IOE Position Paper – Unleashing the Full Potential of Female Talent for the Future
Introduction
Over the past quarter century, women have joined the labour market in increasing numbers, partially
closing the gender participation gap. Globally, this trend has been accompanied by economic
development and growth. Nevertheless, female labour force participation still lags significantly
behind that of males in some countries. This keeps a large slice of the population from wage-earning
activity and deprives the economy of a potentially valuable resource. Ensuring the appropriate use of
half of the world’s available talent pool has a vast bearing on a country’s growth and development. In
this context, this IOE position paper is intended to provide employers and their representative
organizations with an international perspective on the challenges facing the world of work and the
implications of these for women in the labour force. From this analysis, the paper identifies the
business case to improve talent management (especially the untapped talent pool of women) at the
enterprise, national and international levels. The paper also represents the IOE’s contribution to the
ILO’s Director General’s “Women at Work” Centenary Initiative.
It will be critical to improve the potential of the talent pool in the context of the future of work
where there are three key challenges:
1. Skills (both skills shortages and skills gaps);
2. Demographic changes (ageing societies and youth bulges); and
3. The rise of flexible forms of work (demanded by both employers and workers)
These challenges require a more qualified labour force, that possesses a wider range of higher-level
skills and that is able to work in non-traditional settings under conditions of uncertainty and change.
Women are an integral part of the solution when seeking to address these challenges, if only because
they represent more than half of the adult population. In fact, these challenges provide the
necessary impetus to integrate women effectively in the labour market. Women possess or can
achieve the necessary higher qualifications to respond to the problem of skills. They also possess the
relevant skills to venture as entrepreneurs and board-level managers. Increasing their overall
participation rate is essential to address the burden of ageing populations. Efforts to combat youth
unemployment will only be truly successful if they address the needs of young women. Finally, for
many years women have been struggling to balance their work and family responsibilities through
flexible work arrangements. Thus, the rise in these forms of working arrangements can offer
opportunities to achieve a better balance and thereby increase female labour market participation.
Over the past quarter century, female participation in the labour market has been on the rise,
partially closing the gender participation gap from 32 percent in 1980 to 26 percent in 20091.
Globally, this trend has been accompanied by economic development and growth. Ensuring the
appropriate use of half of the world’s available talent pool has a vast bearing on a country’s growth
and development. A larger share of economic growth in the OECD has come from employing more
women. Since 1995, narrowing the gap between male and female employment rate has accounted
for half of the increase in Europe’s overall employment rate and a quarter of annual growth2.
Similarly, in the United States, if no additional women had joined the paid economy since 1970,
American output would be 75 percent of its current size3. The Asian Tigers story is one in which
significant progress was made by tapping into female talent pool, resulting in strong economic
growth and development. Thus, there is strong evidence in advanced economies of the contribution
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of women in the labour market to economic output and development. Yet, more can and should be
done in these countries as well in developing countries to better utilize female talent to confront the
challenges of the future. The challenge for emerging economies is greater as they are equipped with
populations that have a larger female group and are overwhelmingly young and hungry for
professional advancement. These countries have the potential to turn themselves into “factories of
talent”, instead of being cheaply-staffed workbenches of the developed world, if they could better
tap into the currently untapped talent pool of women. Companies that are intend on expanding and
sustaining their competitive advantage on a global scale will increasingly have to maximize the
potential of their workforce (both men and women). There is hence an undeniable economic and
business case for actively engaging women in the labour market.
Challenges in the World of Work
The past three decades have seen dramatic improvements in the working lives of men and women
around the world. The most striking benefit has been the creation of 900 million non-farm formal
employment in developing countries and 165 million in advanced economies, helping lift hundreds of
millions of people out of poverty4. Technological advances and globalization have reshaped jobs,
enterprises, sectors, markets and economies in dramatic ways and this process is expected to
continue well into the future. These powerful forces have created new stresses and strains in the
advanced economies in the form of skills gaps and ageing populations and in the developing
economies in the form of skills shortages and youth bulges. The path to dealing with these forces
runs through the three elements of skills, demographic changes and flexible forms of work.
1. Problem of skills
The problem of skills is one of the main challenges faced by advanced and developing economies
though different economies deal with this challenge in different forms.
For advanced economies, the introduction of new technologies to the workplace has led to the
phenomenon of job polarization, where the composition of jobs has shifted towards the employment
of more high and low qualified people at the expense of those medium-skilled5. Despite these
countries producing greater supplies of people with higher qualifications (such as in Ireland, Canada
and the United States), unemployment persists amongst the highly educated especially in
professions in healthcare, finance, information and communications technology and occupations
requiring specific vocational skills, for instance, engineering where employers complain about their
inability to fill these vacancies. In Europe, roughly 4 out of 10 companies report difficulties in finding
workers with the required skills6. Recruitment bottlenecks range widely from 3 percent in Spain and
Ireland to 85 percent in Japan in 20137. Despite being highly educated, the unemployed tend to lack
the required employable skills identified by these employers such as soft skills, interpersonal skills,
leadership, knowledge of foreign languages, readiness to learn, problem solving and ICT skills8.
In developing countries, low educational attainments due to the lack of basic schooling has led to a
significant share of underqualified workers, reaching levels as high as 82 percent in Malawi, 56
percent in Cambodia and 55 percent in Togo9. Serious skills shortages have been noted in countries
like Belarus, Kazakhstan, Russian Federation, Romania and the Baltic States. Additionally, some
emerging economies notably North Africa experience higher unemployment rates amongst the
highly educated despite the region facing serious shortages in high-skilled labour. This is largely a
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result of the lack of private-sector high qualification jobs and the large size of the informal
economy10.
A shortage of workers with the right training and skills is a serious drag on business expansion and
national GDP growth. For the individual, skills mismatch results in lower returns to his investment in
education which in turns diminishes the value of education and results in wasted resources when the
individual is unable to find a job in the labour market. For companies, loss in productivity and
underutilization of skills occur due to the mismatch between the skills required by the job and those
possessed by the employee. This has serious repercussions for the economy in terms of lower
national output, increased economic inefficiency and lower competitiveness.
As skills requirements differ widely across different groups of countries, all countries will need to
evaluate for themselves how to equip their future labour force with the necessary set of skills to
meet the demands of the ever-changing labour market. Though solutions may differ in practice, one
common solution seems to be apparent: maximizing the potential of their female workforce.
Globally, women are becoming increasingly highly educated evidenced by their stronger tertiary
enrollment rates compared to those of men. Across the OECD countries, 34 percent of adult women
and 31 percent of adult men have attained tertiary education. Younger adults have spurred this
growth with the change being even larger among younger women11. Across developing countries as
well, women are increasingly outperforming men in the tertiary education system. For instance, 60
percent of college graduates in Brazil were women and the rate was 65 percent in China in 201112.
Female tertiary enrollment rates in 2008 lagged behind in only 36 developing countries of 9613 with
data. This increase in female enrollment is consistent with an increasing demand for “brain” rather
than “brawn” jobs in a globalizing world. As women become more educated than men, it is wasteful
not to use their human capital and knowledge to improve the economy’s output, productivity and
knowledge base. Clearly, female workers are an important source of labor that has not been fully
utilized. Raising the female participation rate could help fill the skills gap, by bringing more welleducated workers into the job market.
Women also tend to possess the skills that are often demanded by employers mainly due to the fact
that they tend to pursue educational courses that provide training in acquiring such skills. For
example, Cobb-Clark et al. (2011)14 found that a man’s occupational attainment was closely related
to his locus of control, whereas for women, attainment was most associated with her openness to
experience. There is also some evidence of average gender differences between men and women in
soft skill proficiency. For example, many studies have found that, in general, women score higher
than men on assessments of social perception, a measure of social skills15. Recent research by Gallup
has found that, in general, women have different management styles that are more conducive to
productivity than men. Women tend to build relationships with their employees, check in with their
subordinates more often, and have more engaged employees overall16. These studies suggest that
women are more likely to have more highly developed soft skills, making them the ideal talent pool
to be used to address skills mismatch.
Booz & Company17, based on their analysis of data from the ILO, predict that there will be 865 million
women between the ages of 20 and 65 in 2020, with the potential to contribute more fully to their
national economies. About 812 million of these women live in emerging and developing countries
notably Latin America, Asia, the Pacific Rim, the Middle East, eastern and central Europe and Africa.
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These women are clearly about to participate more fully in the mainstream global economy, if
countries can better harness the talents of these women.
2. Demographic challenges
Globally, the number of older persons is expected to more than double, from 841 million people in
2013 to more than 2 billion in 205018. The ageing population is already a feature of advanced
economies and is expected to create serious strains in these economies. With an ageing population, a
large proportion of older workers leave the workforce upon retirement, reducing the size of the
working age population and increasing the old-age dependency ratio. On the basis of current
projections, the old-age dependency ratio is expected to more than double from around 25 percent
today to more than 50 percent in the middle of the century in Europe19. As the pool of active,
productive workers in the economy continually shrinks in favor of a larger set of retired individuals,
per capita output will decline while per capita costs increase due to increased health care costs and
pensions. On average, this would also imply lower standards of living and significant losses to
welfare20. For instance, in the face of constant level of labour use and unchanged rates of growth in
productivity, the ageing population in Europe is expected to reduce trend real GDP growth by around
1 percent per annum in Europe between 2007 and 205021.
On the other hand, much of the emerging world is experiencing a different demographic challenge, in
the form of youth bulges. Youth can be a positive force for development when provided with the
knowledge and opportunities they need to strive. However, the challenges facing many developing
countries today are inadequate human capital investment and high unemployment rates among
youth. Inadequate investment in the health and education of youth limits their ability to reach their
full productive potential and to contribute to economic development. Rapid growth in the number of
youth further compounds that challenge, requiring constrained developing economies to improve
the quality and reach of their education systems and to serve the rapidly growing number of youth.
In Jordan, Iraq and Saudi Arabia, for instance, youth unemployment rates are above 30 percent and
youth populations are expected to grow by more than 20 percent over the coming 15 years. Even in
countries, where youth unemployment rates are comparatively low, rapid growth in the number of
youth over the coming years could challenge sustainable development and stimulate social unrest, if
labour markets are unable to absorb the increasing numbers of young workers. In Mali, for example,
even though youth unemployment rate is just under 11 percent in 2015, the number of youth
projected to seek jobs in 2030 is 70 percent larger than in 201522.
Women talent pool represents important opportunities to help address the problem of ageing
populations in advanced economies and that of youth unemployment resulting from youth bulges in
developing countries. With the prospect of a shrinking working-age population, increasing labour
participation and raising the employment rate of women is paramount in advanced economies.
While male and female labour participation rates have nearly converged in many advanced
economies, female labour force participation still lags significantly behind that of males in some
countries. This keeps a large slice of the population from wage-earning activity and deprives the
economy of a potentially valuable resource. Raising the female participation rate could help fill the
skills gap, by bringing more well-educated workers into the job market and help support the old-age
dependency ratio. Recent evidence from the OECD shows that, on average, the projected gain from
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full convergence in participation rates is an increase of 12.4 percent in GDP per capita by 2030 in EU2123.
Due to women’s longer life expectancy in most countries, the ageing population is often made up of
more older women than older men24. For instance, in the Asia-Pacific region in 2013, there are 261
million women above 60 as opposed to only 229 million older men. Keeping the older women active
in the labour market by extending the working age can also help to mitigate the pressures of old-age
dependence ratio on younger populations as well as impart valuable workplace knowledge to the
young populations.
In developing countries, women are instrumental in addressing the skills gap as seen earlier. Youth
unemployment is worsened in these countries largely due to the lack of income opportunities. In
fact, many emerging countries struggle with youth unemployment as work is dominantly created not
in the formal sector but in the informal sector. During the past three decades, in most developing
countries, the growth of employment in the formal sector has stagnated or at best shown a gradual
ascent while the informal economy has increased significantly25. Women are over-represented
(making up more than 50 percent) in the informal sector26. Having a large proportion of young
people especially educated young women in the informal economy means a large pool of
discouraged workers, lower productivity and eventually a loss of income and output in the economy.
Women are attracted to the informal economy mainly because it is compatible with women’s needs
and existing patriarchal social norms and women create entrepreneurial ventures in the formal
economy out of necessity than to seize opportunities27. Creating opportunities for women especially
young women to find jobs through entrepreneurship and innovation is instrumental in dealing with
persistent youth employment resulting from youth bulges and to successfully transition these
economies from the informal to the formal sector. In fact, business sustainability can be promoted
through increasing the inclusion of women which is beneficial to all stakeholders. Companies will get
access to a larger labour force and access to new distribution channels; women will gain access to a
protected, regulated, customized working or training environment; and governments will save time
and money and focus on their primary function, namely to ensure an appropriate and favorable
regulatory frameworks to facilitate further job creation for a rising cohort of youth.
3. Rise in flexible forms of work
Technological innovation, the growth of service and knowledge work, the economic pressures of
globalization and deregulation and other forces are dramatically reshaping the nature of work.
Responding to these forces, companies have begun to restructure themselves. These adjustments
have significant effects on the nature of work. Most importantly, this is leading to a shift away from
standard employment towards flexible forms of work. For example, temporary employment has
increased nearly 400 percent in the USA since the early 1980s28. Projections are that a quarter of the
American workforce would be working in these flexible forms of employment by the year 202029.
Temporary and part-time work and self-employment now account for about a third of total
employment in OECD countries and this trend is expected to increase30.
In an age where finding and retaining top talent is among the strongest predictors of a company’s
success, workplace flexibility is increasingly viewed as a necessary tool to increase employee
satisfaction and productivity. According to Cisco’s 2014 Report, workers value flexibility immensely.
Those surveyed indicated that flexibility was the second most important factor, after salary, they
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would consider when evaluating a job offer. 66 percent of American millennials said they felt an
organization that adopts a flexible, mobile and remote work model has a competitive advantage over
one that requires employees to be in the office from 9am to 5pm every weekday31.
The rise in flexible forms of work has the potential to help bring down many of the barriers that
prevent women from entering and remaining in work after having families. The ability to work
flexibly such as working part-time and remotely is particularly important among working mothers
and those returning from maternity leave and has often produced an increase in the number of
women who reach the most senior levels. For example, the increased focus on part-time work
coincided with a rapid rise in women’s labour force participation from the 1980s with the result of
59.6 percent of all jobs held by women in the Netherlands , Germany and the United Kingdom were
part-time in 200332.
Unlocking potential in the labour market requires the need to address the constrained employment
prospects for women. The rise in flexible forms of work provides opportunities for women to enter
the workforce and help the economy recoup lost output and utilize skills more effectively. Research
has found that higher employment rates are positively correlated with the proportion of the general
part-time rate33. Those countries with higher rates of part-time work also tend to have higher
employment rates, with the association being the most striking among the female workforce. To the
extent that part-time employment is allowing mothers to work who would otherwise not be able to
do so, this may help explain the association between part-time work and higher employment.
Compelling evidence from most Southern European economies (with the exception of Portugal)
shows that the lack of part-time jobs has resulted in low preferences for work found among
mothers34. This indicates that the potential for flexible working options to better tap into existing
labour market potential is far from exhausted. Thus, the future holds more opportunities for women.
Flexible work arrangements can lead to better matches between qualifications and job skill-level for
women and mothers. Many high-skilled mothers who decide to return to work part time are finding
themselves obliged to take up work of a lower level than they are capable of. While any mother’s
return to work will contribute to boosting a country’s economic performance and to boosting a firm’s
output, having qualified women in low-skilled is suboptimal for both employers and employees as it
represents a significant opportunity cost and loss of potential output. The future promises increasing
flexibility at the workplace, especially for high-skilled jobs35. This can help address the skills shortages
problem and the problem of ageing populations by attracting more women especially highly qualified
women to enter and return to the labour force.
In developing countries, women are disproportionately represented in the informal sector. This is
especially true in societies with traditional views of gender roles, where women account for a much
larger share of the unpaid labour force. Given the rising youth unemployment challenge and the rise
in educational attainment of women in these economies, the rise in flexible working arrangements
offers opportunities for women to transition from the informal to the formal sector and start
contributing to the output in the economy.
Conclusion
The three challenges discussed above offer a myriad of opportunities for women in the labour
market and a better utilization of their skills so as to increase enterprise competitiveness, national
output and economic development. Women are central to the problem of skills, both in terms of
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fulfilling the demand for higher qualification as well as possessing the right set of skills required for
the future; they alleviate the costs of ageing populations and address youth unemployment through
the creation of employment opportunities and transitioning from the informal to the formal sector;
finally the rise in flexible working arrangements meets their demand for flexibility to juggle work and
family responsibilities.
As policymakers seek short and long term solutions to the challenges of the changing world of work,
expanding opportunities and fostering the talent of the previously untapped pool of female talent
becomes pertinent. This would require the removal of cultural, economic and social barriers
hindering women’s participation in the labour market. This is not only the role of national
governments but also that of enterprises. The IOE and its member organizations have an important
role to play in contributing to the construction of effective policies to ensure the inclusion of
women’s talents, skills, experience and energies in the economy. Beyond meeting their own skill
needs, businesses can also play a more active role in mitigating the economic and social
consequences of low-skilled workers and demographic changes.
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Technical Notes
Skills shortages
Skills shortage occurs when demand for a particular type of skill exceeds the supply of people with
that skill at equilibrium rates of pay.
Skills gaps
Skills gap occurs when the type or level of skills is different from that required to perform the job
adequately.
Old-age dependency ratio
The old-age dependency ratio is the ratio of older dependents (people older than 64) to the working
age population (those aged between 15 to 64).
Endnotes
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3
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4
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5
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8
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19
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20
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31
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33
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34
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35
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