March 13, 2017

Chart of The Week – Equal participation: a question of time?

by Fathom Consulting

It was International Women’s Day (IWD) last week. In the economic press, IWD has become an annual exploration of wage inequality between men and women. According to the latest research, the UK’s gender pay gap is 18% – a high number indeed. But perhaps the biggest source of income inequality between men and women around the world stems from their differing rates of employment.



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Before anyone can enter employment, they must first actively seek work. They must, in other words, participate in the labour force. In almost all countries, women participate at far lower rates than men. Among the working-age population, the male-female gap stretches from a comparatively low eight percentage points in France to almost sixty in Saudi Arabia.

Tapping all of a country’s resources makes basic economic sense. For many, it may be the least painful structural reform to boost a country’s level of economic output. In Japan, for instance, the 15 percentage point gap in participation is an extraordinary waste of resources. So while things look bleak now, the good news is that times are changing.

Millennials are sometimes disparaged but their labour market behaviour could provide a medium term boost to economic activity. Japan, the archetypal demographic time bomb, actually looks set to enjoy a partial dividend. The gap between male and female participation rates among people aged 15 to 24 is -0.9%. That is twenty percentage points lower than the current average among the working-age population, and means that young women participate at a higher rate than men.

If that trend persists, it will help to offset the natural aging of its population. Indeed, if immediately rectified, it could boost gross domestic product by over US$150 billion. Who knows? Somewhere in Tokyo, there may be a young, female economist with fresh ideas for the Bank of Japan.


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