How to get to gender equality? New paper gives action plan for bridging gap - adding $12 trillion to global GDP

Narrowing the global gender gap could secure $12 trillion of additional annual GDP in 2025

AS over 5,000 advocates of women and girls’ rights and issues converged last week in Copenhagen for the Women Deliver conference - the biggest question of the day was on the practical interventions and steps that can be taken towards achieving a more gender equal society. 

One group that believes it has some answers to this question is the McKinsey Global Institute (MGI) which released a new discussion paper at the conference, “Delivering the power of parity: Toward a more gender-equal society”, outlining an agenda for action and investment towards gender equality.

McKinsey pinpoints six areas where improved access to services could unlock economic opportunities for women: education, family planning, maternal health, financial inclusion, digital inclusion and assistance with unpaid care work. In each of these areas, MGI explores how many women and men could be empowered through concerted action and how much investment would be needed.

But concerted action on these areas won’t come cheaply. 

MGI finds that achieving the economic potential of women and making progress toward the United Nations’ recently-adopted Sustainable Development Goals (SDGs) will require $1.5 trillion - $2 trillion in annual spending on essential services in 2025 - but the potential economic gains from this could be huge, as much as six to eight times this outlay. 

Big money and gains

Previous MGI research found that if every country bridged its gender gap at the same historical rate as its fastest-improving regional peer, the world could add $12 trillion to annual global GDP in 2025, an 11% boost over current trends. This is equivalent to the current GDP of Japan, Germany, and the United Kingdom combined. 

At the launch of the paper, Vivian Hunt of McKinsey stated that “narrowing the gender gap can unleash massive growth…But in order to realise the $12 trillion opportunity that comes from advancing gender equality in the world of work, we have to tackle gender gaps in society more broadly. Our new analysis finds that the economic benefits of narrowing gender gaps far outweigh the additional social spending required.”

The paper went on to name 75 interventions that have been used to narrow gender gaps that policy makers could evaluate and choose from for the framing of policies and funding.

Key interventions described in the paper include:

Education: Actions may include building more secondary schools and ensuring girls
have access to sanitation facilities in schools, and creating financial incentives and cash transfers to raise enrolment and keep girls in school. Other strategies include improving the quality and engagement of teachers, and reshaping secondary and tertiary education curricula to better equip students with employable skills, for example, through vocational training programs. 

Family planning and maternal health: Critical actions include expanding the
number of health workers and developing emergency services, as well as services to cover remote rural areas for maternal care. Family planning and health awareness can be improved by focusing on supply chains for delivery and stocking of contraceptives, implementing school and community-based programs for comprehensive sex education, and producing mass media campaigns and digital content for education on maternal and reproductive health.

Financial and digital inclusion: Interventions include implementing policies
that support universal access to savings and credit accounts using digital and mobile platforms. Digital platforms can expand access to financial capital, but this depends on improving Internet access and affordability through greater investment in digital infrastructure. Programmes can enhance digital and financial literacy among women, and incentives can be created for women to open digital or mobile financial accounts, by linking them to financial benefit programs, for instance.

Unpaid care work: Each region will need to create an ecosystem for child-care
services, whether it is government subsidised, employer assisted, self-funded, or a mix of these models. Innovative methods such as paid family leave funds contributed by both employers and employees or allowance programs to offer income cover for maternity leave may help extend access to women employed in the informal sector in developing countries. A fund made by a combination of tax collection and social security contributions can be also be earmarked and allocated for providing paid family leave to women employed in the informal sector. The expansion of sanitation, water, and energy infrastructure using government or public-private partnership models is a high priority for developing countries. 

Financing the gap

A key question is where the money will come from to finance the $1.5 trillion - $2 trillion in annual spending for the essential services.

MGI research suggested that about 60% of the 95 countries analysed could meet the additional spending need from the tax revenues secured with the additional best-in-region GDP gains. Tax resources can be augmented by considering earmarked taxes (such as airlines or alcohol), and taxes specifically to fund paid leave programs.

For the rest, the public sector may also need to play a role in developing innovative financing mechanisms to attract private investment into areas that help bridge the gender gap but where the investment case is long term or less certain. This could take the form of social impact bonds, backed by reliable institutions, such as pooling investment from donors into a fund focused on improving education. The paper also named the example of the International Finance Corporation’s women’s bond that allows investors to fund women-owned businesses in developing countries.

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