Empowering women has a positive effect on reducing poverty

profits 2The fact that having one or more women in senior management / C-suite positions has numerous positive effects on business is already well known.  These benefits include much improved corporate governance, a greatly decreased possibility of insolvency, better ability to relate to the largest section of the consumer market (which is 70% comprised of women worldwide) and, consequently, improved profitability.

But what effect does this empowerment have at a social level?

The good news is that the economic empowerment of women also has the effect of sharply decreasing poverty levels.   An example of this can be seen in Latin America and the Caribbean (LAC) where economic growth has accelerated over the past decade, while it has largely contracted in the rest of the world.  How did this happen?

Latin American 3Researchers discovered that many Latin American men lost their jobs during the recent recession, which required women to step up to the plate, out of necessity, to feed their families.  The result was the burgeoning success of many small businesses that were started by women, which pushed poverty and inequality to historic lows – in what was considered one of the most gender-unequal regions in the world.

There are, of course, other factors that have contributed to this decrease in poverty.  High global commodity prices have helped, there has been substantial foreign investment and a growing middle class that has increased consumption.  However, a major factor has been these millions of Latin American women who have entered the workforceAccording to an August 2012 World Bank report, Latin American women have been responsible for 30% of the region’s extreme poverty reduction over the past decade, as a result of their increased workforce participation and higher earnings. 

Latin AmericanWhat is interesting to note is that a women’s income has an even greater effect on the lowest rungs of the socio-economic ladder, reducing the severity of poverty more than twice as effectively as men’s earnings.  Studies of this nature have been conducted around the world, and it was found that women, in general, spend their income on household expenses (child nutrition and family “basic human needs”) and the education of their children.  By contrast, men tend to retain more of the income they control for their personal use.

The result of this can be seen clearly in the LAC region.  The LAC mirrors other parts of the world in that gender gaps in education have closed and even reversed in many countries.  In most parts of the region, girls now have higher enrolment rates in secondary and tertiary education than boys.  Following this trend of women focusing on education, statistics show that in households dependent upon female labour, enrolment in schooling is between 7 and 14% higher compared with those households dependent on male labour income.

Latin American 2Despite all this good news, women in the LAC region still experience inequity in the workplace.  Women continue to be employed disproportionately in leadership positions.  Men not only continue to far outnumber women in corporate leadership positions across industries, they are also often paid significantly more than women for the same labour.  Particularly in top professions, compensation for women and men appears to remain unequal, with women in Chile, Brazil, Mexico and Peru facing a large and widening gap that is especially evident in high-ranking occupations.  And still about 60% of Latin American boards have not a single female member.  Even when Latin American women make it to the top of their field, 61% report some form of discrimination at work.  

It is absolutely clear why the empowering of women and promoting gender equality are enshrined as global development objectives within the Millennium Development Goals agreed to in 2000.  As we continue to address this inequality, we need to remember that, apart from the benefits to business of having women in decision-making positions, empowering women is also a crucial step towards overcoming poverty.  The well-being and betterment of the family is at the heart of transforming society, and the economic empowerment of women is at its core.

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About Anne G

My company, SkillsSource, is committed to the process of gender balancing and to the change management needed in public and private enterprise to improve the representation of women at all levels of decision-making. We believe that humanity is like a bird with two wings: the masculine and feminine. Only when both wings are balanced and strong can the bird fly.
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