IMF calls for end to gender bias in labour market

Wednesday, February 25, 2015
[PHOTO: Donnie Nunley/Flickr/CC BY 2.0
Washington: In a new report, the International Monetary Fund says that leveling the legal playing field for women holds real promise for the world, in both human and economic terms. 

The Fund says in too many countries, too many legal restrictions conspire against women to be economically active—to work. There are big differences across the globe in female labor force participation. While women make up 40 percent of the global labor force, only 21 percent of women in the Middle East and North Africa work outside the home versus 63 percent in East Asia, the Pacific and sub-Saharan Africa

The lead author of the study, Kalpana Kochhar, says that this can have very real economic consequences. 

She said "there is ample evidence by now that shows when women participate in greater numbers in the economy there can be significant macroeconomic gains.  For example, our research shows that when women participate at the same rate as men, gains in the U.S. could be about 5 percent of GDP, in Japan up to 9 percent of GDP, in the United Arab Emirates up to 12 percent of GDP, and up to as much as 34 percent in a country like Egypt."  

The IMF looks at these issues through analytical work and regular health checks known as Article IV consultations with each of its members. The IMF says issues related to women's participation in the labor force have important economic consequences, particularly in countries where there is a need to find new sources of growth, for instance where populations are aging rapidly.

Despite some progress over the past few years, gender-based legal restrictions remain significant. 

Kochhar said that "in 90 percent of countries there is at least one law that impacts women differentially than men.  These could be laws that apply to women's ability to open a bank account, to own property, to inherit property, and, indeed, even to be able to look for a job.  We find that the gender gap in labor force participation, the rate at which women and men participate, the difference between these two, can be impacted not only by things like taxation and access to child care and education, but also these legal restrictions". 

The IMF's study finds a strong relationship between legal restrictions and female labor market participation. In 50 percent of the countries studied equity was reflected in law. When this happened, female labor participation rates increased by at least 5 percentage points over the following five years.

"We found that when legal barriers are removed, meaning to say when the gap between the women's ability to own property, inherit property, and open bank accounts are removed, there can be a powerful effect on the rate at which women choose to participate in the labor force.  In fact, we found that the removal of these restrictions can lead to up to a 5 percent increase in female labor force participation rates, and this effect comes on top of closing gender gaps in education, in taxation, and the provision of child care facilities," Kochhar says. 
Countries ranging from Kenya and Namibia to Peru have made legal changes and reaped the benefits. 

"Countries that are serious about closing the gender gap in labor force participation should take a look at their laws and look to see if there's gender-based discrimination in these laws and try to remove them.  And countries recently, good examples are Kenya, Namibia, and Peru that have done this.  And, in fact, in Peru, two gender-based discrimination laws were removed in the 1990s and we found that 15 percent more women have gone to work since that time," Kochhar says. 

In 1993, the new Peruvian constitution granted equality between men and women under the law, and it eliminated discrimination by guaranteeing equal opportunities for work. Customary law (that is, traditional rules of practice) was invalidated if it contradicted these rights. 

The IMF says that other factors also play a role, of course.  Demographics, education, and policies that include the provision of child care and maternity leave benefits all help boost female labor participation, but legal rights are fundamental. -UNifeed
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