Women in China are losing out in the workforce — that's bad news for the economy – CNBC

China’s rise as a global economic power over the last few decades has put women at a disadvantage and worsened gender inequality in its workforce, according to a report by think tank Peterson Institute for International Economics.

It contrasts with other major economies — such as the U.S., Japan and the European Union — which have made progress  over the years in reducing the gender gap in their respective labor markets, said the report published last week.

The report made the comparison by looking at data of male and female labor force participation rates by the International Labour Organization, a United Nations agency focused on workers’ issues worldwide. The labor force participation rate measures the percentage of men and women, between the ages of 15 and 64, who are in employment or looking for work.

The PIIE report said a major factor behind the widening gender gap in China’s workforce is “the loosening of state control over the marketplace” since the country’s economic liberalization spearheaded by former leader Deng Xiaoping.

A series of economic reforms since 1978 kicked off decades of rapid economic growth in China, but it gave “private sector firms and even state-owned enterprises more latitude in a competitive economic environment to discriminate against women in the workforce and in pay,” said the researchers, Eva Zhang and Tianlei Huang.

The PIIE report follows a growing body of research that highlights the widening gender gap in China’s labor market, both in terms of employment opportunities and potential earnings.

But China didn’t always have such a poor track record in giving women equal opportunities in the workforce.

In the early 1980s, the country’s female labor force participation rate exceeded that of many developed economies, according to a report published in January in the Asia and the Pacific Policy Studies journal by The Australian National University.

The gender wage gap in China was also “much smaller” compared to major economies such as the U.S., noted the report.

Those earlier “successes” were largely a result of “strong government commitments to promoting gender equality,” said the authors. Such commitments were easier to translate into actual policies and actions back then due to state control over large swathes of the economy, they explained.

“The policy of encouraging women’s contributions in the workforce was part of overall national development plans during the period,” the report said. “Public sector domination of the economy played a key role in implementing gender equality policies when China was a centrally controlled system.”

But participation of women in the work place has dwindled in later years even as the country leapfrogs from one of the poorest economies to the second largest globally today.

“Female labour force participation rates have fallen to levels that are low by international standards, gender gaps in pay have widened, gender discrimination in the labour market is widespread, and there is evidence of a worsening bias in views about women’s right to work and leadership in the workplace,” read the report.

At the same time, a decline in state-supported childcare facilities forced many women to stay home to take care of their children, according to the PIIE report. That trend has come as fewer married couples now live with their parents, who could have helped with childcare responsibilities, it added.  

Today, China has some of the worst gender inequality in the areas of economic, education, health and politics, according to a report by the World Economic Forum.

The World Economic Forum placed China in 106th position out of 153 on its ranking of countries with the smallest overall gender gap to the worst. In terms of the gender gap in economic participation and opportunity, China is ranked 91st out of 153 countries — below fellow emerging economies such as Brazil and Russia, but above India, said the WEF.

China’s widening gender gap in the labor market — if it persists — could become a bigger burden on the economy at a time when growth is already slowing down, according to the PIIE report.

The country’s labor force is shrinking due to declining birth rates, while its aging population is growing as life expectancy increases — demographic changes that many economists have warned will weigh on China’s economic growth prospects.

“Increasing gender equality, however, can counter this drag,” wrote the PIIE researchers.

“It would require greater policy intervention providing targeted support for women and more stringent enforcement of antidiscrimination laws,” they added. “At the end of the day, leveling the economic playing field at work would benefit not only Chinese women but also the entire economy.”