The Economics of Equality
One of the big-picture ideas of the 2016 World Economic Forum in Davos, Switzerland was arguably one of the simplest: we for we.
The question on everyone’s minds was how gender parity in the workplace could easily be answered by the economics of its solution. The impact of gender parity on the global bottom line was brought up again and again with data from numerous studies on a breadth of subjects. “We for we,” a phrase that we had stenciled on front windows of The Girls’ Lounge Davos, embodied the solution that kept bubbling up: gender balance in the global workforce is a necessity for global economic growth.
From the outset of The Girls’ Lounge Davos panels, and simultaneously being discussed at WEF, economists, heads of state and thought leaders all made clear that it’s no longer debatable that diversity in the workplace is imperative for successful business. Over the course of our time in Davos, a massive body of research from numerous sources was shared that proved this theory: EY’s data showed that from 2005 to 2014, boards with a higher-than-average percentage of women outperformed those with fewer than average by 36%; McKinsey & Company Director Vivien Riefberg cited the $12 trillion growth potential that’s on the table for companies who maximize their output by equalizing the workforce; and the numbers go on. But these points were just openings for the broader, collaborative discussion — a discussion that, alongside the rousing data, remains essential in order to see change. The minds and the talent at The Girls’ Lounge were so inspiring that it was easy to forget that just 18% of the WEF 2016 attendees were female.
According to a recent McKinsey Power Of Parity study, the global annual GDP could increase by as much as 26% if women and men play an identical role in the labor market by 2025. That’s an additional $12 trillion in the world’s economy. For over half of the world’s countries, the impact could be more than 10 percent of annual GDP in 2025 compared with business as usual. Melanne Verveer, executive director of the Georgetown Institute for Women, Peace and Security at Georgetown University, and founding partner of Seneca Point Global, reaffirmed these facts in her panel at The Girls’ Lounge; “Countries closing gender gap have stronger economies. Countries who ignore data do it to their own detriment.”
This scope of progress will only be achieved if the global workforce sees integral changes. Currently, the McKinsey report shows that women make up 50% of the world’s working-age population, but only 37% of its workforce. This discrepancy has everything to do with categorization. 75% of the world’s total unpaid care is performed by women, meaning that tasks like child and elderly care and domestic labor occupy their time and labor potential without contributing to the GDP. This leaves as much as 13% of the world’s GDP, or $10 trillion in output, off the table every year. As Vice President Joe Biden said at WEF, “economies don’t work if there aren’t women involved integrally.”
With such a momentous task ahead and so many moving pieces at play, the conversation of connecting present realities with future goals boiled down to next steps. “When thinking about workplace gender equality, start with making the easy stuff work,” said Gary Pinkus. “The tools and ideas.” The McKinsey senior director spoke at The Girls’ Lounge, along with Twitter COO Adam Bain, who added, “There’s a whole body of research that shows that more diverse companies are more successful.”
Among the studies mentioned, MSCI’s 2015 report on Women On Boards brings the issue closer to home. Female-led startups surveyed showed lower failure rates than male-led ones, and female-led tech companies averaged 12% higher revenues. Multinational corporations with more women on their boards showed 26% high returns and 56% higher operating profits. Additionally, public companies with “strong female leadership” showed 36.4% greater return on equity than companies with less women in executive roles.
Far from being a moral issue, the information available and widely discussed at Davos indicated an enormous economic opportunity. In the professional world, the results are too big to ignore, and the C-level executives of Fortune 500 companies are already using the learnings as strategic planning rather than relegating the impetus of gender balance to HR where it could languish indefinitely. In developing countries, the actions needed are bigger in scope and require broader strokes, but no longer can the matter be considered merely social or cultural or even moral: the data presented at Davos clearly spells a sea change for the whole world and the women in it. The age of “we for we” has arrived, and it’s demanding action.
Written with ❤ by the Girls at The Girls Lounge.
