Introduction

‘Womenomics’ is a portmanteau of ‘women’ and ‘economics’ and is defined by Kathy Matsui, the former head of Japan Portfolio Strategy, as “a set of policies implemented in Japan to reduce gender gaps in the labour market”. She found that the growth in women’s contributions to the labour force in recent decades has been one of the most transformative economic developments of the last century, and this has had a significant impact on international economies.

History

In 1999, a report led by Matsui titled ‘Womenomics: Buy the Female Economy’ became the first research paper published by Goldman Sachs Research on women’s contributions to the labour force. Matsui helped shape the policy agenda by finding the opportunity for further growth in women’s contributions to the labour force and further economic possibilities. A further twenty-five years later, another report led by Sharon Bell, a Senior Strategist on the European Portfolio Strategy team, and Yuriko Tanaka, an analyst, titled ‘Womenomics: 25 Years and the Quiet Revolution’ was also published by Goldman Sachs Research, revisiting some of the issues identified by Matsui on an international scale. Bell and Tanka found that women’s contributions to the labour force have grown across many developed international economies.

What Has Driven These Changes?

Previously, Goldman Sachs Research found that family-friendly benefits and policies and improvements in worker protection increase women’s contributions to the labour force. Furthermore, there has been a decrease in the education and skills gaps between men and women, as well as an improvement in the focus on corporate diversity from the perspective of both investors and the broader society as a whole. The notion of the ‘Quiet Revolution’ comes from a report of the same name by Nobel Laureate Claudia Goldin. Goldin (2006) describes various ‘phases’ underpinning the long process of change through the course of the twentieth century. Overall, the Quiet Revolution showed that women with children could work to support themselves, which changed the narrative of demographic changes after the Second World War. Previously in 1995, Goldin wrote:

“A few years of high school catapulted a young woman from a life of drudgery and disrespect into a world of comfort and courtesy, or so it seemed to her. The young man, however, did not often see high school as having so positive an impact. The rather dead-end clerical and sales positions opened to young women were not the road to success for the young man. Machinists, electricians, and other tradesmen could enter their craft with far less than a high school diploma and little apparent loss. Thus the apparent private return for young women [of getting educated] was actually higher than for young men, even though the latter remained employed for a considerably longer fraction of their lives.”

How Do Women’s Contributions to the Labour Force Differ Across Countries?

This chart shows that approximately half of all women internationally contribute to the labour force, but there are significant regional disparities. While most regions are at or above the global average, the Middle East, North Africa, and South Asia have notably lower participation rates. In the map view, it is clear that there are also significant disparities in women’s contributions to the labour force within world regions. In India, the female labour force participation rate is 28%.

Successes

• An improvement in opportunity and welfare for women from a microeconomic perspective.

• A significant international economic impact from a macroeconomic perspective. For example, the labour force in Italy would have shrunk if not for the growth in women’s contributions in recent decades. Similarly, the labour force in Japan has kept the labour force stable, despite its decreasing population.

• A decrease in the gender pay gap almost everywhere. It persists partly because there are differences in jobs, levels of experience, and hours worked by women compared to men. However, the European Commission found that the “largest part of the gender pay gap remains unexplained in the EU and cannot be linked to worker or workplace characteristics such as education, occupation, working time, or economic activity”.

• An increase in women’s contributions to the corporate sector. In the last five years, the number of female CEOs in the S&P 500 has doubled.

• An increase in women’s contributions to the boardrooms of European companies. Secondly, almost 40% of the average STOXX Europe 600 board members are women. This is because of a combination of quotas, for example in Norway, France, and Germany, and soft pressure, such as attention from the media.

• A slow increase in the share of female executive directors and CEOs. It is unclear whether this is a success or a challenge because the base is low and the numbers remain small.

• An increase in women’s contributions to construction and the sciences in Europe. Again, this is only a small success, because the base for construction is low.

• A fast post-pandemic recovery in women’s contributions to the labour force.

Challenges

Goldman Sachs Research emphasises that ‘there is much to cheer but also much to do’.

• A decrease in women’s contributions to high-paying financial services and technology industries in Europe and the USA since the Global Financial Crisis (GFC). Another challenge is that the women in these industries face lower upward mobility into management positions compared to those in other sectors, especially with the rise of Artificial Intelligence.

• A lower propensity to work, but a higher likelihood to work part-time jobs among women compared to men, especially in emerging markets such as India. It can be argued that some of these disparities also contribute to the persistence of the gender pay gaps, particularly because part-time work is more likely to be lower paid.

• A persistence of non-paid work. This is one of the most significant barriers to women’s contributions to the labour force and broader gender equality. For example, it can be argued that family caregiving limits career development to the top roles in academia, corporations, and politics. It is this non-paid work that takes up the largest share of a woman’s day in every single country.

• An increase in difficulty for families to raise children could exacerbate any decreases in birth rates. This is arguably the most significant concern. However, there is only a weak relationship between women’s contributions to the labour force and birth rates. In recent decades, this has even been a modest positive relationship, and it is increasingly becoming a social norm for women to work and have children, especially in developed economies. This is potentially because of an improvement in the access to and availability of childcare, as well as equality legislation.

• A scarcity of women in senior positions, especially at the executive level, remains persistent. Although the growth in women’s contributions to the labour force has been transformative, both in itself and by notably causing a decrease in the gender pay gap and an increase in women’s contributions to the boardrooms of European companies, there is a decrease in women’s contributions to the labour force further up in the corporate hierarchy.

Why is the Growth in Women’s Contributions to the Labour Force in Recent Decades so Important?

It can be argued that the growth in women’s contributions to the labour force has never been more crucial to the global economy, because there has been a dramatic decrease in international birth rates and an increase in concern among investors and governments over ageing populations. Any growth in contributions to the labour force in recent decades of women, older workers, or both, is necessary to prevent economic shrinkage, in the absence of a significant increase in productivity.

The Indian Context

The Reserve Bank of India (RBI) used their data and found that women in India generally hold more savings deposits in their accounts compared to men in urban areas, and are earning more than men in the booming technology industry. This trend reflects broader social changes in recent decades, in which it has become clear that women in India are both outnumbering and outperforming men in educational achievements across all levels. This is because of three key factors:

What Has Driven These Changes in India?

• A decade-long infra-build and the rapid growth of a service-oriented economy.

• An increase in affordable education, as previously mentioned.

• An increase in access to consumer markets and further information because of broadband and the Internet, as well as an increase in the widespread uptake of smartphones and social media.

• An improvement in access to financing, because of financialisation and tools such as the India Stack.

• A growing target market of affluent and aspirational women, so a faster increase in the rate of entrepreneurship among women in India compared to men.

Economic and Investment Implications

Shaili Chopra found in her book ‘Sisterhood Economy’, that “women contribute 17% of the GDP in India. And if female labour force participation is increased, women can add up to $700 billion to the country’s GDP by 2025.” Even without a significant increase in GDP that the growth in women’s contributions to the labour force in recent decades can deliver, it is clear that including almost the entire other half of the population of the country, who are currently undercontributing to the workforce, would have a significant impact on the GDP of India. This could be achieved through improvements in employment measurement techniques and broader policy changes. For as long as the increases in education, earnings, wealth, and spending power of Indian women continue, both compared to men and their historical selves, many investment companies will project that companies that focus on this increase in demand will do well. Therefore, they may think that this will be a defining investment theme for many years to come, and shift their portfolios to further emphasise investment opportunities in companies that are associated with women in India:

• Rajiv Anand, the deputy Managing Director at Axis Bank found that “According to Axis Mutual Funds, they are seeing a seven-times increase in the number of women visitors on their websites from January 2020 to October 2021. Similarly, the number of women investors has also increased in the same period by 30%”.

• Titan Company Limited (NSE: TITAN) is a $30 billion market-cap Indian company that mainly manufactures and sells fashion accessories such as jewellery, watches, eyewear, and other products in India and internationally. Over the last five years, its revenues, profits, and free cash flows have grown at 17%, 25%, and 58% per annum, respectively. Therefore, it is the largest and fastest-growing jeweller in India.

• Nykaa (NSEI: NYKAA) went public last year and is a $6.5 billion market-cap Indian e-commerce company, making it the largest Beauty & Personal Care platform in India. It sells beauty, wellness, and fashion products through its website, mobile app, and over a hundred physical stores. In 2020, it became the first Indian unicorn startup headed by a woman. As of June 2021, Nykaa had over 15 million customers and now generates annualised revenues of $617 million.

• Mamaearth (NSEI: HONASA) operates as a digital-first company selling beauty and baby products in India and internationally. It signed up five million customers within its first two years of operation. For the fiscal year ending in 2022, its revenue was $130 million, and in its January 2022 funding round, Mamaearth was valued at $1.2 billion.

Conclusion

In conclusion, the growth in women’s contributions to the labour force in recent decades has been one of the most transformative economic developments of the last century, and this has had a significant impact on international economies. There are many reasons to be optimistic about it, despite the challenges. In India, It can be argued that the growth in women’s contributions to the labour force in recent decades reflects the emergence of a New India, one that is better educated and better informed, because of improvements in broadband and the internet, and better employed, because of its thriving economy. If these trends continue, women internationally will continue to close the gaps with their male counterparts at home, in academia, and the workplace.