Gender gap 'costs billions in lost growth'

IMF economists call for global initiative. Governments urged to use spending to cut inequality

Inequality between men and women is costing the world billions a year in lost economic growth that justifies a global initiative to force governments to address the problem, new research shows.

Ground-breaking research by economists at the International Monetary Fund shows that governments should use economic policy to reduce gender inequalities and shun austere measures that would widen the gap. Countries should use their annual budgets to ensure that public money is spent in ways that reduce the gender gap, and to back up their rhetoric with action.

The report, which is not endorsed by the IMF, suggests that the fund itself could use its surveillance of its 184 members to encourage governments to take into account the benefits of reducing the gender gap and of removing "arbitrary discrimination".

The report comes a week ahead of the launch of the European Year of Equal Opportunities for All (2007) that will highlight the lack of representation of women at all levels of one of the world's richest societies.

A survey of more than 40 rich and poor countries found that gender divides reduced economic growth while economic growth tends to narrow the gap between the sexes.

On one level, women with the power over a household's resources tend to devote more to fostering their children's potential that has knock-on - but unrewarded - benefits to society as a whole. Women also have a greater tendency to invest savings in more productive ways and keep up the repayments on loans better, both of which have wider economic benefits.

The survey also found that women were more supportive of collective insurance and redistributive spending and larger government - although the author of the report, Janet Stotsky, admits it is open to debate whether that is a laudable outcome.

"Women often face barriers in gaining access to a good education and health care for economic and cultural reasons," she said. "The end result is a lower level of educational attainment, a higher rate of infant mortality for girls than boys in many countries, and markedly lower wages and fewer job opportunities for women than men."

In terms of spending, she said: "Cuts in critical education and health services could have potentially significant effects on well-being and economic growth. Cuts in a number of social services would have a disproportionate effect on women."

She said that the issue was most pressing in developing countries where a woman's position was often highly disadvantaged.

The report praised the UK for having embraced gender budgeting. Since 1998, the Treasury has undertaken some level of gender analysis, primarily in the context of the Budget.

In spring 2003 it launched a pilot Gender Analysis of Expenditure Project (GAP) across several departments that recommended all departments looked at gender issues when formulating policy. Examples include a consultation exercise to inform the development of a national childcare strategy, and in 1999 the Government's largest ever consultation exercise specifically for women, setting out their policy priorities.

However the UK still comes only 18th out of the 177 countries ranked by the United Nations in its Human Development Index, based on life expectancy, educational standards and having a decent standard of living. It is down from 12th in 2002.

However in terms of gender differences, the UK comes 38th in terms of the ratio of girls to boys in primary, secondary and higher education.