The Gender Dimension of Services

13 June 2017

What are the gender-based constraints faced by women in accessing employment and business opportunities in the service sector? How can governments tackle these barriers through gender-sensitive policy interventions?

The service sector makes a substantial contribution to the world economy, providing jobs, crucial inputs, and public services. In 2014, it accounted for almost 71 percent of global GDP.[1] A competitive service sector contributes to development in four key ways: through output growth and productivity gains; through effects on employment and national incomes; through effects on the range and quality of services, including key social services and business services; and by diversifying the economy and offering a source of competitive and comparative advantage in terms of trade. In fact, research has shown that through output growth and productivity gains, services have the potential to contribute more to economic growth, job creation, and poverty reduction than manufacturing.[2]

As a key driver of economic growth, the service sector can indirectly contribute to significant gender equality outcomes and support the realisation of Sustainable Development Goal 5 (SDG 5), which aims to “achieve gender equality and empower all women and girls,” and other gender-related SDG targets. As countries develop and household incomes grow, families are more willing to allocate resources to the education and health of girls. The creation of more jobs through growth allows for the entry of more women into labour markets, and ultimately contributes to changes in social norms and perceptions about gender roles, improving women’s legal, social, and economic status.

Beyond the general economic impact, services also affect women more directly as producers and consumers through the employment and consumption channels. In fact, countries where services account for a higher share of employment have higher female labour force participation rates.[3] The presence of employment opportunities for women in the service sector can also result in women being more highly valued socially and economically, with the perceived returns on investment improving attitudes and incentives towards girls’ education. Finally, in most developing countries, women assume a disproportionate share of family and community-support responsibilities. An improvement in the availability and price of vital services can reduce the domestic and social care burden on women, freeing them up to engage in formal employment.

There is also a strong instrumental rationale for greater inclusion of women in the economy, including the service sector. Greater labour force participation of women can be a source of competitive advantage for the economy, but also contribute to more inclusive growth, including improving distributional dynamics and well-being within households. It can stimulate short-term growth through higher consumption expenditure, while also stimulating long-term growth through higher savings. At the same time, equal access to educational opportunities for girls and women allows for greater accumulation of skills and expertise in the labour force and thus raises the growth potential of the economy, as educated women can undertake higher value-added economic activities. Greater decision-making power for women over household resources and family size has the potential to enhance the human capital of the next generation, as children benefit as a result of more spending on food and education. The service sector is more skill-intensive than other sectors, and by improving human capital and productivity of labour for current and future generations, gender equality in terms of educational attainment can contribute to service sector competitiveness.
 

Women’s participation in the services sector

Statistics indicate high levels of female employment in service sectors, with services globally accounting for almost 50 percent of female employment in 2013.[4] Women are increasingly moving out of agriculture in developing countries, and out of industry in developed countries, and into services. Female employment in services is particularly high in advanced economies, where women’s employment in industry has halved, and more than85 percent of women are now employed in the service sector, primarily in health and education. While in developing countries the majority of women are still employed in the agricultural sector, the share of women employed in services increased by 7.6 percent between 1992 and 2012 and is likely to increase further as opportunities in the service sector grow.[5]

In developed and developing economies alike, women are represented across a more limited range of occupations in the service sector than men. Figure 1, showing a detailed sectoral breakdown across selected developed and developing economies, indicates a higher concentration of women in wholesale and retail trade, hotels and restaurants, education, health and social work, and community, social, and personal services. There is a clear horizontal segregation of women in sectors that are generally characterised by low pay, long hours, and informal working arrangements. Women are also often present in unorganised sectors, such as domestic and care work, limiting their wage-bargaining power.
 

Figure 1: Differences in average shares of the 1-digit sector[6] by sex in selected developed and developing economies, latest year available after 2000

 

Source: ILO, 2012.
 

This also has implications for the liberalisation of trade in services, as the benefits of trade are unevenly distributed, with some sectors expanding and others contracting. Since women are clustered in fewer sectors and have access to fewer resources than men, they are often less likely to enter expanding sectors, are more susceptible to informalisation and vulnerable work associated with international competition, and are more likely to lose out due to trade-related adjustment. Due to their care burden and gender-based discrimination, women often have less access to vocational and business training programmes. These types of limitations in access to skills upgrading can particularly hurt women when economies move up the technological ladder or labour displacement occurs due to trade.

Public or government services have traditionally provided an important avenue for women's participation in the service sector. However, with the increased privatisation and liberalisation of service sectors in many developing countries, women have turned to growing employment and entrepreneurial opportunities in the private services sector. In many developing countries, the more traditional, non-tradable, low-productivity services with reduced capital accumulation potential such as small retail trade, restaurants, and personal services are the ones accounting for the increasing share of services in GDP and in total employment, especially of women. Similarly, austerity measures introduced after the financial crisis in many developed countries have been particularly harmful to service sectors in which women are concentrated, such as elderly and child care, healthcare, and education.

Vertical labour segregation is equally present in the service sector. Women tend to be concentrated in low and mid-cadre occupations, with few rising to positions of management. As shown in Figure 2, women’s employment globally is more heavily concentrated in mid-skills occupations, such as “clerks and service workers” and “shop and market sales workers,” while men are more present in high-skilled occupations such as “craft and related trades workers,” “plant and machine operators,” and “managerial and legislative professionals.” Such vertical labour segregation along gender lines suggests that due to various gender-based constraints, women do not have the same opportunities as men to access the full range of occupations, or the required skills and training.
 

Figure 2: Differences in average shares of major occupational groups by sex in selected developed and developing economies, latest year available after 2000

 

Source: ILO, 2012.
 

Similarly, a World Bank survey of the providers of professional services in Eastern and Southern Africa found that women represent only 6 percent of top senior positions and 12 percent of second most senior positions in professional services firms.[7] These figures are also broadly comparable with data from developed countries. The under-representation of women in senior positions is related to the various institutional barriers women face. Women’s limited access to education and training opportunities often means they lack the necessary qualifications and skills necessary to fulfil senior positions. Gendered stereotypes that create bias in recruitment and promotion as well as the lack of work–life balance also act as barriers to greater gender diversity in leadership roles, particularly in the STEM (science, technology, engineering and mathematics) and finance industries.

Women in services are more likely than men to be found in precarious forms of work and non-standard employment. Non-standard employment is characterised by temporary or short-duration employment contracts, low wages, limited or no social security benefits, work at multiple worksites, low-skill or medium-skill job requirements with limited career prospects, and lack of representation. In many cases, employers use precarious work to evade their obligations to provide social security contributions, pensions, maternity and family leave, overtime payments, vacations, and occupational health and safety. Because of time poverty, many women seek out flexible and non-standard working arrangements in the form of part-time, temporary, and/or informal jobs. However, this can reinforce their specialisation in non-market work, because informal jobs pay lower wages than full-time and formal jobs and are less valued.

Globally, female participation in the ownership of services firms and the proportion of female top managers of services firms is higher compared to manufacturing. A possible explanation for this is that it is easier for women to participate in the ownership of services firm given the predominance of small firms in service sectors. Lower entry costs and lower capital requirements in services may be particularly attractive to women who often face greater difficulties in accessing credit than men.

Women entrepreneurs engaged in trade in services are often impeded by limited access to productive resources, including lack of access to quality inputs and equipment, capital, and credit. According to the World Bank, 70 percent of women-owned SMEs in developing countries have issues with accessing finance. This lack of access to finance limits the growth potential for women-owned enterprises and makes entrepreneurs risk averse towards entering export markets. Analysis of data from the enterprise surveys undertaken throughout a large number of developing countries shows that, in general, firms with female management tend to be smaller than firms with male managers in both manufacturing and services, and are less likely to export.[8]
 

The role of policy

The analysis in this article has thrown up two important implications for policy. First of all, it has emphasised the important contribution that services can make to economic growth, employment, poverty reduction, and gender equality. Enhanced competitiveness of the service sector can play an important role in the achievement of SDG 5 in terms of empowerment of women and girls and other gender-related SDG targets. Secondly, it has shown that gender inequalities that manifest themselves in economic transactions, relations, and institutions also structure women’s participation in services, restricting the competitiveness of the sector and limiting the ability of women to benefit from the opportunities created by service trade and service sector growth. In order to foster competitiveness and to ensure that the benefits of growth in services accrue to both men and women, this section discusses a range of policy interventions.

Supportive policy and regulatory environment for women service workers

Some of the policies that can facilitate easier access to the labour force for women include provision of childcare, regulation relating to equality and non-discrimination in employment, and policies that encourage equal sharing of domestic responsibilities between men and women, such as equal parental leave. There is also a need to expand social protection measures to reduce women’s vulnerability, invest in their skills and education, and implement policies to foster access to employment across the occupational spectrum. Ensuring that both foreign and domestic service suppliers are covered by national employment legislation, including on equal pay, healthy working conditions, and childcare and maternity leave provision, can prevent the clustering of women in lower-skilled, lower-pay, vulnerable types of employment as a result of trade liberalisation.

Engagement with the private sector

For the private sector, much of the focus has to be on changing the organisational culture of businesses in terms of the pay, working conditions, and quality of work offered to women. This includes improving the provision of education and training, mentorship opportunities for women to allow them to access opportunities higher up the career ladder, and changing recruitment and human resources practices to ensure career progression for women. It also means encouraging a better work–life balance for women with care responsibilities through flexible working hours, teleworking, and extended parental leave. Addressing the vertical segregation of women may also require affirmative action through the use of quotas and targets to promote greater diversity at top management levels. While not legally binding, voluntary codes of conduct such as the UN Global Compact Women’s Empowerment Principles are an important step forward in terms of creating inclusive business processes in the age of greater brand sensitivity.

Capacity Building and Financial Support for Women Entrepreneurs

For women entrepreneurs engaged in services, the focus has to be on addressing their limited access to credit. New women-specific financial products that minimise documentation requirements, use innovative credit-scoring models and flexible collateral, and promote branchless and mobile financial services are a step in the right direction. However, often the provision of financial services does not necessarily lead to adoption, and tackling issues such as women’s land rights and financial literacy and illiteracy is still necessary.

Interventions that address the gender skills gap and women’s access to business networks are also needed. Skills training and vocational education programmes need to be implemented in a manner sensitive to women’s disadvantages regarding mobility and time. Targeted interventions, executed through women’s business membership associations, can assist women in pursuing new customers and markets through business development services, mentorship, and networking. In their export promotion efforts, governments need to ensure higher visibility of women service exporters – this could be done by staging service-specific trade events with targets for the participation of women and ensuring female representation in trade missions. Greater use of ICT by women entrepreneurs can also help them access new markets through online commerce and digital technology.

Mainstreaming gender in trade policy

Finally, mainstreaming gender in trade policy can help ensure not only that women and men are equally able to take advantage of the opportunities created by trade, but also that trade expansion actually plays a critical role in narrowing the gender gap. Examples of practical steps include ex ante gender impact assessments of trade agreements and policies, as well as adopting a proactive approach to ensure women’s participation in any consultation processes guiding policy design.

Trade in services liberalisation can bring important benefits, but can also create risks for women if gender-sensitive policy frameworks are not in place. To prevent this, governments need to put in place social upgrading initiatives, including enforcement of labour standards, non-discrimination and equality in wages and working conditions, and facilitation of career mobility and job opportunities for women through skills training. Trade liberalisation also creates winners and losers, and governments may need to invest in social safety measures that will cushion the poor, and particularly women, against the costs of adjustment as the composition of output and employment changes in response to services liberalisation. Likewise, when liberalising sectors that provide essential services such as water, sanitation, energy, and health, governments need to ensure both foreign and domestic suppliers meet levels of universal service or, alternatively, cross-subsidise the provision of services in certain disadvantaged areas or for vulnerable groups.

This article is based on a longer study published by ICTSD.

Author: Julia Lipowiecka, Independent Trade and Social Development Consultant.


[1] World Bank. World Development Indicators 2015. Washington, DC: World Bank, 2015.

[2] Ghani Ejaz, and Homi Kharas. “The Services Revolution.” Economic Premise 14 (2010). World Bank.

[3] Ghani, Ejaz. “Is Service-Led Growth a Miracle for South Asia?” In The Service Revolution in South Asia, edited by Ejaz Ghani. New York: Oxford University Press, 2010.

[4] ILO. Global Employment Trends 2014. Geneva: International Labour Organization, 2014.

[5] ILO. Global Employment Trends for Women 2012. Geneva: International Labour Organization, 2012.

[6] 1-digit codes designate major divisions in the standard industrial classification of all economic activities 

[7] World Bank. Women and Trade in Africa: Realizing the Potential. Washington, DC: World Bank, 2013.

[8]Ibid.

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