The Female Factor for Growth in LatAm

March 8 marks 100 years since the first International Women’s Day. Over the past few decades, Latin America has made significant advances on gender equality. As proof of that trend, the rate of female participation in the labor force has increased to nearly 57% in 2009 from 35% in 1980. In addition, participation gains can be traced across all sectors: Less than 30% of the increase of women in the labor force is directly linked to the expansion of sectors traditionally dominated by women, such as education and health. Moreover, women’s earnings have increased by more than 10%, and their share of overall household income ranges from 30% in Costa Rica to over 60% in Jamaica. Compared with other regions, LatAm also has a higher rate of female entrepreneurship and a smaller gap between male and female entrepreneurs.

Yet, gender disparities are still high. According to the International Development Bank’s (IDB) latest data, while female employment ranges from 40-70% in the region, male employment is above 85% in all LatAm countries. Despite the advances on earning disparities, when comparing men and women with similar levels of education and age, women earn on average 17% less than men, with this figure varying widely between countries (men earn 30% more than women in Brazil and 26% more in Uruguay). Women are also disproportionally over-represented in the informal sector and self-employment: In 2010, 2.9% of females in LatAm were entrepreneurs against 6.6% of men; 11.2% reported “zero income” compared with only 7.6% of men; 57.5% of women were wage earners (58.4% of men). Women only surpassed men in the self-employed category (28.4% versus 27.4%). Additionally, studies using the World Bank Enterprise Survey Data found that in 2008 only 35% of LatAm businesses were owned by women. More saliently, women are significantly under-represented at high levels of management: In 2010, only 3% of presidents or CEOs of LatAm’s top 100 companies in Argentina, Colombia and Mexico were women; 2% in Ecuador and Peru; and 1% in Brazil.

The same trend is visible in the political arena. Despite the election of female presidents in countries like Brazil, Argentina and Chile in recent years, the IDB estimates that regionally in 2009 women held an average of only 23% of ministerial posts and 20% of parliamentary seats; furthermore, only 11.5% and 6.6% of party caucus leaders in lower and upper houses, respectively, were women. Also, while women accounted for more than 50% of the membership of many parties, only 15% of party presidents or secretary-generals were female.

While many governments are designing programs aiming to leverage women’s control over expenditure (conditional cash transfers), more emphasis should be placed on promoting labor policies that reduce the burden on women and allow for greater flexibility in the workplace. In a region where on average women are more educated than men (female secondary school enrollment equals or exceeds that of males in 80% of countries in the region), female economic influence will be pivotal in the coming years to improve the region’s growth trajectory, which is desperately in need of productivity gains to increase its competitiveness in international markets.

Editor’s Note: This post is excerpted from a much longer analysis available exclusively to RGE clients, Banxico Expected to Stay on Hold in 2011.