Women boost the world economy

At the end of March I joined other members of the British Embassy in American University’s Race to Representation, a 5k run organised by the Women and Politics Institute in Washington. The annual race (now in its third year) helps raise awareness of the gender gap in political leadership in the US, while the mission of the Institute is to provide young women with academic and practical training that encourages them to get involved in politics.

Alongside the race route were displayed some remarkable facts: despite comprising half the population, women make up only 20% of the US Senate, and just over 18% of the House of Representatives. The UK numbers are similar: around 20% of Members of Parliament are women. Indeed, around the world women are under-represented in politics.

There is increasing support for the view that this needs to change. More diversity, including of gender, is needed in leadership positions. Not only as a matter of principle, but for the effectiveness of our institutions.

But I also want to highlight the evidence on the benefits of increased participation of women, not just in politics, but in the global workforce more generally.

The International Monetary Fund (IMF) laid out the facts quite plainly in a report last year. Women are half the working-age population, but they represent less than one-third of the actual labour force. When women are employed in paid work they are over-represented in the informal sector, and among the poor. The median gender pay gap is about 16% in the advanced and emerging market countries of the Organisation for Economic Cooperation and Development – and there remains a significant wage gap even when controlling for factors such as education.

Rectifying these differences would help all our economies. According to the IMF many countries could see higher growth if more women were in paid employment. Equalising the rates of employment for men and women in the US could add 5% to GDP. The same is possible in the UK. The employment of women on an equal basis to men could also increase potential growth by bringing talented women, who employers may currently be overlooking, into the workforce.

As Christine Lagarde, Managing Director of the IMF, put it: “more women at work means good news for the global economy.”

Many organisations are now focusing on women’s role in the economy and development, and are taking action to support and encourage women’s participation. As well as international institutions such as the IMF and World Bank which promote and support gender equality, NGOs like the Vital Voices Global Partnership (which started here in Washington and has now trained and mentored over 14,000 emerging women leaders in over 144 countries) are working to use the power of women around the world to bring prosperity and security to communities. The UK government also continues to support women and girls in the poorest countries, as well as support gender equality in the UK,  including through the Women’s Business Council.

It is great to see increasing diversity at the leading economic and financial institutions here in Washington: the Federal Reserve is now chaired by Janet Yellen and the IMF run by Christine Lagarde, while Sarah Bloom Raskin has just been appointed as Jack Lew’s number two at the US Treasury. But it is also encouraging to see the wide range of organisations and people working to secure equal opportunities for women around the world, and recognising the huge benefits of doing so.