Authors: Frank C. Bracco, Ahmad Abuomar
Closing the gender pay gap and improving female participation in work could add trillions to the global economy according to PwC’s recently released Women in Work Index for 2019. The report shows that while progress continues to be made across OECD countries, the pace of progress is slow. But there is a huge prize at stake for accelerating progress.
Improving female labour participation in the OECD alone could boost OECD GDP by US$6 trillion, while closing the gender pay gap in those countries could boost GDP by an additional US$2 trillion1. Drawing on lessons learned from across these countries and our experience working here in the Middle East, we know the opportunity for economic growth from increased female labour participation has the potential to be even more impactful in the Gulf. This is particularly true for the Kingdom of Saudi Arabia, the region’s largest economy.
This past June’s decision to allow women to drive in the Kingdom may have been a watershed moment, and it also serves as a testament to all the achievements of women over the last several years. On the education front, Saudi females now constitute 48% of university students.2 And, in leadership, females now make up 20% of Saudi’s Shura council.3 Yet, one area that remains an opportunity for Saudi Arabia is female participation in the labour force.
An estimated 22.3% of females over the age of 15 actively participated in the Saudi labour force in 20184. One of the central themes of Saudi Arabia’s National Transformation Program (NTP) - a part of Vision 2030 - is to support the development of the private sector by diversifying the economy and raising “labour market attractiveness” in Saudi. Vision 2030 specifically recognizes the importance of increased female labour force participation (FLP) as an imperative to economic growth.5 Through Vision 2030, the country aims to boost female labour force participation to 25% by 2020.6
Estimated Female Labour Participation Rates in the Gulf (Aged 15+)
Source: FLP rate modeled for 2018 by the World Bank using ILOSTAT database numbers as retrieved in September 2018. For more information see World Bank’s Labor force participation rate, female (% of female population ages 15+) (modeled ILO estimate).
The Kingdom’s plan to raise FLP could yield many positive outcomes. Evidence from other countries shows that greater workforce diversity and female participation often leads to more profitable and effective organizations:
With the benefits of increasing FLP so apparent, the Kingdom of Saudi Arabia has many opportunities for legal and regulatory changes that could support the entry of additional women into the workforce.
The Kingdom’s authorities are already recognizing that regulatory and legislative hurdles can be removed to stimulate FLP. Thanks to recent efforts by the General Authority of Civil Aviation (GACA) and Saudi airline companies, the first class of Saudi women flight attendants recently graduated and are ready to take to the skies.
Society in Saudi Arabia supports higher female labour participation. Recent surveys suggest many Saudi males support for female employment13. To ensure this public support is better understood inside and outside the Kingdom, collective efforts are being undertaken by the government and private sector to increase awareness. By increasing public awareness of the benefits of women in the workplace, many people could be more willing to support additional legal and regulatory changes to encourage female labour participation.
Another social norm to address includes the potential bias in hiring decisions between either a male or female with the same skill-set given the expectation that females could take time off work for maternity leave. To combat this bias, Nordic countries have been able to bridge the gender gap through policies, including the introduction of paternity leave. Moreover, there is some correlation between the number of women (especially in management positions) in a firm and whether a paternity leave policy exists within said firm14. It turns out that there exists less of
a difference between hiring decisions related to gender if both genders are entitled to the same leave time.
To ensure greater participation in the workforce, upskilling, improvement to the educational system, increased vocational training, and other programmes designed to ensure a better transition of both Saudi men and women alike into the workforce is also important. The Kingdom is taking steps on this front. As an example, a public seminar titled ‘Women in Vision 2030,’ was held in December. During this seminar, the Vision’s goals were emphasized and expanded upon, and future plans - such as increased funding for daycares and training programs designed to ready women for the labor market15 - were announced. PwC is taking steps to support female labour participation and training as well: 40% (16 out of 40) of the Saudi nationals being trained through for our Foundation for the Future Program (a program for recent graduates to join PwC through a two-year rotation across all our lines of services) are females for the 2018 class.
The enhancement of female labour participation is desirable from a social and gender equality perspective; and, it can also deliver real economic benefits as evidenced by other economies that have made progress in FLP and realised gains. Higher household incomes also lead to higher health standards for children16, which produces a virtuous inter-generational cycle from there onwards. Policymakers and firms have an important role to play in creating a working environment which is more conducive to female employment - one which offers equal opportunities to both men and women. By tapping into the full potential of its workforce, and with the recent steps taken by the government in Saudi Arabia through Vision 2030, we expect to see continued increases in the FLP rate and additional opportunities for women in the workplace. This can only translate into greater economic opportunities for the Kingdom as a whole as it moves away from its reliance on oil to emerge as a strong contender on the global scene well beyond the oil era.
1. PwC’s Women in Work Index 2019.
2. General Authority for Statistics, KSA.
3. Women’s Labor Force Participation Across the GCC, Karen Young, The Arab Gulf States Institute in Washington. 2016.
4. FLP rate modeled for 2018 by the World Bank using ILOSTAT database numbers as retrieved in September 2018. For more information see World Bank’s Labor force participation rate, female (% of female population ages 15+) (modeled ILO estimate).
5. Percentage of women, nationals or otherwise, of the overall labor force that is employed or actively looking for work.
6. Program document for KSA’s Vision 2030’s National Transformation Program
7. Is Gender Diversity Profitable? Evidence from a Global Survey, Marcus Noland, Tyler Moran, and Barbara Kotschwar, PIIE. 2016.
8. The Tipping Point: Women on Boards and Financial Performance, Meggin Thwing Eastman, Damion Rallis, Gaia Mazzucchelli, MSCI. 2016.
9. Women Matter. 2012.
10. The Tipping Point: Women on Boards and Financial Performance, Meggin Thwing Eastman, Damion Rallis, Gaia Mazzucchelli, MSCI. 2016.
11. Meeting of the OECD Council at Ministerial Level. 2012.
12. More Women in the Workforce Could Raise GDP by 5%, Sylvia Ann Hewlett, Harvard Business Review. 2012.
13. Missperceived Social Norms: Female Labor Force Participation in Saudi Arabia, Leonardo Bursztyn Alessandra L. Gonzalez, David Yanagizawa-Drott. 2018.
14. Paternity Leave: The Key to Female Leadership, Shellie Karabell, Strategy+Business. 2016.
15. Al Riyadh Newspaper, “مشاركون في ندوة «المرأة»: رؤية المملكة 2030 أعطت اهتماماً خاصاً بتوظيف المرأة”.December 2018
16. Income and child mortality in developing countries: a systematic review and meta-analysis, Bernadette O’Hare, Innocent Makuta, Levison Chiwaula, and Naor Bar-Zeev. 2013.