The gender pay gap for top positions is costing the global economy $7 trillion
The persistence of the gender pay gap is a long-standing problem worldwide. In the US, women earn 92 cents for every dollar men make, and global female labor force participation has remained flat for decades—only about half of working-age women participate in the labor market, compared to about 80% of men.
But as more women climb the corporate ladder, the gender gap widens, and labor force participation fails to explain the difference, according to a new report from ratings agency Moody’s. Researchers found that women in middle and higher management positions are often overqualified, underpaid and underrepresented.
“On average, women make higher upfront investments in education, but tend to end up in lower, lower-paying positions that work below their skill level,” wrote Dawn Holland and Katrina Ell, directors at Moody’s and authors of the report.
In countries like the UK and France, the number of women in managerial positions fell from 2010 to 2019. The proportion of women in management positions varies greatly depending on the type of company. In industries such as mining and construction, which traditionally have a higher proportion of men, less than 20% of managers are women. But in the health and education sectors, that share is over 60%. The gap between men and women in management is particularly worrying in fast-growing sectors such as information and technology, where only about 33% of managers are women.
“Women have the necessary education and broader skills to succeed in these important sectors, but are not yet well represented in management,” Ell said wealth. “This is problematic for future growth and productivity gains, as these sectors are critical to future productivity gains.”
It’s not just women who are affected by the gender gap in business. According to the report, closing the labor force participation gap and correcting underutilization of women in leadership positions in 38 OECD member countries would add $7 trillion to the global economy.
“This upsurge in economic activity comes from an increase in the labor force, with more women entering the workforce, and a rise in productivity as a greater proportion of women are employed in more productive managerial and professional positions,” Holland Ell said written.
According to the report, there are various reasons for the lack of women in managerial positions. In some cases, women find it difficult to identify as leaders because they lack role models in their industry. Other barriers include the burden of family responsibilities, unequal access to relevant professional networks and women being held to higher standards in the workplace than men. Labor force participation and the skills gap also contribute to women’s underskilling in some economies.
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