Chile’s new public-private partnership has high aims: to increase women’s labour force participation, close the wage gap, and get more women into leadership roles. Already more than 90 companies, drawn in by recent research showing that more diversity leads to stronger economic performance, have committed to undergo monitoring of their current gender inequalities and to implement serious change. It is estimated that if women in Latin America and the Caribbean were integrated into the economy to the same extent as men by 2025, the region’s GDP would increase by 14%, or $1.1 trillion.
Results & Impact
More than 90 of Chile’s most important companies have signed on, including several large mining and electricity companies, as well as internationally recognised corporates such as Microsoft Chile, Banco Santander, L’Oréal Chile, and PriceWaterhouse Coopers. Of these, around 50 have already completed the initial diagnostic of internal gender equality levels, though the results are yet to be published. Women’s incomes in Chile are on average 32% lower than men’s: women make an average of $640 a month, while men make $940 a month. This figure has remained practically unchanged for the past 25 years.
Government of Chile (Finance and Labour Ministries), Inter-American Development Bank (IADB), World Economic Forum (WEF), private sector companies
Companies make two commitments: to undergo an evaluation of their current gender inequality problems, and to implement suggested recommendations and take action on one of the three primary aims (participation, wage gap, leadership) over a three-year period. Collaboration is key to the whole initiative: companies are asked to share best practices with each other, which are disseminated in detail by the WEF. There are monthly working groups to share experiences on the three main goal areas. The IADB and WEF are organising the process and providing technical and financial support: creating the diagnostic tool, coordinating monthly meetings, and following up with the companies.
Women and girls
Cost & Value
It is estimated that if by 2025 women in Latin America and the Caribbean were integrated into the economy to the same extent as men, the region’s GDP would increase by 14%, or $1.1 trillion.
Running since 2016
So far, there have been no major hurdles - but also no concrete results. While it may be easy to get companies to sign on to the initiative, getting them to keep their commitments to implement serious change will represent a whole other challenge.
The WEF and the IADB are bringing the scheme to Argentina and Panama next.
Ninety of Chile’s largest companies have joined a government initiative committing them to undergoing an analysis of their current levels of gender inequality and then to take sweeping and concrete action where needed. The private sector has been drawn in by new research pointing to the stark economic benefits of gender diversity.
According to a recent McKinsey report, Latin American companies with one or more women in the executive committee have 44% higher return on equity (ROE) and 47% higher earnings before interest and taxes (EBIT) than their all-male counterparts.
And it is estimated that if women in Latin America were integrated into the economy to the same extent as men by 2025, the region’s GDP would increase by 14%, or $1.1 trillion.
“Neither sector can really move the needle on this on their own – you need actions from both sides to see progress on these areas,”
“This government and previous governments have for several years recognised that gender inequality is an area that is really dragging the country in the opposite direction than that they want to go in,” said Claudia Piras, Lead Economist for the Gender and Diversity Division of the Inter-American Development Bank.
Underlying the whole gender parity initiative is the recognition that without private sector buy-in, the government alone will not achieve its main goals: equal labour force participation, closing the wage gap, and more women in leadership roles Similar World Economic Forum-run schemes in Mexico, Turkey, Japan, and Korea demonstrated that public sector efforts to address gender gaps must be complemented by private sector action to be effective.
“The fact that this is a public-private collaboration or partnership is based on the understanding that neither sector can really move the needle on this on their own – you need actions from both sides to see progress in these areas,” said Piras.
But through this initiative, now more than 90 of Chile’s most important companies have committed to new focus and action on women’s empowerment, including several large mining and electricity companies, as well as internationally-recognised corporates such as Microsoft Chile, Banco Santander, L’Oréal Chile, and PricewaterhouseCoopers.
Participation commits companies to undergoing monitoring of their gender equality problems and to put resources and drive behind focused improvement on at least one of the goals of diversity hiring, wage equality, and more women in the top positions. Around 50 companies have already completed the initial diagnostic of internal gender equality levels, though the results are yet to be published. After this analysis, the companies then have three years to implement substantial changes.
The idea is that companies and the government will work together with the coordinators of the scheme, the Inter-American Development Bank (IADB) and World Economic Forum (WEF), to share experiences and get ideas for how to make change quickly and effectively.
Collaboration is key to the whole process. “Companies are sharing best practices and the WEF is sharing best practices of how each of these areas has been substantially improved in other countries. We’ve been doing this in different ways; sharing information privately, but also in Chile we have been having monthly meetings with all the people appointed to working groups,” said Piras.
The IADB and WEF are coordinating these monthly meetings, and will be responsible for following up with the companies to monitor how progress is going. They are also providing oversight, technical assistance (such as the creation of the diagnostic tool), and are responsible for publicising the scheme, so that the companies are held accountable.
“We’re really confident that by having a more fluid dialogue and joint collaboration on these issues we will be able to accelerate progress,” said Piras. “At least, so far in the case of Chile, where we have been working already for a year, we have really seen a lot of enthusiasm from both sectors. This is a first-time effort to work on this in a collaborative fashion, and not make it a confrontational issue.”
“I am very hopeful because many of these issues can change really quickly if there is real commitment,”
Most of the short-term costs will be born by the private sector. “The main financial commitment comes from the government and the companies, basically in terms of allocation of their time and high-level people, and in terms of what they will do, which may have cost implications,” said Piras. But a key pillar of the whole initiative is the belief that diversity means more profitability in the long run.
The high-profile nature of the program – and its success in recruiting so many influential corporations to the women’s empowerment agenda – mean that the IADB and WEF are now putting out feelers across the region for other countries who want to be involved. They have commissioned research on the economic impacts of gender inequality in a variety of Latin American countries, seeing whether they, too, would benefit. The scheme is already getting underway in Argentina, and will likely also kick off next year in Panama.
There is a long way to go to economic equality. Today, women’s incomes in Chile are on average 32% lower than men’s: women make an average of $640 a month, while men make $940 a month. This figure has remained practically unchanged for the past 25 years.
But Piras is confident that the new collaborations could lead to real and fast change. “I am very hopeful because many of these issues can change really quickly if there is real commitment. If by giving visibility to the issue this initiative is really able to raise that commitment to another level, and make both the private and public sector accountable to the public about what they are doing, then this will have a lot of potential.”
“I’m seeing it in Chile: 50 companies have already taken the first actions and committed themselves to change, which is huge. They’re companies that otherwise would not have done it,” she said.
Too good to be true? Only time will tell. So far, there have been no major hurdles – but also no concrete results. While it may be easy to get companies to sign on, getting them to keep their commitment to implementing serious change will represent a whole other challenge.
(Picture credit: Flickr/Alobos Life)