Women in the workforce: Analyzing the gains and gaps

Global Trends in Female Labor Participation

• Japan's "Quiet Revolution": Women's workforce participation has surged from roughly 50% to 75% within one generation.
• Italy's Demographic Shift: In the last two to three decades, virtually all net additions to the Italian workforce have been driven by women; without this demographic, the workforce would have stagnated or contracted.
• Regional Divergence:
  • Developed Markets: Experienced dramatic increases, with Europe overtaking the U.S. in female labor force participation over the last 20–30 years.
  • Emerging Markets: Showed growth over the last 25–30 years, but remains lower in absolute terms compared to developed markets.
  • United States: Female labor force participation has largely flatlined, contrasting with significant growth in Germany, the UK, and Japan.
• Policy Drivers:
  • Japan: Implemented mandatory shorter working hours (2009), free preschool education for ages 3–5, capped overtime hours, mandatory disclosure of female ratios and pay gaps, and tax benefits for companies advancing women.
  • Differentiation Factors: Countries with higher participation rates typically offer generous parental leave and subsidized, high-quality childcare, which the U.S. lacks compared to European counterparts.
• Workforce Composition Nuances:
  • Part-Time Variance: 50% of German women work part-time compared to only 25% of U.S. women, meaning U.S. women may contribute more total aggregate hours despite lower participation rates.
  • U.S. vs. Europe: While U.S. women participate in the workforce at high levels, the lower propensity for part-time work suggests different underlying employment structures.

Impact of the Pandemic and Future Trajectory

• Initial Projections: Early pandemic expectations suggested a disproportionate negative impact on women due to increased unpaid care duties and a higher concentration in hit service sectors.
• Actual Recovery:
  • U.S. and UK female participation has rebounded to pre-pandemic levels, while male participation remains below pre-pandemic figures.
  • Remote and hybrid work models accelerated by the pandemic have provided flexibility that benefits female workforce participation.
• Future Outlook (25-Year Horizon):
  • Education: Women in developed nations are now graduating with higher frequencies and more degrees than men, signaling a pipeline of highly qualified entrants.
  • Role Modeling: The slow increase in women CEOs (approx. 1 in 10 in the S&P 500) is expected to create role models that further accelerate change.
  • Cultural Shifts: Growing expectations for men to take parental leave and engage in care work, though currently hindered by a lack of opportunity and societal normalization.

Gender Pay Gap Analysis

• Overall Progress: The gender pay gap has narrowed in nearly every OECD country over the last 20 years.
• Specific Country Movements:
  • Japan: Decreased from 30% to 21%.
  • France: Halved from roughly 15% to the high single digits.
  • United States: Slowed progress from roughly 20% to 17% over two decades.
  • Persisting Gaps: Double-digit gaps remain in Japan, South Korea, Canada, the U.S., the UK, Switzerland, and Germany.
• Gap Attribution: Eurostat data indicates that approximately one-third of the pay gap is explained by factors like occupation, sector, qualifications, and hours worked; the remaining portion is unexplained, suggesting systemic disparity.
• Sectoral Strategy: Increasing female representation in high-paying sectors like technology and finance is identified as a key method to further close the gap.

Corporate Leadership and Representation

• CEO Demographics:
  • Global/2008 Baseline: 98–99% of CEOs at major listed companies were men during the global financial crisis.
  • Current S&P 500: 9% of CEOs are women (approx. 45 individuals).
  • FTSE 600 (Europe): 7% of CEOs are women.
  • Japan: Only 1% of CEOs at large listed companies are women.
• Sectoral Disparities: Women are underrepresented in CEOs of technology companies, despite that sector's high growth and valuations.
• Board Roles: Women on boards are frequently siloed in Human Resources roles rather than holding positions in Technology, R&D, or Finance.

Women Entrepreneurs and Capital Access

• Economic Contribution:
  • One in three companies globally is led by a woman; 25% of high-growth companies are women-led.
  • Over 90% of graduates from the "10,000 Women" program mentor other women in their communities, creating a significant ripple effect.
• Structural Obstacles:
  • Capital Gap: A global gender credit gap of $1.7 trillion exists, with men receiving a disproportionate share of loans.
  • Network Limitations: Women face smaller business networks, restricting access to major contracts and customers.
  • Mentorship Deficit: Beyond developed markets, a lack of mentorship leads to stagnation; in the U.S., Black women face a 97% business failure rate within three years.
  • Unpaid Labor: The "second shift" of unpaid childcare and elder care imposes significant time burdens on women entrepreneurs.
• Legal Barriers: In parts of the Middle East and Africa, women face legal restrictions on owning property, signing licenses, or obtaining business permits without male co-signatures.

Strategic Initiatives and Policy Recommendations

• Goldman Sachs Foundation Programs:
  • 10,000 Women: Over 200,000 women supported globally since inception, focusing on financial literacy and mandatory growth plans.
  • One Million Black Women: Targets the specific challenges of Black women entrepreneurs with a focus on capital access, education, and mentorship to reverse high failure rates.
• Private Sector Actions:
  • Supply Chain: Actively buying from women-owned businesses and including them in supply chains.
  • Investment: Directing capital toward women-led companies.
  • Data Transparency: Utilizing gender-disaggregated data to identify specific lending and investment gaps.
• Public Policy Needs:
  • Infrastructure: Expanding access to affordable childcare and adjusting parental leave policies.
  • Education: Increasing access to business training and STEM education.
  • Legal Reform: Removing structural barriers such as property ownership rights and licensing restrictions.
  • Targeted Support: Moving beyond "rising tide" approaches to implement policies specifically designed for women entrepreneurs.
• Internal Corporate Progress: Goldman Sachs reports its highest-ever representation of women in senior partner and MD classes (29% of partners, 31% of executive MDs) and maintains transparent tracking of diversity goals.