If Asia improved gender equality at the rapid pace that some developed countries have done, the value at stake would be over $4 trillion. How are companies going to address the challenge to bring more women into the workplace, particularly at senior levels of leadership?
In this episode of the McKinsey Future of Asia Podcast, Kweilin Ellingrud, a senior partner and director at the McKinsey Global Institute, and Anu Madgavkar, a partner at McKinsey Global Institute, discuss the issues around gender disparity in the Asia–Pacific region. They emphasize the diversity in the region and chat about the effects that the COVID-19 pandemic had on inequality. They identify the significant opportunities that exist for women in the technology sector, and they both remain hopeful for the future in light of women’s resilience. An edited version of the conversation follows.
Angela Buensuceso: Hello, and welcome to the Future of Asia Podcast. In honor of International Women’s Day, in today’s episode we look at the state of gender parity in Asia and the role that businesses can play in advancing greater diversity, equity, and inclusion moving forward.
We are joined by two of McKinsey’s most preeminent experts on gender equality and inclusion: Kweilin Ellingrud, a senior partner and director at the McKinsey Global Institute, and Anu Madgavkar, a partner at the McKinsey Global Institute. Before we jump in, can we take a step back and look holistically at where we stand on gender equality today globally?
Kweilin Ellingrud: Looking around the world, we can see that gender equality is good for business. The global research we have done shows that companies that are in the top quartile of gender diversity are 25 percent more likely to outperform from a total-return-to-shareholders’ perspective, and companies that are ethnically diverse are 36 percent more likely to outperform.
We know that gender and ethnic diversity correlate with better financial returns. We also know that significant opportunities arise when women match men’s participation in the workforce. Globally, that is roughly a $12 trillion opportunity, about 11 percent of global GDP; a significant number.
In Asia–Pacific it’s greater than that, at 12 percent of Asia-Pacific’s GDP, or $4.5 trillion. Of course this varies across countries in Asia. The region is home to the majority of the world’s population, leading to great diversity across countries and within.
Anu and I have, over the years, created a body of research called, “The Power of Parity,” in which we studied both the workplace and equality opportunities and correlated it with women’s social equality globally.
What we find is that countries that have captured the economic opportunity of women participating more equally in the workplace also tend to capture that opportunity from a social perspective. Having looked at data from over 125 countries, the main takeaway is that if a country wants to capture more of the financial and economic opportunity from gender equality in the workplace, it must address some of the social and environmental challenges, and fill some of the gaps for women as well.
Further, when you look at this not just from the overall workplace but at more senior levels of leadership, there’s great variability in the percentage of leadership teams that are made up by women.
For example, it varies from Australia, Norway, and Sweden at the top end of the spectrum closing in on about 30 percent of leadership teams with women holding roles, to the other end of the spectrum, with 3 percent or so in Japan, 5 percent in India, 8 percent in Mexico, Germany, and Brazil, an so on. This is a wide variability that presents great opportunities for countries in Asia to step up at that most senior level of leadership to incorporate women.
Anu Madgavkar: It’s interesting to compare what gender equality means globally to the way it’s panning out in the Asia–Pacific region. If we improved gender equality in work at the rapid pace that some countries have done, the value at stake in improving gender equality is just as large as them, in fact, larger, at $4.5 trillion.
That’s a substantial number in a region that’s rapidly growing and undergoing several deep transformations in its economy as well as its society. The diversity is interesting. For example, at one end of the spectrum, in a country like India, women account for maybe less than 20 percent of national GDP. This is because fewer women participate in the economy and many work in relatively lower-productivity and lower-paid jobs.
On the other hand, in countries like China and Singapore, women account for over 40 percent of national GDP and the rate of participation.
Asia is also a region that’s seen great change and new structural forces in technology. This is shifting the dynamics and opening up opportunities for women in many significant ways. For example, women-owned businesses in e-commerce form a much greater share of all businesses compared to women’s share in offline micro-, small- and medium-sized enterprises (MSMEs).
In some countries we’ve seen women-owned online businesses generating 35 percent of total e-commerce revenues, for example, compared to just 15 percent in the offline world. There is plenty of scope for women to play a much more significant role in Asia’s economies. Innovation will be important here. It becomes particularly so in the post-COVID-19 world as various forms of digitization and automation rapidly transform work and create new challenges and opportunities for women.
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Angela Buensuceso: We know that there were some regressive effects of the pandemic on gender equality. Have these effects shifted in the last years since the pandemic started? And what are the new challenges that we’re facing in the post-pandemic world?
Kweilin Ellingrud: I think one of the biggest challenges, in fact, pre-dates COVID-19 but was exacerbated by it, and this is what we call “unpaid care work.” This is work that someone does for other people for no pay, such shopping, cooking, cleaning, taking care of kids, and taking care of parents or in-laws.
Globally women do about three times as much unpaid care work as men, and in many countries across Asia that number is quite a bit higher. In India it’s about nine times as much. In contrast, in the United States, it’s more like two times as much. There is a great deal of variability between countries.
During COVID-19 as countries shut down, there was a lot more unpaid care work taking place. Many people were eating at home and needed to be cooked for. A lot of schools either moved online with students at home and needing parental guidance. The unpaid care work increased greatly.
If you consider that this was unevenly distributed before COVID-19, you can see that the pandemic exacerbated many of those gaps. The combination of that, plus the additional mental health challenges, plus more stress and pressure from COVID-19, made the baseline even more uneven.
The challenge for some countries is that they have seen more women step out of the workforce during COVID-19 than in other countries. How do they regain the ground they have lost from the workplace and from an economic perspective, but also from women’s leadership perspective in the workplace, in society, and more broadly?
Anu Madgavkar: Because of the uneven impact of COVID-19, this situation was striking—the combination of women having to spend more time on unpaid care work and being in the kinds of occupations that were most severely hit by the pandemic.
For example, face-to-face customer service, sales, food service, and hospitality. Many people in these occupations were under extreme stress during the pandemic. Based on data from India and the United States, we found that, on average, women were two times more likely to have suffered job losses during COVID-19 than men were, because of the types of jobs they were in.
While women accounted for about 39 to 40 percent of employment globally, their share of job losses was significantly higher at over 50 percent. It’s been a bit of a two-steps-forward, one-step-back scenario for women.
However, there is a real opportunity here. On the positive side, one of the things that COVID-19 has done is allow more flexibility at work, hybrid-work, and remote-work based models. These new ways of working bring fresh opportunities because it is easier to negotiate working terms and to have some days in which you can work flexibly in your own location and at your own pace.
However, the issues of burnout and isolation for women must be addressed. They struggle to build networks when they work independently in a less well-connected workplace.
It’s harder for women to build relationships and networks and to keep progressing at work. COVID-19 has opened up possibilities that were undreamt of before, but employers are going to have to be much more sensitive to the challenges and gear themselves for them.
Angela Buensuceso: What else can businesses do to better support women leaders to ensure they have the opportunities to excel and thrive, and that they’re recognized for the work that perhaps they’re not being recognized for currently?
Kweilin Ellingrud: The global diversity, equity, and inclusion (DEI) that we see around the world affect a couple of things. Most importantly, DEI efforts are treated as business initiatives. There are longstanding gaps here that have been centuries in the making. We’re not going to erase them through a short-lived couple of years of effort or an initiative taken off somebody’s desk.
It’s going to take concerted effort and a real diagnosis of the problem. Where are the pinch points across the talent pipeline? A visible and powerful business leader needs to face the challenges, unblock them, and provide the necessary resources. This will take a real learning and iterative mindset.
How do we learn, fail fast, but then scale and adjust? Everything that you would do to grow a new line of business or drive a business initiative is what it takes to drive DEI at scale. The more companies treat DEI as part of the business, not just something on the side, I think the more they’ll be effective.
Companies that do this best set an aspirational target: “Where do we want to get to in terms of gender, ethnic, and other diversity?” They define “diversity” broadly. Then they get accountable at the line-of-business level, at the geographical level specifically: “What is our starting point and where do we want to go?” And then: “How do we systematically drive the execution of the initiatives that are going to get us there?”
This business-oriented mindset of accountability is critical, and the conversation, “Let’s talk about how we’re making progress every step along the way,” can’t be separate from your business results. It must be at the same time.
Anu Madgavkar: The conversation around this has started but it has to move even faster toward the dimensions of both creating an inclusive work environment as well as helping women build their skills and human capital. Both of these are as critical, or perhaps even more critical, than managing representation in a way that is more fair and equitable.
I believe the starting point is managing representation and getting diversity right at all levels in the organization. Particularly in Asia, for instance, we see big drop offs occurring quite early in people’s careers. This comes from lower rates of enrollment for women in tertiary education and therefore a lower intake of women into the workplace.
There are significant drop-off points—the first promotion or managerial role, or the first role that involves relocating to another place. It’s important for companies to think about these “pinch points” and how they will address them.
Companies can create an inclusive environment and help women build skills—these are critical to harness women and make them be successful exemplars. There are more and more examples of successful women who are able to take on roles of greater responsibility, be in positions of leadership and lead in profit center positions, not just support functions.
It is these examples that make an organization realize that diversity is important for business and is core to delivering results. It builds allies and stakeholders across the spectrum, including men in the organization.
Creating those conditions is critical. Technological change is proceeding so rapidly that the very nature of what one’s job is changes year to year. It’s going to be more important than ever for women to learn how to work with new technologies, manage to make the time, and take some risks to try out new types of job roles where they’re stretching themselves.
However, this is harder for women because they face what’s called, “time poverty.” There are so many other demands on their time, particularly from family and other care responsibilities.
With time poverty it’s hard to carve out the time to learn something new or to take the risk of trying out a new job role. Creating a supportive environment in which women can exercise these choices is vital if we are to reverse the two-steps forward, one-step back scenario and make a positive story out of opportunities that are opening up and women being able to take advantage of them.
The power of parity: Advancing women’s equality in Asia Pacific
Kweilin Ellingrud: One of the things that’s striking in Asia, and globally, is that women outperform men academically. In most developed countries, women get the majority of tertiary degrees.
That’s true in China, for example. But then, as Anu described, when that first promotion to manager comes, we typically see a drop-off. Then at every level up to senior manager, vice president, C-suite executive, and board positions, people drop off.
We see around the world that half of a person’s lifetime earnings are due to education (and this is where women are doing well), and half of lifetime earnings are due to skills, experience, and what a person learns on the job. That’s where women are not maximizing the returns because they’re not jumping to new responsibilities and not stretching themselves in new ways.
For example, we noticed when analyzing North American data that if you talk to two vice presidents, a man and a woman, who have just been promoted, typically the man has been in his previous role for four years and the women has been in her previous role for seven years. Women are stagnating across the organization, staying in roles for longer, not getting the chance to advance, but also not getting the returns to their work experience that their male colleagues are.
Anu Madgavkar: When we looked at the data of individual career trajectories and traced who the people in the workforce were who ended up being more successful and were able to lift themselves to higher levels of productivity and pay, it was people who made these role moves more frequently.
This doesn’t necessarily mean leaving your organization and moving to another company, but it does mean taking on a new role that challenges you in new ways and demands that you do new things. And those who did that more frequently were more successful, including in terms of lifetime earnings.
This has implications for both individuals and companies in helping create the conditions in which women can challenge themselves in these new ways. And women are up to it. If you look at company data across the spectrum of industries, you find that women really are up to the challenge.
Women do very well at each of these levels when they take on the challenge, but we need to help more of them do that. It’s about helping them to do that at scale and not having it be the exception rather than the norm.
Angela Buensuceso: How will automation and reskilling impact women and the opportunities they will have in the future?
Kweilin Ellingrud: It is interesting that we already saw long-term trends in automation before COVID-19. The pandemic simply accelerated them and had a strong impact on some specific occupations like customer service and sales, production and manufacturing, and office support roles, for example.
So, in a way, the pandemic impacted many of the same roles. In the future, we’re all going to need two broad types of skills: socio-emotional and technological.
Socio-emotional skills are things like, “Can I read a human interaction and react appropriately?” “Can I show empathy?” “Can I build a relationship and trust?”. These are all things that a robot can’t do very well. The technical skills aren’t necessarily, “Can I code,” but, “Can I interact with technology effectively? Can I monitor a system and when there’s a red flashing light, follow the instructions to replace the part or whatever it might be?”
Those two skills are ones we are all going to need in the future, because many jobs will be better done at scale through machine learning or automation. I think women in general are very well positioned on socio-emotional skills.
On the technological side, however, the time poverty issue will be significant.
To be open to learning new skills, upskilling, reskilling, learning through your current employer or elsewhere, will be increasingly important to stay at the cutting edge of what’s going to be needed over the coming 10 to 20 years.
Anu Madgavkar: There are large numbers of women globally and in Asia who will need to move through this process of reinvention, of learning how to work with technology and transforming what they do. For example, you might have started work as a legal aid assistant, but you end up learning how to maintain a database and you ultimately become a data analyst of some kind.
That kind of reinvention or transformation is what is going to be called for over one’s lifetime because of the rapid changes in the nature of work and the new kinds of occupations that will come into demand. We believe that globally there are anywhere between 40 and 160 million women who need to reskill, upskill, and be deployed into new kinds of work and occupations. Every country in Asia is going to have to do this as we go forward.
Angela Buensuceso: Kweilin and Anu, what worries you about the future of gender parity in Asia? And what are you hopeful about moving forward?
Kweilin Ellingrud: What concerns me are issues like the impact of COVID-19 and the impending climate change. We know that climate change around the world will disproportionately affect poor areas and women.
The challenges and exacerbation of gaps that were in existence before COVID-19 and worsened during the pandemic concern me. There’s so much transition and change, and so many challenges that we have to get through over the next decade. However, the thing that gives me hope is resilience.
Women are incredibly resilient when you look across Asian countries. They’re also incredibly entrepreneurial. Anu mentioned the disproportionate share of entrepreneurship on online versus offline businesses.
Across the board in Asia, women are amazingly entrepreneurial. For example, China has the majority of self-made female billionaires globally. Even more broadly across Asia, there are such exciting examples of women’s entrepreneurship and resilience in these challenging times. That gives me a lot of hope.
Anu Madgavkar: What concerns me is that when we study the macro picture or the macro numbers over years, it feels like things don’t change as fast you want them to. Something like the labor force participation rate, for example: of the total population of women, how many are in work for which they are paid and are considered to be part of the paid economy?
That number struggles to increase at a macro level, although it’s encouraging that in some countries it has moved quite rapidly. However, some of these macro indicators are slow to move. On the other hand, what encourages me and what I’m optimistic about is the changing demographic in Asia.
There are parts of Asia that are still quite young. We see a lot of social and attitudinal change that’s coming with more well-educated young women entering the workforce who have aspirations and ambitions. In fact, you can see some of this society change and shift in attitudes in advertisements, movies, and popular culture.
The young demographic will play a strong role in making change happen in Asia. There are already inspiring examples of the population openly embracing the rapidly-changing technology—China for example, or Indonesia’s e-commerce market.
Asia is vibrant, dynamic, and the digital economy is growing so rapidly in most of Asia that this is opening up new opportunities and demolishing barriers that have traditionally come in the way of women. For example, accessing credit to set up their own businesses or struggling because they can’t break into an all-boys’ network to sell what they’re producing. But with e-commerce, that’s possible. The way that Asia’s digital economy is changing has profound positive implications for the cause of gender equality in the region.
Angela Buensuceso: Thank you, Kweilin and Anu, for joining us today on the Future of Asia Podcast.
