When gender inequality is good economics
October 25th, 2013
09:10 AM ET

When gender inequality is good economics

By Saadia Zahidi, Special to CNN

Editor’s note: Saadia Zahidi heads the Women Leaders and Gender Parity Program at the World Economic Forum and is founder and co-author of the annual Global Gender Gap Report, released October 25. The views expressed are the writer’s own.

Gender inequality is good economics. Yes, you read that correctly. While we know that individuals, economies and societies would benefit from gender parity in the long term, gender inequality is often a perfectly rational choice for individuals in the short term.

Gender imbalances, and their resulting economic consequences, are still startlingly visible everywhere, from the developed world to emerging markets. In Brazil, more women attend university than men, but women earn only a third of what men make for the same job. In the United Arab Emirates, three times as many women go to university as men, but half as many women participate in the labor force. Across Europe, women outperform men academically and enter the workforce in similar numbers, but occupy less than 15 percent of board positions. In Pakistan, where I grew up, a girl has only a 29 percent chance of making it into secondary school, compared to 38 percent for a boy.

There is irrefutable evidence on the economic contribution that women can make, from the familial and community level, to research showing that companies get a diversity dividend, to the World Economic Forum’s own global data on the correlations between gender and competitiveness, released this month. By some estimates, gender parity in employment could raise the GDP of countries such as the United Arab Emirates by 12 percent, Japan by 9 percent and the United States by 5 percent. While many institutions are constantly pointing to these potential collective gains, progress remains dismally slow. So what’s holding us back?

We are. Millions of daily, individual actions of men and women, from a manager’s hiring decision, to a woman’s career choice, to a family’s resource allocation, add up to perpetuate the gender gap. These are not always the work of overt sexism. Very often these choices can be perfectly rational responses to the short-term realities.

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Imagine a working, married mother-of-two in Switzerland. Statistically, she is likely to earn less than her husband. Considering the country’s joint taxation regime and expensive childcare, it makes economic sense for her to choose to leave work for the relatively short period of early motherhood even if she would have preferred to work.

Or take a low-income family in Pakistan with two sons and three daughters. Sons are culturally expected to financially support parents, while daughters are married into other families where they become primary caregivers. In the short term then, parents with a small disposable income are making a rational economic decision by prioritizing their sons’ education.

Visualize an HR manager in Mexico. Even managers who inherently value female colleagues are factoring in the reality that women are more likely to take parental leave, especially in a context where men have traditionally been breadwinners and women homemakers. For the less conscious managers, hiring an equally skilled man is the rational and convenient short-term option.

Paradoxically, it’s these convenient and appealing choices that are leading to unintended and harmful long-term consequences for the individuals who make them. Over time, the Swiss mother may struggle to find a rewarding job that matches her expectations of salary and seniority, after the hiatus in early motherhood. In old age, the Pakistani parents may have found more comfort with five well-educated children earning good salaries – and two similarly successful daughters-in-law. The Mexican manager may find that having predominantly male staff prevents the firm from appealing to the majority of its consumers, who happen to be women.

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Add up these short-term logical choices across households, firms and countries and we end up with severe individual and aggregate long-term losses. So what’s the solution? There are many – and responsibility lies with both governments and companies at once.

First, governments need to become more strategic in regulating, creating incentives and raising awareness to encourage people and organizations to make advantageous long-term decisions. In Turkey, for example, where only 26 percent of women work, the government rewards companies for employing women by subsidizing their social security contributions. In Norway, a “daddy quota” allocates fathers 12 weeks of non-transferable paternity leave, creating knock-on effects for the division of labor at home and at work. In Bangladesh and Indonesia, cash incentive programs aim to encourage parents to send girls to secondary school. The governments of Malaysia and India are introducing minimum thresholds for women on boards.

While these are useful examples of innovation, countries cannot implement only one or two of these policies and expect real, broad results. Each country needs to implement an array of policies – a multi‑pronged approach that caters to its unique circumstances and is customized to various strata of society.

Companies also hold enormous responsibility. The current approach of many companies is to create externally focused girls’ or women’s empowerment flagship programs that are not core to their business.

While such programs are useful, if companies really want to get the benefits of gender diversity, their leaders needs to take a holistic, introspective approach that leads to fundamental reforms on how to recruit and retain employees, how to mentor and sponsor high-potential women, how to sensitize managers to different leadership styles, how to manage work-life balance policies so that they don’t disadvantage women, how to empower women across supply chains – and how to manage efficient corporate responsibility initiatives so that they support women and girls.

To accomplish this, companies need to learn from each other’s experiments so that change is accelerated, as opposed to competing in promoting their flagship programs. At the World Economic Forum, we are running innovative and experimental pilots with dozens of companies through such collaborative platforms in Mexico, Turkey and Japan – and early results show change.

“Culture” is man-made, quite literally. What we think of as irrational and harmful biases are rooted in a past logic, one that may not be valid today, but which cannot be ignored when designing solutions. With the right incentives, we can make gender equality the new rational choice.

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Topics: Economy • Women

soundoff (79 Responses)
  1. JASC92

    Wow, that was a surprisingly thoughtful and intelligent article

    October 25, 2013 at 9:57 am | Reply
  2. barbaraviale

    Reblogged this on The year I never said no and commented:
    so very disappointing...

    October 25, 2013 at 10:01 am | Reply
  3. ✠RZ✠

    So be it, how about the rest of us focus on getting off this messed up planet.

    October 25, 2013 at 5:16 pm | Reply
  4. julnor

    "First, governments need to become more strategic in regulating"

    Funny, we all talk about how we want to reduce unemployment. Well, who does the hiring? Businesses. So perhaps the better approach is for the govt to do less regulating and make it easier to hire people. Remember, the harder you make it for a business to fire someone, the more reluctant they will be to hire.

    October 25, 2013 at 6:46 pm | Reply
    • Julia

      Did you take the right meds ? How easy is it to hire someone just say yes to a person who is qualified and pay them the same as other workers male or female .... sort of like how the Federal Gov. does. Real hard that!

      October 26, 2013 at 5:46 pm | Reply
      • Kenny

        Its harder than that. The Government puts a cost on hiring people. So you have to do a cost benefit analysis. If its even close you don't hire some one because the risk is greater than the reward. If government buts out it shifts the equation reducing the risk, allowing employers to take a chance on people.

        October 27, 2013 at 4:11 pm |
  5. james frisina

    What the freak are you talking about?

    October 25, 2013 at 6:59 pm | Reply
  6. AnimalNature

    As long as women prefer taller guys as their mates, inequality persists! Biologically, men have an advantage and studies have confirmed that height-biased salary differential exists, regardless of gender and/or IQs.

    October 25, 2013 at 7:02 pm | Reply
  7. Amazing

    this gender inequality bull shows up like ticks after a storm. The fact is that when you factor in for time on the job and years experience the "gender gap," disappears and actually shows the opposite. Women make more than men with the same time and experience.

    October 25, 2013 at 7:26 pm | Reply
    • Lisa

      Links?

      October 26, 2013 at 8:27 pm | Reply
      • Shellback

        Here's the link
        http://www.consad.com/content/reports/Gender%20Wage%20Gap%20Final%20Report.pdf

        October 27, 2013 at 12:25 pm |
  8. Eric B

    It exists because Genders are not equal, get over it each gender has its stregnths and weaknesses embrace it becuase it isnt going to change

    October 25, 2013 at 8:49 pm | Reply
    • LL11

      Men are usually stronger, taller, they can pee standing up. Okay. So? When it comes to many jobs (IT, science, engineering, etc), strength is not a factor. Doesn't explain why women are paid less or deserve to be paid less.

      October 26, 2013 at 8:30 pm | Reply
  9. Ken

    So lets simplify this whole article. The writer basically suggests that women have to be the ones taking parental leave, and work and other policies encourage this, and this "short-term" loss comes back to severely haunt them. And hence the answer is to change policies so women will make better long term decisions, one to benefit their skills and career over their family.

    Of course, with birth rates of falling and many countries rates dropping below replacement level (with only immigration keeping some positive like in the US), this will drive rates down further. Countries will have even fewer people to support all the social programs built on the assumption of growing populations. So long term decisions by women to put more into their career will cut growth rates and result in a need to scale back social programs (as we've seen happening in Europe in the last recession, and will occur every time there is a new recession). Sounds great to me!

    October 25, 2013 at 9:37 pm | Reply
    • rkage

      So are you for or against welfare?

      October 28, 2013 at 4:14 pm | Reply
  10. HJC

    I have heard this comment from a few middle aged white women in California of late: the deck is stacked against white men.

    I didn't say it just reporting it.

    October 25, 2013 at 9:38 pm | Reply
  11. JAG

    This is news? This is nothing new. We've known this for years.
    This author is stating the obvious. Nobody disputes his facts. We've understood the facts for decades.
    It's like yesterday he was a teenager and woke up an adult today and sees the world as it is.
    The world understands the "practical" realities of gender discrimination. In some societies its practical to marry off a daughter at 14 for a dowry.
    The fight is to illuminate the fact that practical is wrong. It might feed the family of that young woman for a few months, but it desecrates marriage, the feminine and the survival of our species as damaged mothers, sad enough as that is, create damaged children.

    October 25, 2013 at 9:50 pm | Reply
  12. Elle

    Nice to know women are still just a statistic to be pawned away. Screw the greater good. It's no good!!

    October 26, 2013 at 1:10 am | Reply
  13. scott bleyle

    I met three Brazilian Women in College on Scholarships,pre law,per med,pre engineering.They were here to meet Husbands with potential for prominence so they could take their scholarship educations home and raise babies.

    October 26, 2013 at 4:08 am | Reply
  14. Robert Constant

    I do not know the causes of the cultural inertia in the rest of the world, but in the United States the Republican Party has consistently blocked all legislation requiring employers to pay equal wages to men and women for equal work.
    This fact, along with Republican opposition to a woman's right to choose and opposition to a sane policy regarding social issues and gun sales have insured a loss of women voters in just about every election. Women know that the Republican Party is a party of mostly old white men opposed to the best interests of women.

    October 26, 2013 at 7:17 am | Reply
    • person

      Which GOP members have authored this legislation? When was it done? Who are the people in the GOP who are doing this? Or is this just more liberal crap who makes comments with nothing to back it up. Oh I think so.

      October 26, 2013 at 3:52 pm | Reply
  15. Andrew

    Oh I thought this article was going to tell me why men and boys especially white, are treated like second class citizens. But guess there is no end in sight till they can depend on us to vote socialist. If I had one piece of advice for the middle east, no matter what CNN says don't let women vote, look what happened in the US to us.

    October 26, 2013 at 7:35 am | Reply
    • Terri

      The US's problems do not come from women and their voting rights, it comes from people who do not educate themselves with the issues and vote based on what other people are saying, or the color of their skin. Now that's real intelligent! **sarcasm – in case you couldn't figure that out.**

      March 31, 2014 at 5:18 pm | Reply
  16. Merle McClung

    What a bunch of baloney. Same as the excuses I received when lesser skilled men were advanced before me - "He has a family to support," "The men won't listen to you," "Your time will come!." Just more excuses.
    White males are taught from the cradle that they run everything. Their mothers over-indulge them, their fathers tell them to "be a man!" The easy way to do that is to put others down. It isn't logic, it isn't culture. It is discrimination and only that.

    October 26, 2013 at 10:59 am | Reply
    • firenech

      That's bunk. I'm a white male and I was in no way raised to believe that I run everything. Instead, I was inundated with the message that I had to at all times be sensitive to the needs and feelings of women and minorities.

      As I grew to adulthood, this cost me dearly in terms of career advancement and with my relationships with women. While my bosses and I were being "sensitive to the needs of women and minorities," a few unscrupulous individuals took advantage of the tolerant atmosphere to enhance their career. One individual made sure to take off extra time for every Jewish holiday (even though he was unobservant and identified himself as an atheist), took extra time off because he and his wife "needed" to work on their marriage, and was in general an irresponsible screw up. No one wanted to do anything because they wanted to appear tolerant and sensitive.

      The problem isn't with men or women or this race or that creed. The real problem is with the atmosphere of indulgence that comes with trying to avoid the appearance of impropriety.

      So please stop spreading the lie that white men are raised to think of ourselves as privileged. We're not.

      October 26, 2013 at 5:28 pm | Reply
      • pattysboi

        No, firetech, YOU are the one who is wrong. Completely and totally wrong. The white males of today are the ones who look ridiculous, their caps on backwards, their pants hanging halfway off their backside, and ALWAYS shouting at their boys to "man up". Get a life. Please.

        October 26, 2013 at 6:30 pm |
  17. Rick McDaniel

    The concept that women can do it ALL, has been debunked. They cannot. They have to make choices, and that s absolutely going to impact on their earnings potential.

    The stupidity of the U.S. is that we will provide hand outs to women, to compensate them for that disparity of earnings, as an incentive to give their political backing and vote, to those providing the hand outs. That is going to destroy America, in the longer term........without any doubt, whatsoever.

    October 26, 2013 at 11:07 am | Reply
  18. Dean

    Genders are not the same. Each one has its advantages and disadvantages. As far as money, one gender spends more and the other makes more.

    October 26, 2013 at 11:45 am | Reply
  19. Joe

    If an employer can pay a woman less than a man and get the same productivity... why are women unemployed at all?

    October 26, 2013 at 12:49 pm | Reply
    • Marjot

      Twisted writing. Accepting the status quo while intimating that things could be much more fair for women. The "guys have it bad" group represents the "This isn't how I thought, or was taught, it was "supposed to be" group. No wonder the powerful males want to keep women pregnant so they won't mess with the male power structure. Every time a new young exceptional female comes along, some male steps up to dominate and impregnate her thus enhancing his own status while diminishing hers. When she becomes middle aged, he does it to another young woman with potential and dumps his previous wife. This is the "power" behind the "Right to Life" politicians. Keep women pregnant and they can't quite keep up. Men have fun and pleasure making certain that this happens. Women get child support after he moves on.

      October 26, 2013 at 7:33 pm | Reply
    • rkage

      ...because, in families, if the man is to be paid more for less work, is there any reason for the man to stay home while the woman works? And actually, many women are employed, part-time, in jobs that require 'flexible scheduling' and because they don't get paid as much, they often end up working around their husband's jobs. And sometimes they are not employed because they don't have the option of being that flexible, because their husband's employment might also require one to work whenever.

      October 28, 2013 at 4:20 pm | Reply
  20. EdL

    No gender inequality with me. When I see a lady driver stopped with a flat tire instead of stopping to help I give her a friendly wave.

    October 26, 2013 at 12:52 pm | Reply
  21. rightospeak

    This article is Globalist agenda to keep men and women fighting each other. For now , let us worry about the US. With Affirmative Discrimination women have preference for jobs in the US so the article's point is that we should do it all over the world almost put a tear in my eye. White males have been discriminated in the US for generations now- a generation is about 25 years.

    October 26, 2013 at 3:23 pm | Reply
  22. david b

    This article mentions the system in Pakistan and other countries where daughters are married off but the son continues to support the family. It fails to mention however that such cultures also have the concept of a dowry. This is meant to reward parents for the quality upbringing of daughters and compensate them for the loss of future income. We may not like that as a concept, but in such a system it is a necessary balancing force.

    A lot (certainly not all) of the problem in places like india can come in when areas are partially westernized. We work to get rid of systems that we view as degrading to women without realizing that many more customs have to be adjusted or abolished to keep things functioning. These traditions didn't arise in a vacuum, they are systems. Adjusting one part in isolation will throw off the rest of the system and lead to unforseen problems.

    October 26, 2013 at 4:38 pm | Reply
  23. more2bits

    Gender equality exists because of caveman mentalities......

    We haven't evolved much since the dawn of time.

    In fact, now that all invalids are allowed to procreate along with everybody else we no longer are evolving.

    October 26, 2013 at 5:11 pm | Reply
    • ✠RZ✠

      To keep in compliance with discrimination laws, would a paid government benefit for gender inequality also have to apply to gay and lesbian couples ?

      October 26, 2013 at 7:55 pm | Reply
  24. Mark

    Obviously, the GOP in congress has killed the equal pay act, and the republicans at the state level have made laws relegating women to second class citizens. Ignorance, lies, stupidity = GOP

    October 27, 2013 at 12:01 am | Reply
    • Tell it like it is

      You're a Borg? Sounds like it.

      October 27, 2013 at 10:02 am | Reply
  25. Philip

    We no longer hear about the "glass ceiling". Instead, we hear about how women make less then men for the same job. Having the same job is just part of the picture. Many if these jobs have just recently been opened to females, thus no more glass ceiling. Why should a female in the same pay grade as a male, who has far less years in that pay grade, make the same salary as the male? Also, having the same job does not mean doing the same work. The glass ceiling was removed because of lawsuits, not because women today are smarter or work harder then their mothers. Positions that would have gone to men are now going to women in the search for parity to avoid lawsuits. How do you reward a male who works longer hours then his female peer when he cannot be promoted due to quota's? You pay him more, and yes, statistics prove that men work longer hours then women and are far more likely to show up for Saturday work.

    October 27, 2013 at 12:50 am | Reply
  26. Gayle

    I look forward to your piece explaining why racial discrimination is good economics. And another piece on the benefits of child slavery.

    They would be similarly offensive.

    October 27, 2013 at 8:30 am | Reply
  27. Tell it like it is

    Yes, the genders are unequal. They're supposed to be unequal. They've always been unequal and they always WILL be unequal. Get over it and move on.

    October 27, 2013 at 10:02 am | Reply
  28. chrissy

    Agreed @ Gayle and hogwash @ Philip! I don't know what world you live in Philip, but in my world woman work every bit as hard as men, in fact most times harder, because they are forever, having to prove themselves to men such as yourself! And also in reply to another of your comments, women are most times able to work LONGER hours because they've already been conditioned to long hours, just for the simple fact that when they leave their "paid job" they still have to put in mega hours at their "unpaid" job! This only proves that as long as the job training required has been met by men and women alike, than the pay should be the same no matter which gender that worker is!

    October 27, 2013 at 10:09 am | Reply
  29. jawhawk

    If so many women are attending college and getting educated why do not they start their own businesses. That way they can make what ever they want to pay them selves.

    October 27, 2013 at 10:50 am | Reply
  30. Virginia Beck

    Women should get extra pay! We do 3/4 of the world's work! Statistically speaking, including child care, household work, food gathering, preparation, administration of health, home healthcare, family counseling, in addition to doing paid work...women do that.

    And oh, yes...how about the 24/7 work of gestation new humans! A woman's heart, lungs, kidneys, liver, lungs, etc. are circulating through a 150 percent work load of extra blood volume, metabolism, and respiration to grow a baby! She is working harder even when she is sleeping.

    And, oh yes....those humans are human CAPITAL...nature's greatest resource for all these genius ideas, inventions, breakthroughs, philosophies, music, art, medical innovations, technology.

    Therefore women deserve performance bonuses above and beyond equal pay!

    October 27, 2013 at 2:26 pm | Reply
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