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OPINION March 8, 2022

No Economy Can Reach Its Full Potential Where Women Do Not Have Equal Opportunities

World Bank Europe and Central Asia Chief Economist Asli Demirgüç-Kunt spoke with Turkey's Dünya. During the interview, she emphasized that gender equality is central to the World Bank's goals of ending extreme poverty and boosting shared prosperity, and stressed that no society or economy can reach its full potential where women do not have the same opportunities as men.


Dünya: The World Bank Group is one of the global organizations on the frontline with its efforts tackling with gender equality. What will be on your agenda in 2022 for more actively promoting it across the world?

Asli: Gender equality is central to the World Bank’s goals of ending extreme poverty and boosting shared prosperity.  We believe the whole agenda of greater gender equality and women’s economic empowerment is also smart economics because it enhances productivity and improves other development outcomes, including prospects for the next generation and social betterment. No society, country or economy can achieve its full potential if girls and women don’t have the same rights and opportunities as boys and men.

Achieving women’s economic empowerment is, however, an enormous task. According to estimates from the International Labor Organization, globally women’s labor force participation has actually been declining over the last decades to below 50% just before the pandemic. In Turkey, women’s labor force participation has consistently lagged that of men by a factor of at least 2:1 for the past several decades.  The pandemic made it even worse: just 29% of women participate in the labor force, compared with 66% of men. But the benefits of women’s economic participation are enormous. Global wealth could increase significantly if women had an equal part in the global economy by working in paid jobs and earning equal wages.

So, promoting gender equality and women’s economic empowerment worldwide have always been and will continue to be central to our work, but particularly as we work to recover from the impact of the pandemic. The work of the World Bank Group is guided by a strategy on gender equality which focuses on several key areas, such as closing gender gaps in education and health, removing obstacles to more and better jobs, and removing barriers to women’s ownership and control of land, housing and bank accounts.

Dünya: The pandemic had economic and social impacts hitting women particularly harder. Undoubtedly, a significant part of the gains acquired in a long period in terms of women's education and employment have been lost. As a chief economist at World Bank with an oversight on the economies of a wide region, how can you describe the latest status of women and what are the impacts of this on those economies?

Asli: The COVID-19 pandemic is making things much worse, reversing decades of gains for women and girls in areas like education, economic empowerment, and voice and agency – impacts that could well outlast the pandemic. School closures and disruption of health services, for example, have resulted in learning losses, and may increase adolescent pregnancy and the risk of gender-based violence. And Turkey already had a fairly high prevalence of domestic violence, pre-pandemic.

Women are also doing more unpaid care and work and they have also lost jobs at a higher rate than men during the crisis; and women-owned and -led businesses are more severely affected. Research we have done in this area suggests that women-led businesses experienced a bigger decline in sales, faced greater financial risk, and were less likely to seek pandemic-related public support. Despite these challenges, however, women-led businesses are responding to the COVID crisis with resilience and innovation. The same study found that women-led small and microbusinesses were much more likely to increase the use of digital platforms compared to those led by men.  

Women in Turkey have not been immune from the negative impacts from the pandemic. Data shows that women workers in Turkey were three times more likely to become unemployed than men, because they are employed in ‘frontline’ sectors such as hospitality, food, tourism and other services. The extra demand in family and childcare, generated by the pandemic, has also fallen disproportionally on women, causing them to drop out of the workforce. Bringing them back to the labor market may prove challenging.

While the pandemic has worsened inequality, particularly for women and the poor, these inequalities already existed. And we now have to work even harder to ensure that we not only recoup the recent losses but ensure a long-term recovery that is more equal and inclusive.

Dünya: Did the pandemics cause any further deterioration on gender pay gap globally?    

Asli: As I have already mentioned, the pandemic hit some sectors such as tourism, hospitality, retail, entertainment more severely, and since women tend to be over-represented in these hard-hit sectors, they will suffer lasting employment losses. According to high frequency phone surveys of households we in the Bank conducted in developing countries, on average, women were 8 percentage points more likely than men to stop working during the first months of the pandemic. Losing a job obviously impacts careers by slowing or obstructing opportunities for advancement and reduces future income. Furthermore, the longer the pandemic lasts, the greater the risk of long-term unemployment or lower participation rates, as women who are out of the labor force may lose necessary skills to return to the labor market.  Unfortunately, job losses are also proving particularly long-lasting among women. On average, one-half of the initial work stoppages and job losses of the male workers had been recovered, compared with only one-third for female workers. This is also consistent with firm level research we recently conducted, suggesting that female-owned firms appear to be recovering more slowly after the pandemic (ECA Economic Update, Fall 2021). So all these suggest that the pandemic is harming women’s incomes and advancement more than men’s, potentially further increasing pay inequality.

Dünya: Women are underrepresented in engineering, computer and physical science occupations as well as politics. The situation is much worse in emerging economies compared to the advanced ones. What are the reasons do you think and how can this challenge be overcome?

Asli: Gender gaps are mainly the result of deeply-set norms and beliefs about women’s role in economic and social life. So, in many developing countries, the female child faces inequalities within the household, which prevents her from reaching her full potential as an economically productive adult. When women do not study in STEM fields, they automatically sort themselves into lower-paying occupations, reducing their opportunities. Providing information and mentoring can change the aspiration of girls.  Conversation with women role models can also help.

But even those girls and women who do get the full benefits of a good education and family support can still face additional layers of barriers in the form of workplace discrimination and laws that keep them out of certain jobs and prevent them from owning a business. The World Bank’s Women, Business and the Law report, which monitors legal barriers to women’s economic empowerment, finds, for example, that in 104 economies, women are barred from working at night or in certain jobs in areas such as manufacturing, construction, energy, agriculture, and transportation.

Achieving gender equality is not a short-term process. It requires a whole-of society effort, which includes all of us, women and men at the individual level. And it starts at home --- by raising our sons and daughters as equals and to change entrenched mindsets about what women can and cannot do.

Social change, ultimately, is the most durable tool for giving women equal opportunity and achieving gender equality in every aspect of life.

Dünya: How do you see the short to mid-term outlook in Turkey for a stronger labour market providing better chances in female employment?

Asli: This will be an important part of the COVID recovery efforts.  As I already mentioned, the pandemic disproportionately affected women; their traditional caregiver roles meant that they had to adjust more, taking more leave of absence; women experienced more job losses and struggled more to bounce back; and women entrepreneurs were particularly badly hit.  And Turkey’s pre-pandemic female labor force participation rate was already quite low compared to the OECD average of 44%.

Going forward, we need to focus on policies in at least three areas: Labor market and skills training; education; and access to finance.  Female labor market participation can be improved through design of targeted employment subsidies to firms, providing vocational training with on-the-job training, and introduction of more flexible work hours.  This flexibility is particularly important since surveys show that many Turkish women leave the labor force due to household reasons. Some of this is attributable to a relatively nascent childcare industry, but a significant factor is also the social norms and expectations about childcare responsibilities.  The conditions created by the pandemic that accelerated the shift to work from home can help promote this flexibility and catalyze greater female labor market participation, perhaps help even change social norms in the process.

In terms of education, the impact of the pandemic on family incomes means that the risk of school drop-out has increased, particularly for girls. Governments will need to work hard to reduce this school drop-out, through outreach to families, especially in lagging regions in low-income household to encourage the return of girls to school or vocational training programs. Also, in responding to the pandemic, education systems in many countries have been forced to rapidly implement innovations in remote learning at scale. However, the huge digital divides and inequalities in the quality of parental support and home learning environments is amplifying learning inequality, again particularly for girls. Ensuring the education system facilitates digital skills and job training early, will be important for the next generation of young women.

Finally, despite relatively high access to financial services among highly educated women, a significant share of Turkish women still face explicit and implicit biases in accessing finance and employment opportunities.  Our Global Findex database, which keeps track of people’s access to basic financial services, shows that globally, there is a persistently stubborn gender gap – 65 percent of women have a bank account, compared with 72 percent of men. In Turkey the gap between men and women’s ownership of a bank account is 30 percentage points, among the highest in the world, along with Bangladesh and Pakistan. This presents yet another set of important barriers to increase female labor participation.

Dünya: Worldwide, women make up 34 percent of the entrepreneurial ecosystem. Number of Turkish startups founded and managed by women are expected to increase in the upcoming years. However, women’s access to finance will be on the focus. What may be ahead for women entrepreneurs in Turkey in terms of financing conditions?   

Asli: Women entrepreneurs’ access to finance is indeed more limited. Women-run businesses, especially small and medium enterprises (SMEs), tend to have a smaller asset base and are more likely to operate in the informal economy —factors that can make it harder for women to meet the requirements for obtaining a loan. For example, our enterprise surveys show that in Turkey 58% of loans require collateral when the business is managed by a woman, versus 37% when the business is run by a man.

As I mentioned earlier, there is also a large gender gap in financial inclusion: 83% of men but just 54% of women have bank accounts, a 30-percentage point difference, which is over three times the developing country average of 9 percentage points. In general, women tend to be less likely to be banked purely due to lack of financial literacy and low labor force participation. In Turkey, recent studies have shown that there also seems to be an inherent bias in the banking system, which seems to discriminate against women entrepreneurs on their loan applications (EBRD 2019, IBRD 2019).

These gender gaps in financing do have serious economic implications and will need to be overcome if we expect to see more women entrepreneurs in Turkey.  One opportunity is through the use financial technology services for expanding access to finance and the use of digital technologies by women-led firms.  For example, Turkish e-commerce has expanded very rapidly in response to the pandemic.  And although the share of women-owned businesses is less than 10 percent, close to 25 percent of enterprises engaging in e-trade platforms are owned by women. This could point to strong potential for digital technologies in closing the gap in financial inclusion and bridging the divide between women-owned businesses and others.

Dünya: You have an inspiring career full of achievements. This is a source of pride for us, but you may have experienced some tough challenges also as many of us. What barriers have you faced as a woman in becoming successful in your field? How did you overcome them?        

Asli: Thank you. Mainly, I have been very lucky. First, I was born into a very loving and supportive family.  As the only child, I was brought up to feel the sky was the limit and there was nothing I could not accomplish.  The love and guidance of my parents has been an important source of strength throughout my life. Second, I found an equal partner in my husband, who encouraged my ambition and has never put his career above mine.  And finally, I was again lucky that my interests led me to work at an institution like the World Bank, which prioritizes gender equality.  So, my colleagues have also been supportive and I can’t say that I faced barriers due to my gender.  Having said that, the most difficult time in balancing family and career is usually when you have young children - I think for both parents, but particularly for women- and that was also true for me.  Having an understanding manager makes all the difference, and now I remember that as a manager.

Dünya: Based on your own experience, what advice would you give to women considering pursuing a career in your field?

Asli: I have a daughter who studied economics and is now working on her PhD in finance, so I ask that question to myself and I don’t think I have an easy answer.  There is a lot of luck involved, but I believe it is important to do what you love, work hard and persevere.  Inevitably there will be set-backs, but in my experience those who succeed are the ones who have the passion and determination to keep going.


Originally published in Dünya on 8 March 2022.