New York: With a staggering 1 billion women around the world set to enter the global economy in the coming decade, strategy consulting firm Booz & Company has analysed this complex group's potential and the common challenges that it faces.
Women in the workforce play a pivotal role in spurring economic growth. Yet — despite amounting to almost 1 billion worldwide and rivalling the populations of India and China — this fast-growing group of people has not received sufficient attention from key decision-makers in many countries.
In light of this, Booz & Company has created the Third Billion Index — a ranking of 128 countries based on how effectively leaders are empowering women as economic agents. The Index is a composite of established data on women's economic and social status; it aims to isolate factors that facilitate women's access into the larger economy as well as determine how additional advancements and further integration can be achieved.
The Third Billion Index is a combination of indicators of women's potential for economic participation, drawn from a spectrum of criteria — all of which were taken from existing data compiled by the World Economic Forum or the Economist Intelligence Unit. The index divides all the characteristics of women's economic standing into two separate clusters: the first, "inputs", identifies measures that a government and other entities can take to affect the economic position of women. These are grouped into three combined elements that include women's level of preparation for joining the workforce, the country's access-to-work policies and entrepreneurial support.
The second centres on a set of "outputs", which are based on observable aspects of women's contribution to the national economy. These comprise issues such as inclusion in the workforce, the degree of advancement in the national economy and equal pay for equal work in practice.
The results of the index lead to several revelations about government practices and women's economic progress. "First, there is a clear correlation between the front-end processes and policies regarding women's economic opportunities (inputs) and the actual success of women in their national economies (outputs). We discovered this by clustering the 128 countries into five broad categories based on their index rankings," explained Dr. Karim Sabbagh, a Senior Partner with Booz & Company.
The countries with a strong set of both inputs and outputs are labeled "on the path to success"; these are typically developed economies. Moreover, the countries "taking the right steps" have implemented a slate of input policies and are just beginning to see their efforts pay off. They vary widely in other political and social dimensions and include Malaysia, Tunisia, and Venezuela. On the other hand, a small number of states also comprising China and Cambodia are "forging their own path"; they are seeing modest output results, but have not yet established a strong foundation of inputs.
The next group of countries, classified as "average," consists of those that have taken slow steps to improve inputs to women's economic progress and have, subsequently, seen commensurate output results. Nations such as Columbia, Serbia and Thailand belong to that realm. Lastly, there are nations that have not yet approached the problem at all; those are said to be "at the starting gate" and include most of the Arab states in the Index, as well as Indonesia, Laos, and Nigeria. This category accounts for the largest number of the 128 countries, suggesting an immense economic opportunity in many parts of the world.
The Effect on "Outcomes"
Perhaps the most significant finding from the Third Billion Index is the impact of "inputs" and "outputs" on "outcomes" — the latter which refers to broader indications of well-being, including per capita GDP, literacy rates, access to education, and infant mortality.
"The data shows a very strong correlation between index scores and beneficial outcomes. This relationship indicates that positive steps intended to economically empower women not only contribute to the immediate goals of mobilizing the female workforce, but also lead to broader gains for all citizens," said Dr. Leila Hoteit, a Principal with Booz & Company.
In truth, all countries have unique requirements and must combine specific input policies to create a solution that can best address women's needs. However, Booz & Company's research has also found several common challenges that women face — regardless of their country's stage of economic development or its performance in empowering women.
"One challenge is the care economy," said DeAnne Aguirre, Senior Partner with Booz & Company. "Around the world, women are the primary caregivers for children, the elderly, and the sick, and this responsibility hampers their economic development. Certainly, countries must walk a fine line in determining how to address this issue.
"However, several elements are critical in any approach to care work including widespread, affordable care for children, the elderly, and the sick; cultural changes aimed at dividing care work more equitably between men and women; and private sector recognition of the importance of care work for all employees, along with accommodations to allow for a healthy work-life balance."
Enabling Women for the Future
Additionally, in every country in the world, women require investments — financial, educational, and cultural — in their future. "Allocating capital for investment in women's businesses is fruitless if women do not have the education and training to run a business successfully, or the cultural perception that they can compete economically with men," added Dr. Hoteit. "The measures needed to create change in each of these areas will vary according to a country's level of economic development."
"Lack of credit is another common hurdle," said Christine Rupp, Partner at Booz & Company, "although micro financing has helped launch many women-owned businesses, these schemes also risk limiting such businesses to tiny operations in the service sector, instead of helping foster larger operations."
More so, in all areas of women's economic empowerment, there is a need for detailed, updated, and gender-disaggregated data — so interested parties can better understand the issues that women face and more effectively frame solutions. This includes data on access to capital, property rights, and small and medium-sized enterprise (SME) ownership.
Addressing these matters will require a set of solutions tailored to individual countries, with cooperation from various entities. Yet the universality of these challenges certainly shows that solutions in one part of the world will likely apply elsewhere as well, and that best practices will transcend borders.
The full report is available here.