Empowering women economically: 2010 Women’s Economic Opportunity Index

Leo Abruzzese, 26 September 2010

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In recent decades girls’ and women’s education and health in most poor countries have dramatically improved. But progress in women’s economic opportunities is still lagging. In many emerging market economies, women consistently trail men in formal labour force participation, access to credit, entrepreneurship rates, income levels, and inheritance and ownership rights.

The story is very different in richer countries. Throughout the 1980s and 1990s, women entered the workforce in droves, fuelling economic growth such that today many women lead global corporations and countries.

Yet even in the richest countries, full equality is still some distance away. Women, on average, earn 75% of their male co-workers’ wages, and the difference cannot be explained solely by schooling or experience. In many other countries, women have fewer educational and employment opportunities than men, are more often denied credit, and endure social restrictions that limit their chances for advancement. In some developing countries, women still cannot vote, own property, or venture outside the home without a male family member.

The Women’s Economic Opportunity Index: The first of its kind

To gain a better understanding of the factors that influence women’s economic opportunity – and how countries have addressed them – the Economist Intelligence Unit (2010) has constructed a pilot Women’s Economic Opportunity Index, the first of its kind. This index builds on, and extends, prior work done by the UN Development Program on its Gender-related Development Index (GDI) and the World Economic Forum’s Global Gender Gap Index.

Women’s economic opportunity is defined as a set of laws, regulations, practices, customs and attitudes that allow women to participate in the workforce under conditions roughly equal to those of men, whether as wage-earning employees or as owners of a business. The goal of this index is to spur debate and research on the factors that affect women’s ability to access jobs and business opportunities. It is also intended to prompt improvements in policy and programmes that will encourage women’s participation in the workplace and thus create more productive economies overall.

Working closely with a panel of experts and advisers, the index has indentified determinants of women’s economic opportunity in the formal sector, from educational attainment to legal and regulatory restrictions. Gender-related data has been collected and analysed from a wide range of trusted international sources, including the World Bank, the UN, the International Labour Organisation, the World Economic Forum, and the OECD. Existing datasets have been supplemented with new indicators created and scored by the Economist Intelligence Unit’s own team of analysts and contributors. The new indicators attempt to capture information that research shows is important to women’s economic opportunity but for which there are no globally comparable data, such as access to childcare and the availability of training for women running small- and medium-sized enterprises.

The result is a new ranking of economic opportunity for women in 113 economies.

What the index shows

Figure 1 ranks the best and the worst countries according to the economic opportunities available to women. Sweden, Belgium, and Norway occupy the top spots. These countries have particularly open labour markets for women, high levels of educational achievement, and liberal legal and social regimes. Hong Kong (China) performs best in the Asia region, ranking in the top 25% in most categories. Mauritius is Africa’s best performer; its labour policies are among the most favourable to women in the region. Excluding Canada and the US, Brazil edges Chile and Mexico for the best score in the Americas. Eastern European countries have particularly balanced labour-law protections, although retirement ages for men and women are often different. Tunisia comes first in Northern Africa, and Sri Lanka in Southern Asia.

The index reveals laggards as well as leaders. Chad, Yemen and Sudan fill the bottom three spots in the index. Only 20% of women in Chad can read and write, and teenage girls are more likely to become pregnant there than anywhere else.

Figure 1. Highest and lowest rated in the Women’s Economic Opportunity Index

Note: Modelling the indicators and categories generates scores of 0-100 for each country, where 100 represents the most favourable economic environment for women, and 0 the lowest. The overall score, as well as the category scores, are unweighted averages of the normalised scores for each of the indicators. The 113 economies assessed can then be ranked according to these indices.

How the index is constructed

The 26 indicators in the index have been selected from among hundreds of choices. Topic-specific working groups – on labour policy and practice, for example – were assembled to review the options and make recommendations. Although the choice of indicators involved an element of subjectivity, the extensive literature on women’s economic empowerment pointed in important directions. For example, research suggests that the guarantee of maternity leave, particularly paid leave, will raise women’s participation in the labour force before giving birth and increase the likelihood of a return to work when the leave ends. However, who pays the benefits also matters, since employers are more likely to hire women if maternity leave is provided under a universal system financed by taxes or insurance than through one in which the employer shoulders the full amount. Hence, a sophisticated maternity leave indicator has been included in the benchmarking model that takes into account both these aspects, as well as the length of maternity leave provided. Although the determinants of women’s economic opportunity are not understood perfectly, metrics were included from every step of the social and economic value chain – from primary education and adolescent fertility to financial access and differential retirement age.

No index of this kind can ever be perfect. This one focuses entirely on the formal sector – jobs that usually have set hours and agreed levels of pay, and that are reflected in national accounts. Many women, especially in lower-income economies, work in the informal sector, where activity is often untaxed and not usually counted by the authorities, but also where labour rights and contracts cannot be enforced. While informal employment can lead to short-term gains, these may be outweighed by informality’s long-term negative impact on economic growth and job creation. For example, a study in Mexico found that women moving from informal to formal employment enjoyed a significant increase in earnings (de Laiglesia et al. 2008).

This new index is intended to spur further debate on the drivers of, and constraints on, women’s economic opportunity. The results have been validated against existing external benchmarks, such as the ratio of female-to-male participation in the labour force. The scores were also correlated against other standards of women’s achievement, such as the UN Development Program’s Gender Empowerment Measure. The index was reviewed at critical stages by a peer panel of international development and gender experts.

This index breaks new ground by focusing specifically on a country-by-country comparison of economic opportunities for women, going beyond a measurement of gender gaps. For this reason it includes an assessment of the national business environments in which women must function. The index also builds on well-established legal codes, such as the International Labour Organisation’s annual evaluation of equal-pay conventions; in this case, the project team created a scoring scheme based on the International Labour Organisation’s written assessments.

Entirely new qualitative measures were also created, including an Economist Intelligence Unit assessment of whether customary practice overrides statutory law in matters of gender equality, specifically in property ownership. Owning property can increase a woman’s access to credit, and may confer broader social and economic benefits, including enhanced food security, wealth, authority, and a greater propensity to make investments in land or property.

A final goal of the Women’s Economic Opportunity Index is to promote the collection of comparable, sex-disaggregated data that will encourage further research and dialogue on the binding constraints to women’s economic opportunities.

This index opens a window on to the landscape in which women live and work, acknowledging countries that are coming closer to full equity and challenging those that still have work to do.

References

Consultative Group to Assist the Poor (2009), Financial Access 2009: Measuring Access to Financial Services around the World, October.

Economist Intelligence Unit (2010), “Women’s economic opportunity: A new global index and ranking”, June.

International Monetary Fund, International Financial Statistics.

de Laiglesia, JR, R Bazillier, RS Parker, U Quijano, A Saracho, A Scorza, and V Scorza (2008), “Work and Well-Being in Mexico: Integrating the Employment and Social Development Agendas”, draft report prepared for the Mexican Ministry of Social Development, OECD Development Centre: Pairs, 2008. Cited in Is Informal Normal? Towards More and Better Jobs in Developing Countries, OECD Development Centre (2009).

The UN Secretary-General's Database on Violence Against Women

UN Department for Economic and Social Affairs, Population Division, World Fertility Data 2008

World Bank Group, Women, Business and the Law Database.

World Bank Group, Doing Business Project.

World Economic Forum (2009), “Executive Opinion Survey”, in The Global Competitiveness Report 2009-2010.

Topics: Development, Labour markets, Poverty and income inequality
Tags: economic opportunity, gender equality, Labour Markets, women

Editorial Director for North America, Economist Intelligence Unit