Alexandra Bro, research associate of the Women and Foreign Policy program, contributed to the development of this blog post.
As government leaders gather in Indonesia this weekend for the Annual Meetings of the IMF and World Bank to discuss poverty eradication and economic growth, the issue of women’s economic potential merits a high place on their agenda. To explore the benefits of inclusive economic growth, I interviewed Jacob Lew, former U.S. secretary of the treasury.
What does female labor force participation have to do with economic growth?
There are two things that really contribute to economic growth: demographics and productivity. Women are half of the world’s population. You need people who can contribute and work, to work. You cannot just let half of the talent not be part of the economy.
How does this affect the United States?
Right now, the U.S. economy is facing a demographic challenge. Just as an economic matter, we cannot afford to leave people with the ability to work on the sidelines if we want to continue to grow our economy for the next ten, twenty years. Women’s participation in the labor force is part of the economic puzzle.
As we tell countries around the world to let women drive and own land, we also have to ask ourselves what we can do to create opportunity in our own country. We need to practice what we preach, including by closing the wage differential between men and women and addressing the conditions that make it harder for women to work—from the lack of leave policies to harassment.
What keeps women out of the workforce?
Many barriers keep women from working—including culture and history—and while many are coming down, it takes a long time, even in developed countries. In the developing world, it is a question of getting an education, learning how to read and write, and getting basic skills. It is about being part of the economic system, having a bank account, and being able to access credit and microloans so that what you need to start a business is available to you.
In the United States and in many other Western countries, women sometimes outnumber men in education programs, whether it is college, doctoral, or professional levels. But in the workplace, there has to be an environment where the option of raising a family and pursuing a career is not a binary choice. I’ve long believed that if men took more time off for family leave, women would get more family leave. It can’t be only women that take family leave. In the United States, we’re one of the few developed countries that do not have a very advanced paid leave policy. There are things we could do to improve even the basic structure that would make the system more of a level playing field.
What’s the effect of discriminatory laws on women’s economic participation?
Legal barriers make it harder for women to work—whether it’s in some countries where women couldn’t drive until recently, or other countries where they still can’t own land. Those kinds of barriers have to come down, but it can be culturally difficult to change these laws—you must tackle them one by one.
Where is there progress in removing some of these barriers to women’s economic participation?
Here’s one example: over the last ten years, financial technology has helped bring down the barriers to becoming part of the financial system. In India, one billion individuals were signed up to be part of the financial system through a biometric identification system. For many women, that means that they will be able to make deposits and ultimately get loans, and maybe buy a little bit of land or equipment for a business—a farm, or a crafts business, or whatever line of work they’re in. It is usually not a lot of money, but you need to have access to some capital. And you need to be part of the financial system for that to happen.
What is the role of private sector companies?
In the private sector, the search for talent is what drives most businesses, from professional work to skilled labor. Women have to get the required skills and then need the chance to prove their ability. If the system is on the level, women won’t have less of a chance than men to do well. But for that to happen, the culture has to change. While we’ve seen a lot of change in the last twenty-five years, it’s fair to say we could use some more culture change.
For more on how governments can capitalize on women’s economic participation, read the Women and Foreign Policy program’s report, Building Inclusive Economies.