Increased female participation could boost Canadian economy by $160 billion

19 September 2017 5 min. read

Canada could add up to $160 billion to its economy by increasing female participation, sectoral mix and working hours, finds a new study. While improvements have been made in the education system, women are still highly underrepresented within corporate managerial ranks. While Canadian corporates continue to pledge support for changing this, a substantial gender pay gap remains.

The economic costs and benefits of full female participation in the global workforce were estimated by McKinsey & Company’s for-profit thinktank: the McKinsey Global Institute. When considering improving global female participation to the level of the best in class country, total economic benefit amounts to $12 trillion.

In a new report, titled ‘The Power of Parity: Advancing Women’s Equality in Canada’, the strategy consulting firm considers the situation specifically for Canada, highlighting where the country is performing relatively strongly, but also key areas of concern – particularly pertaining to the corporate environment in which women continue to find themselves out of luck when it comes to promotion to the higher ranks.

Female addition to GDP

The study estimates that around $150 billion in incremental GDP is currently missed out on by the wider Canadian economy, due to the prevalence of systematic differences in treatment, participation and hours worked by women. The largest segments of lost GDP stem from changes in sectors in which women are employed, at 42%, followed by increased labour participation rates, which add a further 42%. Around 16% of the total stems from increased hours worked.

However, there are considerable differences across provinces and territories in Canada, in terms of their respective contribution to a loss of additional incremental GDP. In Quebec, for instance, the largest segment of lost GDP, at around $34 billion, stems from the sector mix of employment. In Saskatchewan, to the contrary, it stems from lower levels of labour force participation. In Ontario, which would contribute around $60 billion in additional GDP through boosted gender parity, the result stems broadly from all three factors.

Female representation improvement

The research also sought to identify the areas in which the largest levels of gender disparity were noted, and their respective change over the past two decades.

One area that has seen the level of gender inequality actually shift toward inequality on the side of men is higher education. The Canadian higher education system, which is one of the world’s best funded, has seen the number of women as a ratio to men increase from 0.88 to 1.12. Labour force participation has increased slightly, from 0.8 to around 0.85. At this rate, it will take a further 32 years to reach parity, while it will take another 29 years at current growth rates to bring wage equality.

The research found other areas, in which there are considerably higher levels of disparity, with little or no change over the past 20 years. Entrepreneurship, for instance, has a disparity level of 0.6, with current rates to see parity reached in 180 years; managerial level promotions, meanwhile, are declining, with a ratio of 0.52. One area of relative improvement is political representation, which has, since 2007, improved to around 0.45, with another 31 years needed to reach parity.

Corporate spheres

The study also sought to identify in how far corporates are promoting women to more senior roles. As highlighted in the previous section, women are chronically underrepresented in management; the study found, however, that the higher up the corporate ladder, the lower the level of representation for women – with around 25% representation at executive level and 15% for CEOs. Entry into the managerial level, and then subsequent promotion between director and vice president were noted as the biggest bottlenecks for promotion.

Gender pay gap

Aside from disparity when it comes to women in various senior roles in the corporate sphere, the research also found that across all levels of the organisations studied, a gap in pay between genders was prevalent.

At entry level, the gap stood at 11%, which fell slightly to 7% for managers, and slightly further to 4% for Directors. However, from Vice President onwards the gap increased significantly, first to 11% before hitting around 14% at the executive level.

Initiatives don't correlate with success

Businesses are increasingly on board when it comes to dealing with gender inequality. CEOs in particular note that it is a key to improved business performance; 25% of CEOs citing it as a very important issue, while 31% said it is an high-level priority.

How to achieve resolution to the issue, rather than gaining support, has now become the chief problem. Throwing money and initiatives at the issue does not necessarily create positive results. When mapping the number of initiatives against the number of women in senior leadership, no clear correlation arises. A greater number of adopted initiatives did not, for instance, increase the number of women in leadership, while failing to improve conditions at all in many instances.