#BalanceforBetter: Why is Building Gender-Balanced Economies so Complicated?

By Paula Rudnicka

This year, many observe the International Women’s Day under the theme #BalanceforBetter, which calls for a more gender-balanced world and emphasizes that gender equality is an essential element of thriving economies and communities. Indeed, a growing body of evidence demonstrates that gender balance is not only a human rights issue, but also a business imperative. It is estimated that globally, countries lose USD 160 trillion in wealth because of gender pay gap alone, while gender-based discrimination in social institutions induces a worldwide loss of up to USD 12 trillion. If gender inequality makes so little sense from an economic standpoint, why is it so difficult to achieve parity in the economic and other spheres of life? The answer to this question lies in the complex interplay of national laws, sociocultural norms, and traditional practices that have a profound impact on women’s lives in various country contexts.

Despite significant progress towards legal gender equality over the past decade, as of 2018, at least 104 economies still had laws preventing women from working in specific jobs and 18 economies had laws giving husbands power to prohibit their wives from working at all. As a result, over 2.7 billion women across the globe were legally restricted from having the same career choices as men. That’s a staggering statistic on its own, but, in fact, it is only the tip of the iceberg. ABA ROLI’s recent research on women’s economic status in Cambodia, El Salvador, and Honduras found that women face countless practical and structural challenges in the world of work and business, despite relatively strong legal and institutional underpinnings for gender equality.

Although in Cambodia, El Salvador, Honduras, and many other countries women’s legal capacities are identical to that of men, an array of social norms relegates them to a submissive status requiring obedience to male family members. Men are typically perceived as heads of households and breadwinners, while women are viewed primarily as homemakers and caregivers. Consequently, women have limited decision-making power in family settings and are often expected to ask for permission from their husbands to enter into contracts, open bank accounts, or transact in any other way. Similarly, even where the legal requirements for registering and operating business enterprises are the same regardless of gender, women experience unique barriers to launching and growing their businesses. They tend to have fewer networking and mentoring opportunities than men; more limited access to information, quality education, and training; and reduced access to markets.

Women also face higher personal costs of doing business, often managing double or even triple working days as they balance household and caregiver duties with work. Further, there is often a trade-off between business success and family success, because income generated by women leads to shifts in power dynamics in the households. To compensate for the perceived loss of power, men frequently prevent women from making independent decisions about their businesses operations and the disposition of their income. In the most extreme cases, this may lead to increased levels of intimate partner violence.

In addition, women experience significant difficulties in obtaining financing because of a lack of collateral, limited financial education, and unaffordable interest rates. Banks frequently view women as unsafe borrowers and prefer loaning to men, causing women to turn to smaller and more dangerous loans for shorter periods from informal lenders or microfinance institutions. At the same time, working women experience occupational segregation and persistent discrimination in the workplace, especially in the context of pregnancy, maternity, and access to leadership positions.

As a result of this complex web of barriers, women are overwhelmingly clustered in poor-quality jobs, earn considerably less than men for work of equal value, own fewer formal businesses, and are less financially independent than men, which leads to feminization of poverty. On average, women-owned enterprises are smaller and less profitable than men-owned businesses, and most are unregistered, which further hampers their sustainability and growth potential.

In 2018, the World Economic Forum warned that, at the current pace of change, the global economic opportunity gender gap will not close for another 202 years. As UN Women has recently stressed, we must think equal, build smart, and innovate for change to advance gender equality, empower women, and achieve Sustainable Development Goals. This requires transformative shifts, integrated approaches, and new solutions that disrupt “business as usual."

ABA ROLI and the Women and Girls Empowered (WAGE) consortium we lead in close partnership with the Center for International Private Enterprise, Grameen Foundation, and Search for Common Ground, recognize that achieving inclusive and sustainable economies is not possible without gender balance. ABA ROLI and WAGE are therefore committed to employing holistic and highly collaborative approaches that provide women with the resources they need to succeed as equal and active participants in the global economy. WAGE’s pilot program, “Reducing Barriers to Women’s Economic Empowerment in El Salvador and Honduras,” offers financial support to women entrepreneurs and works with local microfinance institutions and civil society organizations to reduce legal and practical barriers that women face in starting and growing sustainable businesses, including gender-based violence, conflict, and insecurity. WAGE implements the initiative together with Kiva—an online lending platform that connects people through lending to alleviate poverty. By using cutting-edge technological solutions, socially connected crowd-funding, and public-private partnerships, WAGE strives to create innovative opportunities for women and reach traditionally excluded populations in a highly impactful and sustainable manner.

Read the WAGE one pager to learn more about the program here.

Paulina (Paula) Rudnicka is an Advisor at the Research, Evaluation, and Learning (REL) Office and a Co-Chair of ABA ROLI's Gender Practice Group.

Disclaimer: The views and opinions expressed in this article are the author’s own and do not necessarily reflect the views of ABA ROLI.