Research by the International Monetary Fund has identified that greater participation of women could boost GDP of Pakistan by 30%. Whilst 50% of the population is female, female labor force participation in Pakistan stands at 22%, one of the lowest in South Asia. It is also important to realize that women have played a large role in boosting the Bangladeshi and Sri Lankan economies. In Pakistan, if we dive further into this figure, we find it varies in terms of geography, culture, formal and informal economy and urban or rural context. The lowest participation of women was in the province of Balochistan, at 9.7%. This was followed by the KP at 13.2% and Sindh at 14.0% with the highest being 29.6% in the Punjab province.
Labor Force Participation by gender and province (%)
The gender divide in labor force participation is the highest in Balochistan and lowest in Punjab
Source: Pakistan Employment Trends 2018
Whilst in Balochistan the numbers are low due to a lack of opportunity for women, it is unfortunate that the level of participation in Sindh is not much higher. Karachi, for example, is the most populous city in Sindh and Pakistan, and attracts labor from all over the country. While Punjab’s statistics fare better than the rest of the country, they are still low compared to global indicators. Pakistan can learn lessons on various policy initiatives that have led to a difference in participation of women. Replication by focusing on the enablers that have been successful can improve employment statistics.
Understanding the Barriers to Equal Participation
Keeping in mind that the heart of the economy lies in the urban context, the barriers for lower participation need to be addressed. Lower levels of participation are partially due to the patriarchal culture, but barriers such as the lack of safe and affordable transport, security and safety in the workplace and day care facilities for working mothers also contribute to skewing the level playing field. These issues exist across all social classes in urban areas, limiting participation of women in the labor force. Companies that have provided transport for the workers show better statistics. This, coupled with zero tolerance policies for harassment, have led to better performance for recruitment and retention.
Source: World Bank
Whilst enrolment of both genders at university level is equal, only 25% of female graduates enter the workforce. At the executive level, even when companies try to recruit equal numbers of both sexes, in moving up the tiers there is an exodus of females as family responsibilities increase. By the time one reaches the C-Suite, there is only a single woman. In companies where efforts have been made to facilitate women to continue working after marriage and children, the numbers show more women in the pipeline.
Business case for Gender Diversity
Globally, there is increasing evidence that workplace diversity leads to better decision-making and profits, with studies showing a strong correlation between the number of women in top positions and company performance. Research undertaken in Pakistan shows similar results. A recent report released by the Securities and Exchange Commission of Pakistan, identified a strong correlation with number of women on the boards of listed companies and their profitability in both the years 2017 and 2019. Return on Assets and Equity were both higher for companies with participation of women in leadership roles. Despite these results, the number of women in top management positions remains lower than the global levels.
Average Financial Performance of Companies with and without Women Directors
Strong correlation between presence of female leaders and higher profitability in Pakistani companies
Return on Equity (%)
Source: Securities and Exchange Commission of Pakistan
Currently only 8% of businesses in Pakistan have a majority female ownership. Women owned businesses tend to employ more women, hence increasing gender participation. This usually involves improving the capacity and capability of these women owned businesses in providing support for their weaknesses. This can enable them to be at par with competing with other generic businesses. Gearing small women owned businesses to become a part of a supply chain encourages these businesses to become part of the formal economy. Many home based women owned businesses are unregistered and thus unmeasured as they operate on cash on delivery. The downside is that they remain invisible to tax collection and contribution to the country’s GDP. Gender focused incentives are needed to encourage women to formalize and register their businesses.
Including Women leads to Better Productivity
As Macro Pakistani has discussed in the past, lagging productivity is one of of the major structural issues with Pakistan’s economy. Including women in the economy has seen to drive better results in the rural context, as women are used to managing multiple activities while being generally in charge of the household and rearing of animals. Training these women to look after the village animals and undertake minor veterinary procedures has improved yields for milk collectors. This has enabled women to become an active part of the value chain for milk supply – a resource that is well appreciated by Pakistan’s dairy sector.
Moreover, there is increasing evidence that a woman’s contribution to household incomes leads to decreased illnesses, increased food security, involvement in household decision-making and a future looking focus. The impact is even more significant when targeting women who are below poverty level. Micro credit loans for establishing micro business, such as agriculture, home‐based industries, tuc shops and tailoring, have a positive impact in improving basic indicators related to poverty. Kashf Foundation, which has been providing loans to pro-poor women since 1996, highlight women tend to be more responsible and inclined to return loans – hence, financial inclusion provides a return in investment.
The development economics sector has long recognized the potential reward that exists in increasing participation of women in the labor force. The general abilities of women towards management and working with a focus can enable Pakistan to diversify its product base and exports. Financial inclusion through incentives can lead to increasing the tax base and realizing their income as part of Pakistan’s GDP. The business case exists for women empowerment – all that is required for improving numbers is a targeted approach.