IMF champions move towards ‘gender budgeting’

By on 23/07/2017
IMF managing director Christine Lagarde with the German chancellor Angela Merkel at the G20 summit in Hamburg: both are prominent champions of gender equality (Image courtesy: Bundesregierung/Güngör/G20)

With Italy putting gender equality at the heart of its G7 presidency, there’s growing interest in public finance managers’ potential to help women play a greater role in economic growth. Gavin O’Toole explains

The concept of ‘gender budgeting’ is gaining currency among governments and international institutions, with the IMF pushing for greater adoption of the approach and Italy making gender equality a priority of its G7 presidency this year.

Gender budgeting involves building a clear gender perspective into fiscal policy and public financial management (PFM) practices in order to help tackle gender inequality. At Italy’s request, in May the IMF published a policy paper on the topic, setting out a range of fiscal tools that countries can deploy.

Tax policies can help to increase the supply of female labour and raise the net return to women of working, the paper said. Most G7 economies, for example, have replaced family taxation with personal income taxes that reduce disincentives to work for second earners.

The paper also explained that targeted benefits such as subsidised childcare and assistance to low-income families can encourage women back to work; social security and pensions systems can be reformed to take account of women’s intermittent work history; and spending on education and public health can boost female human capital.

PFM practices and institutional reform can give equality an additional boost. Budget laws can be amended to provide a consistent basis for governing gender-responsive budgeting, and budget statements – in which a finance minister sets out key budgetary principles – can be used to set priorities. In Canada, for example, the government introduced its first Gender Statement this year as a stand-alone chapter within its annual budget.

Budget circulars can be used to instruct spending ministries and departments on how to incorporate gender-equality within their annual submissions, and information systems can be adapted to incorporate gender-specific data that allows the impact of budgets to be assessed.

Italy has one of the lowest rates of female labour market participation in the OECD and Francesca Bagni Cipriani, the Italian labour ministry’s National Equality Adviser, argues that public finance can play a key role in improving opportunities for women.
“The first enemy we must confront is definitely that of gender stereotypes,” said Cipriani. “The approval and, above all, the implementation of a gender budget could be an especially useful tool if it is accompanied by insights and debates about the real merits of the choices that it makes.”

Pointing out that the female employment rate in Italy is just 47%, Cipriani said that “gender budgeting is of particular importance because the female condition in Italy is worse than that of other countries which have seen growth in the equal status of women in employment, demographic indices and within the country’s productive development.”

The United Nations Development Programme’s Gender Development Index (GDI) and Gender Inequality Index (GII) both indicate a clear trend of improvement in levels of equality within G7 countries since the 1990s – yet women still face disadvantages around the world.

According to IMF managing director Christine Lagarde, a champion of gender budgeting, the labour market participation rate of women in advanced industrial countries is about 17 percentage points lower than that of men, and the wage gap about 14%. Men remain better represented in political and managerial spheres and women still undertake the main burden of unpaid work as primary caregivers in households.

The issue of gender equality has grown in importance within the G7 since 2015, when the German presidency prioritised women’s economic empowerment for the first time. However, although G7 economies have been using fiscal, regulatory, and structural policies to reduce inequality in recent decades, the IMF says gender-responsive approaches to public financial management have not become embedded.

The IMF says the use of PFM practices and institutional reforms to advance gender equality has been limited in the G7, where most governments tend to discuss gender-related policies in an ad hoc fashion.

None of the G7 countries produces a budget circular; few undertake performance-based budgeting related to gender; and reports on budget execution do not usually contain information on gender-related expenditures or tax policies.

Moreover, decision-making within government on gender budgeting is often fragmented and ineffective. Only Japan has developed formal institutional mechanisms to coordinate discussions across government on gender-related fiscal policies through its Council for Gender Equality, a unique body chaired by the chief cabinet secretary and comprising ministers and external members.

Gender equality is important in itself as an issue of rights – the Millennium and Sustainable Development Goals (MDGs and SDGs) both advocate the empowerment of girls and women – but it is also seen as promising macroeconomic gains by boosting overall economic growth, the accumulation of human capital, and labour productivity.

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See also:

EU gender equality report reveals ‘mountain to climb’

Electing women can boost gender equality in both appointments and policies, research finds

Bulgarian MEP to lead on EU’s digital economy

About Gavin O’Toole

Gavin O’Toole is a freelance writer and editor in London. He has written for leading newspapers, magazines, wire services and business schools about financial markets, business and regulation around the world. He has a particular interest in international relations, and a specialism in Latin American affairs. He has conducted research on this region’s political economy and has also published a number of books about its politics and natural environment. His latest title, Environmental Security in Latin America, will be published by Routledge in September 2017.

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