Equal Opportunities and Gender Equality – What is the Economic Impact?

Lately, gender equality has become an important topic on the Romanian political scene. President Iohannis and Prime Minister Dăncilă have repeatedly spoken about this issue, but each time the discussion has been approached from the point of view of the need to adopt equality as an external pressure. Gender equality is viewed as a Western component that we lack, one that needs to be implemented through quotas or through integrative approaches. In all these discussions, however, an essential component of gender equality is neglected: the economic one.

In Romania, gender discrimination is found in all sectors of society, from health, where access to specific health services, such as family planning, is reduced for thousands of women, to access to the labor market or to senior management positions. Women are under-represented on the boards of listed companies, accounting for only 10% of total membership, compared to an EU average of 24%. The situation is not better in the public sector either, in Parliament women represent less than 20% of the total number of elected officials. But on the labor market this discrimination can be transposed directly into economic losses.

Gender-based discrimination on the employment rate generates losses equivalent to 1.6% of GDP in Romania. These behave as an opportunity cost materialized by not collecting taxes related to the non-transfer of more women to the workforce. Every woman who can not get access to the labor market is money lost directly by the Romanian state. Romania is also a specific case in Europe if we look at this situation from the perspective of young people not employed in the workforce. Among those listed as NEET (Not in Employment, Education or Training), the number of women is seven times higher than that of men. However, we are relatively good at this point, other states in Europe, such as Italy, have losses of up to 6% of GDP from labor market disparities.

Egalitatea de șanse și de gen costuri și impact economic

Costs associated with gender-based violence in Romania

But the situation is much worse if we look at the losses generated in Romania by gender-based violence. In Romania, one in four women has been physically or sexually assaulted by her partner, and death as a result of domestic violence is one of the top thirty causes of female mortality. Since the start of my parliamentary term, I have been one of the most vocal voices in the fight against violence against women. I have argued, on every occasion, that gender violence is a scourge for which we should have zero tolerance. In addition to social considerations, there is also a very strong economic argument. The cost of gender-based violence can be quantified and, according to the European Institute for Equal Opportunities (EIGE), that cost in Romania is 10 billion euros.

This amount derives from the loss of work productivity through absences from work or days when the victim was unable to perform normal activities. These include the money lost by the employee and the employer, health expenses, legal costs, social assistance expenses and related expenses, including those related to emotional and psychological counseling. Ten billion euros of GDP lost through inability or lack of interest in combating gender violence is not only a national shame, but also a colossal waste of opportunity.

Romania’s strong point in gender equality: the technical sector

However, Romania has a strong gender equality advantage: the high number of graduates in technical fields (STEM). We generate annually 5% of all STEM graduates in the European Union and, among them, a very large number is represented by women. Thus, out of about 23 000, 9 000 technical yearly graduates are women, placing Romania on the second place in the EU on this issue. Romania is one of the few countries in the European Union where the IT sector is not dominated by men.

This is a huge asset because the number of technical faculty graduates is directly correlated with the number of start-ups at national level. The European Union has gained around 9 billion euros by involving more women in the start-up of tech companies, according to the European Commission. Thus, Romania is in a privileged position to capture the lion’s side of these potential gains.

But if talent is equally divided between women and men, capital is not. 90% of global VC funding went to companies with male founders. In 2017, the situation was worse, with only 2% of VC funding going to companies with women founders. The fault is largely an implicit bias in the selection process. When large VC funds such as Social Capital or First Round have chosen to eliminate the bias in the selection process, the share of women founders has increased from 10% to 43%, and startups with at least one female founder have evolved 63% better than those with exclusively male founders. Measures to promote gender equality, often seen as counterproductive by investors, can, in turn, lead to surprising economic outcomes.

Equal opportunities can mean more than the fight against gender violence and representation quotas. Gender equality, if taken as a value in Romanian society, can mean tens of billions of euros in addition to social investments and benefits, a more dynamic business environment and hundreds of new Romanian entrepreneurs in the tech and other sectors. Women are an economic and political force, a true economic engine. It is only necessary to abandon the sexist canons and to accept them as fully equal members of society.


Article published on Economistul.ro.