So, the IMF stands with the W-20. On which key policy areas should we focus to help deliver on the G20 promise? Three Key Policy Areas for Women’s Economic Empowerment Over the course of a woman’s life, there are numerous opportunities to support her empowerment.

I will highlight three critical junctures: Going to school—education; getting a job—working; and having a family. Turning first to school, let me begin by quoting Aung San Suu Kyi: The education and empowerment of women throughout the world cannot fail to result in a more caring, tolerant, just and peaceful life for all”, Lagarde said.

She continued, “Indeed, opportunities in the classroom have ramifications that are wide-reaching and long-lasting. At an individual level, for instance, we know that one extra year of primary school boosts a woman’s earning potential by 10 to 20 percent. One extra year of secondary school boosts her earning potential by 25 percent.

At a country level, Turkey’s own experience with girls’ education is instructive. The proportion of Turkish women with graduate degrees who have jobs is very high it exceeds 70 percent.

At the opposite end of the scale, however, where there is illiteracy, just 17 percent of women can find work. Indeed, it is estimated that adding one year of preschool education in Turkey could increase female labour force participation by 9 percent .

The message is clear: girls’ education is probably the single best investment a country can make. Beyond investment in education per se, there are other ways to boost schooling of girls”.

She opined that, social programmes such as cash transfers to poor families can be made conditional on their daughters’ school attendance as is the case in Bangladesh and Cambodia, adding that, strengthening infrastructure such as roads and sanitation makes it easier for girls to get to school. “The good news is that gender gaps in education are narrowing in many countries.

In too many countries, however, they remain significant including in many emerging markets and developing countries. If the promise of 2025 is to be met, those education gaps must be closed. “What about the second major policy area: employment? After receiving an education, a common life event for most women is getting a job.

And while having a good “education certainly helps women enter the workforce, it is by no means a guarantee of employment. A number of countries with highly educated women still have low levels of female labour force participation. For example, it is a well-known challenge in Japan.

Japanese women who are currently in their early-30s typically have more than 14 years of schooling behind them second only to women from New Zealand. Moreover, Japanese women on average have completed more years of education than their male counterparts.

Despite this, the gender gap in labour force participation in Japan stands at 25 percentage points—compared to just over 10 percentage points on average in major advanced economies.

Education is essential but it is part of a larger package. What else is needed to help women find work? First, removing legal barriers is vital.

These include obstacles that prevent women from everyday activities such as opening a bank account and having equal property rights.

Recent IMF research noted that almost 90 percent of countries have at least one important legal restriction that makes it difficult for women to work”, Lagarde said.