Feminist economists respond to the recent IMF Discussion Note "Women, Work, and the Economy: Macroeconomic Gains from Gender Equity" (Part 1)

FRIDAY FILE – In September 2013 the International Monetary Fund (IMF) released a Discussion Note called Women, Work, and the Economy: Macroeconomic Gains From Gender Equity. The report examines “whether women have the same opportunities as men to participate in labour markets in the first place, [or] in other words, are women empowered to contribute fully to global economic growth and prosperity?”

By Mariama Williams

In this two part series we share responses to the report from leading feminist economists. In part one Dr. Mariama Williams gives a critical analysis of the Discussion Note, highlighting the positives and shortfalls of the various sections of the Note. In part two Prof. Stephanie Seguino with Assistant Prof. Elissa Braunstein and Dr. Anit N. Mukherjee take a look at some of the shortfalls in the report related to gender wage gap, how macroeconomic policies perpetuate gender inequality, female labour force participation rate (FLFPR) and unpaid care work.

Dr. Mariama Williams[i] says, The IMF’s Staff Discussion Note, while covering no new territory,[ii] is very important for one simple reason: it is the IMF; and, the IMF has credibility and influence with finance ministers and central bankers like no other institution. So if the IMF says that gender matters, then, it does. And that is precisely what the Note says, quite explicitly, making the following salient points:

• Women’s contribution to measured economy activity, growth and well -being is far below its potential;

• Progress on gender equality has stalled; and

• Gender inequality has serious macroeconomic consequences.

While the Fund’s Discussion Note does not explicitly depart from the IMF’s traditional pre-occupation with the trade-off between growth and equity, it does, if understatedly, say that ‘the challenge of growth, job creation and inclusion are closely intertwined’.

The Note does a credible job of reporting on the state of existing research on gender and labour markets, highlighting the inter-linkage to macroeconomics gains and losses to the economy arising from persistent gender inequality. It also includes a short set of recommendations for fiscal policy to help improve gender equality. Overall, it sends positive messages about the importance of gender equality to economic performance and voices concerns about the seeming slow-down of progress towards gender equality. Quite significantly, the Note flags unpaid work. It argues that women in most economies spend considerable more time than men on unpaid work (child-rearing and household tasks) which is not accounted for in GDP. However, the Note does not explore this issue beyond that.

The Discussion Note is disappointing on two levels: first, it tends to instrumentalize gender equality and, second, while it emphasizes how gender equality can impact macro policy there is no discussion about the adverse impacts of macro policy on gender equality and women’s empowerment.

The first section of the Note, ‘Macroeconomic implications of the labour market divide: does gender matter?’ makes arguments that are useful to gender advocates advocating for better integration of gendered and social content to labour and employment policies as well as the macroeconomic framework that girds these policies.

But the heavy emphasis on the contribution of gender equality to macroeconomic performance, while important, reinforces a trend in international organizations of treating gender inequalities and biases and discrimination against women primarily in terms of their impact on women’s contribution to measured economic activity and the enhancement of macroeconomic performance. There is a need to emphasize that gender equality is good and desirable intrinsically; its basis is the human rights obligations of IMF member countries: women must have equal access to both tangible and intangible resources to the same extent as men so that they can maximize their choices and options in society.

Because it sets aside the rights-rooted approach to gender equality, it is not surprising that the IMF Note does not discuss or address the contribution and potential consequences of the Fund’s approach to macroeconomic policies on gender equality and women’s economic empowerment. The consequence is that the inter-linkages between gender inequality and the Fund’s business model and its core functions—lending, economic and financial surveillance and policy advice—are not examined. This is surprising given the vast literature, most recently arising from the 2008-2009 global financial crisis, as well as, from analyses of the Asian Financial Crises of the 1990s and the 1980s critique of structural adjustment policies that argued that the Fund’s approach to exchange rate management and fiscal and monetary policies have serious adverse impacts on women, poverty, work and the economy. While there are a few lines about poverty in the Note, there is no attempt to explore poverty dynamics underlying the issue of women and work and how fiscal and monetary policy impacts on these dynamics.

While it is undeniable that poverty reduction and growth facility (PRGF) supported programs in developing countries have provided support for social issues, it is also the case that core macroeconomic adjustment in IMF-supported programs have continued in their traditional business-as-usual pathways of enforcing fiscal consolidation and conditionalities that have adverse consequences for both employment and the social sector. For example, one of the key recommendations of the Fund’s policy advice to developing countries’ economic decision-makers is centered on the reduction of government services and public sector employment—a key area where women have made the most consistent and sustainable advance, both in terms of the quantity and quality of employment: in some countries many women are in senior management positions in the public sector more so than they are in the private sector. Yet, invariably Fund policy advice to troubled economies centers on reduction of public sector employment and facilitates the privatization of public sector enterprises. Likewise, exchange rate advice usually does not take account of the impacts on prices and employment in the domestic economy, such as the inflationary impacts of devaluation.

The third section on ‘gender-specific labour market characteristics’ highlights that women contribute significantly to economic welfare through unpaid work, which also constrains their availability for paid work. In a subsequent section, it argues that better access to comprehensive, affordable and high quality child-care could free up women’s time for formal employment. The Note highlights the continuation of perverse gender gaps that negatively impact economic performance.

The fourth section of the Note, entitled, ‘Policies in support of higher female labour force participation’ is based on the premise that ‘well-designed, comprehensive policies can be effective in boosting women’s economic opportunities and their actual economic participation’. It correctly argues that fiscal policies have significant scope for increasing female labour force participation. But the argument that social welfare benefits and pensions weaken the link between labour supply and income treads on dangerous ground as it may bolster conservative arguments that social welfare is a disincentive to work and hence a justification for the current austerity approach that cuts governments’ social programs. In many societies women actually can benefit from greater expenditures on social welfare in order to increase their availability for productive work, increase the profitability of their enterprises, increase leisure time and free them from the drudgery of overwork. Investment in social amenities can ultimately offer women to have more time to study and find other fulfilling ways of enhancing their well-being.

Many of the fiscal policy measures that the Discussion Note proposes, while they may be appropriate for Organisation for Economic Cooperation and Development (OECD) countries such as the US (i.e., reduction of secondary earner tax wedge) may have limited appeal in developing countries. Other proposals such as tax benefits for low-wage earners can be useful where implementable, especially in emerging economies. But for many low-income developing countries the leverage they need to stimulate labour participation, including women’s participation and employment creation, is not so much on the tax side but on the expenditure side. These countries need to undertake expenditures on primary, tertiary education and technical training as well as promote the provision of early childhood education and day care programs, improvement of feeder roads for women farmers, increase government support for storage and distribution facilities, gender sensitize extension services, and marketing information to access international markets. At the same, international rules and disciplines on transnational corporations that enhance compliance with national tax systems can allow developing countries to have more tax revenues to spend on social and development priorities.

But the main unconditional fiscal measures to help support female-labour force participation (FLFP) rate discussed in the Note is the design of family benefits in the form of parental leave schemes. The other fiscal expenditure measures discussed in the report, such as reform of child support and other social benefits are only given qualified support. Reform of child support, it is argued, can be a disincentive to work. Further, the Note also argues for linking benefits to labour force participation to ‘in-work benefits’. Hence, there is over emphasis on formal labour market, where as many women in developing countries are in the informal and subsistence economies. With unconditional support only proffered for expenditures that improve or enable women’s access to labour market—child care, reforms of pension, expenditures on education of women and improvements in rural infrastructure—there is less attention paid to women as farmers and own-account producers. In general, the set of policies discussed to increase the demand for female labour is consistent with findings in the literature and good practices for emerging economies. But without some adjustments in macroeconomic policy frameworks, the measures discussed are likely to remain aspirational for poor developing countries to beginning to think through in their national development strategies.

In the concluding section of the paper, ‘Further IMF Work to strengthen the role of Women in the Economy’, the paper says that the IMF will continue to contribute to enhancing the analysis of the macroeconomic effects of gender inequality and inclusion, including its surveillance work. But there is no commitment to examine how macroeconomic policy affects gender inequality and inclusion. Given that the main competence of the IMF is in this area and that the most powerful interventions of the IMF are with regard to standby programs and external payments crises, it is not good enough for the IMF to rely on the World Bank and the OECD. Does the IMF intend to incorporate gender issues in designing these programs? In the case of surveillance, does the IMF intend to point out the harmful spillovers from developed country policies on gender equality in general and in developing countries, more specifically?[iii] A second important area flagged for further work by the Discussion Note is the IMF analysis with regard to fiscal policies. Here the specific policy response is focused tax codes— to identify and remove provisions that discriminate against women. But there are also broader and deeper fiscal policy mechanisms on which the Fund should focus. For example, fiscal measures to ensure gender equality oriented expenditure as well as non-gender equality interventions that will benefit communities and women.

All in all though, Kudos to International Monetary Fund’s Managing Director Christine Lagarde for speaking in multiple fora about the Discussion Note and therefore highlighting the gender equality and women’s empowerment issues raised, well beyond what such a discussion note might otherwise have garnered.

Edited by Rochelle Jones

[i] Mariama Williams, Ph.D., is a Senior Programme Officer with the South Centre, Geneva, Switzerland. She is also a director of the Institute of Law and Economics, Jamaica. Author of a range publications related to gender and the economy, Williams has extensive experience in the areas of sovereign debt crises, international trade policy and macroeconomics and economic development. She is also a former member of the Steering Committee and Co-research Coordinator, Political Economy of Globalization (Trade) for Development Alternative with Women for a New Era (DAWN, 2003-2008), past Research Coordinator with the International Gender and Trade Network (IGTN, 2000-2008) and served on the Advisory Committee of Progress of the World’s Women, a biennial report published by UNIFEM (2000 and past member of the board of the Association for Women’s Rights and Development (AWID, 2002-2004). She is currently a member of the Board of Trustee of the Dag Hammarskjold Foundation, Sweden.

[ii] For the most part, it presents data and analysis of the World Bank’s World Development Report 2012: Gender Equality and Development, supplemented with OECD analysis as well as insights and findings from an earlier IMF Working paper, Gender and Its Relevance to Macroeconomics: A Survey (Stotsky 2006).

[iii] My thanks to Manuel Montes of the South Centre for this insightful observation