This column is part of Globe Careers' Leadership Lab series, where executives and experts share their views and advice about leadership and management. Follow us at @Globe_Careers. Find all Leadership Lab stories at tgam.ca/leadershiplab
A few years ago, The Economist put forward an assessment that the increase in female employment in the advanced world "has been the main driving force of growth in the last couple of decades. Those women have contributed more to global gross domestic product (GDP) growth than have either new technologies or the new giants, China and India."
Some may find this a rather audacious claim, but it has been backed up by research by the Organization for Economic Co-operation and Development (OECD), the International Monetary Fund, United Nations and the World Bank. The good news is that this growth driver still has considerably more it can contribute to developed economies like Canada. According to OECD, if OECD countries saw the full convergence of men and women in the labour force, those countries would benefit from a 12 per cent increase in GDP over the next 15 years. Closing the gender wage gap represents further growth for the developed world, in Canada an estimated increase in GDP of close to 10 per cent.
For Canada, whose economy clearly needs to capitalize on every opportunity we have to be competitive and prosperous in the 21st century, this is a topic that all business leaders should have on their agenda. Based on trends, there will be an average of 1.4 female students for every male student in higher education by 2025 in OECD countries. In Canada, 62 per cent of university graduates are women (not to mention women have been more than half of the university graduates in Canada for 30 years). This is a considerable pool of talent and a significant potential driver of economic growth. If we are going to capitalize on that talent and maximize its impact on our economy we have some critical issues to address.
Canada has made progress increasing labour participation rates over the past 20 years. Tax and childcare policy changes helped to take our female labour participation rates from below those of the United States (58 per cent) to levels similar to Nordic countries (74-78 per cent). Yet that hasn't resulted in meaningful progress in closing the wage gap or increasing the proportion of women in leadership roles in the economy. Women earn approximately 70 cents on the dollar relative to men, and they occupy only 5 per cent of CEO roles, 17 per cent of board seats, and 18 per cent of senior/corporate officer roles. Not to mention women hold a mere 6.9 per cent of top wage earning roles in corporate Canada.
The gender wage gap is a complicated topic that elicits much debate. It often polarizes on:
- Whether the wage gap is a result of structural barriers related to biases and social norms of “female” and “male” professions and women’s capacity to play leadership roles, or ...
- Is the wage gap a result of women’s family responsibilities and the professional choices they make to meet those needs. The reality is it is a combination of all those factors. Women do need to pursue careers in higher paying professions to close the wage gap and businesses need to ensure that when they do, they encounter corporate cultures which allow both men and women to thrive and advance in their careers.
While taking on the battle of social biases and cultural change is certainly a tall order, progress starts with leadership and tangible personal action. Three steps business leaders can take today to increase the economic impact of women in our economy:
- Get involved in educating and encouraging young women to pursue education and careers in science, technology, engineering and math. Challenge social norms around what careers women should pursue. If you work in a male-dominated field, lead initiatives in your organization which aim to recruit more women at all levels of seniority.
- Ensure your organization seeks to recruit, develop and promote women for leadership roles. Challenge your biases around “leadership characteristics” and insist succession plans include female candidates.
- Create a corporate culture which does not equate commitment to family with less commitment to work. Maximizing the participation of women in the labour force will only be achieved when organizations recognize that both women and men have parenting responsibilities. Flexibility and support for those responsibilities can allow for greater success in the office and at home.
Addressing the barriers which limit the economic impact of women on GDP growth and encouraging women to pursue professions which lead to leadership roles in the economy should be a top priority for business leaders. Canada needs to be a more innovative, productive and competitive economy if we are going to thrive in the 21st century. Maximizing the education, talent and contribution of 50 per cent of the population (and close to two-thirds of university graduates) is an immense opportunity for every industry.
Jennifer Reynolds is President and CEO, Women in Capital Markets