Welcome to a ‘A Woman’s Place’, a research series from the abrdn Research Institute. Focusing on the often overlooked ‘S’ of ESG (Environmental, Social and Governance), the authors set out to find what drives differences in female participation in the workforce and highlight why D&I policy really matters for investors.
There is a clear ethical argument for greater equality in the workforce. But there’s a powerful efficiency argument too. Increasing diversity and inclusivity in the workforce can lift incomes and growth by making better use of human capital. In a world where populations are aging and labour productivity growth sluggish, a stronger diversity and inclusion (D&I) corporate and government policy agenda could provide a much needed shot in the arm for the global economy.
Of course D&I goes beyond gender equality. We had hoped to cover race, socioeconomic background and sexual orientation at both the macro and micro level. However, the research uncovered just how limited the data is regarding inequalities at a company and country level.
For an overview of the research’s highlights, you can download our executive summary. If you’re looking for a more technical run down of our findings then please download our full working paper.
European Thought Leadership of the Year
The 5 Key takeaways
We analysed data for 31 countries from 2002 to 2016 and our findings suggest five clear actions for policymakers and companies wanting to boost female participation. Each finding forms its own edition to the ‘A Woman’s Place’ Series and will be released incrementally throughout the year. Check back for future releases.
1. Ensure that men have access to paternity leave
Do more to incentivise men to take that leave so that the burden of child-related career breaks is more evenly shared.
2. Reform taxation systems
Reduce tax wedges for second earners and sole parents to address the unfair care/work trade-off that women face.
3. Consider both the quantity and quality of female work
Part-time work, flexible short-term employment and access to affordable, high quality childcare is important for women to stay connected with the workforce.
4. Strengthen the performance and resilience of the overall economy
Reduce cyclicality of potential growth and strengthen labour markets to facilitate greater overall participation.
5. Report more and higher quality data
Encourage firms to release this information so that we can monitor what companies are doing and understand what really works in terms of improving D&I within firms.
Meet the authors
Meet the authors
I'm Stephanie Kelly. I'm Nancy Hardy. My name's Abigail Watt.
I'm the Senior Political Economist and I head up Macro ESG, and Politics for the firm. I'm a Macro ESG Research Analyst. And I'm a Research Economist at abrdn Research Institute.
What is A Woman’s Place?
A Woman’s Place is a research series that we recently did to try and understand what drives women and men into the labour force. But we kind of had a specific focus on women because we think that that's an area that's really under researched and also has potentially really big benefits for the economy.
This research is particularly important given the growth challenges that the global economy faces. And these will only be exacerbated by the aging population trends that we're seeing across the economy.
Women are faced with a higher pressure to choose between unpaid care work like looking after family members, or being in the labour force.
Part of the purpose of this research was to understand what difference can policy make? I think, in particular, the importance of things like paternity leave, and also tax treatment, just underscore that there are policy levers you can pull, which can lessen that care/work trade-off and boost labour force participation among women.
Ensure men have access to paternity leave
So one of the really interesting takeaways from this research was just how important paternity leave is for boosting female participation. And I think that's quite an interesting finding, and really quite innovative that men have a role to play in this diversity discussion.
If you have better policies around paternity leave. What I would like to see is that this encourages the take up of that leave, that there's some shifts socially and culturally around taking that leave.
Strengthen the resilience of the overall economy
We also found that the resilience of the macro economy as a whole is particularly important in terms of driving female participation rate.
Reform taxation systems
Tax treatment really matters. Women are more likely to be single parents, they're more likely to be second earners in households with kids.
Ensuring that the tax system is set up so that women can enter the workforce is particularly important.
Increase flexibility in the labour market
We also found that the labour market structure which prevails in an economy can help to encourage women into the workforce. And that can be done through increasing flexibility through the availability of part time work, and also through less regulation on temporary contracts.
Report better quality data at a firm level
Data availability is also another major issue
The lack of data availability
The lack of data in this space.
Something else we like to see is companies disclosing more data.
What does this mean for investors?
If you care about potential growth, If you care about the future of the global economy, you need to care about D&I policy.
The 'S' in ESG is often overlooked by investors. But social factors are very important to consider because they impact long term economic and market outcomes.
I think this paper goes some way in helping us quantify some of the policies around diversity and inclusion and their actual impact in the economy and the economic space.
This is particularly important for long term investors such as those in strategic asset allocation, because the policies which are in place today generate the labour force of the future.
One of the important takeaways from this research is just how little data we have to work with at the company level. We're going to be actioning this as investors by issuing a survey to the companies that we invest in to understand what are their diversity and inclusion policies, what do they look like? How are they enforced? And we're hoping that will help us continue the conversation that we hope this research has begun on the issue of gender diversity.