"Pink tariffs” and other trade barriers are obstacles to better jobs, wage equality

Trade increases women’s wages and helps close the wage gap between men and women while creating better jobs for women, a new World Bank Group report concludes. Countries that are open to international trade tend to grow faster, innovate, improve productivity, and provide higher income and more opportunities to their people. Countries that are more open to trade, as measured by the trade-to-GDP ratio, have higher levels of gender equality.

The report, produced in collaboration with the World Trade Organization, marks the first major effort to quantify how women are affected by trade using a new gender-disaggregated dataset. The dataset, developed by the World Bank Group, allows researchers to understand how women are employed, in which industries they work, how much they earn, and whether or not they are involved in global trade. This analysis helps governments see how trade policies can affect women and men differently.

“Over the past 30 years trade has been the engine of poverty reduction. This report shows that, provided the right policies are in place, it can also provide an engine to reduce the gender gap,” said World Bank Managing Director Mari Pangestu. “Trade can expand women’s role in the economy and decrease disparities with men by giving women more and better employment opportunities. Seizing these opportunities will be even more important in a post-COVID-19 world.”

The report, Women and Trade: The Role of Trade in Promoting Women’s Equality, offers several key findings. Firms that are part of global value chains (GVCs) employ a greater percentage of women (33 percent) relative to non-GVC firms (24 percent). When countries open themselves to trade, women’s share of wages in the manufacturing sector increase by 5.8 percentage points on average. When women are employed in sectors with high exports, they are more likely to be formally employed. Formal employment means better job benefits, training, and job security.

The report also highlights the importance of addressing discrimination against women in trade policy. Although no country overtly imposes tariffs according to gender, implicit biases can amount to “pink tariffs” that put women at an economic disadvantage. The report shows that products specifically consumed by women face a higher tariff burden than men’s products. In the textile sector, for instance, tariffs on women’s apparel are US$2.77 billion higher than on men’s clothing, a consumption gap that grew about 11 percent in real terms between 2006 and 2016. Disparities like this can hurt women consumers all over the world.

Targeted policies can help women maximize the benefits of trade. These include removing trade barriers that impede women’s access to international markets and improving women’s access to education, financial services, and digital technologies. Governments can design trade facilitation measures that remove gender-specific barriers to trade. These measures could address burdensome customs requirements, limited access to trade finance, and exposure to extortion or physical harassment at borders.

Key Findings

• Exporters employ more women: In developing countries, women make up 33 percent of the workforce of exporting firms compared with just 24 percent of non-exporting firms.

• Trade creates better jobs for women: When women are employed in sectors with high levels of exports, they are more likely to be formally employed in a job with better benefits, training and security.

• Trade increases women’s wages and increases economic equality: Developing countries that double their manufacturing exports – a typical increase for developing countries that open themselves to trade – would see women increase their share of total manufacturing wages from 24% to 30% through a combination of increased employment and higher salaries.

Despite many advances, women across the world hold fewer jobs, are paid less, and are more likely to experience worse job conditions than men.

• Fewer than one in two women works.

• Among those who do work, 80% occupy medium- and low-skilled jobs.

• Women are also overrepresented in the informal sector, with up to 90% of women informally employed in Sub-Saharan Africa.

• Just 3% of female employees in low-income countries are skilled workers.

Trade policy is inadvertently biased against women, resulting in lower levels of employment and higher prices for consumer goods.

• Although no country overtly imposes tariffs according to gender, implicit biases can amount to “pink tariffs” that put women at an economic disadvantage – as both producers and consumers.

• Compared to men, women tend to spend a larger share of their income goods with high tariffs, such as food. Removing import tariffs could help women gain 2.5 percent more real income than men.

• Targeted policies can help women maximize the benefits of trade. These include removing trade barriers that impede women’s access to international markets and improving women’s access to education, financial services, and digital technologies.

The lack of gender-specific data reinforces biases against women in trade policymaking. Sex-disaggregated data is necessary to assess how different policies and obstacles impact women and men differently.

• This report makes use of a new dataset that for the first time allows researchers to see labor data at the industry level by gender, reducing subjectivity of trade-related analysis.

• This data sheds light on how women are employed, in which industries they work, what their income is and whether or not they are involved in global trade.

• This analysis helps governments understand how trade policies will affect women and men differently.

The changing global economy offers new opportunities for women through services, GVCs and digital technology.

• More than two-thirds of women in developed countries were employed in the services sector in 2017, up from 45 percent in 1991. In developing countries, the proportion of women in the service sector jumped to 38 percent from 25 percent over the same period.

• Countries are becoming more integrated with global value chains, which tend to create jobs and increase wages for women. GVC jobs tend to have positive, indirect benefits on other aspects of women’s livelihoods, such as education.

• Digital technology and new online platforms create opportunities for women to bypass traditional trade barriers, expand their entrepreneurial skills and develop flexible careers that enable them to manage both work and household responsibilities.