The persistence of the gender pay gap is a long-running problem globally. In the U.S., women earn 92 cents for every dollar men make, and women’s labor force participation worldwide has remained flat for decades—only about half of working age women participate in the labor market, compared to around 80% of men.
But as women climb the corporate ladder, the gender gap gets even wider, and labor force participation can’t explain away the difference, according to a new report from Moody’s ratings agency. Researchers found that when it comes to middle or senior management roles, women are often overqualified, underpaid, and underrepresented.
“On average, women make a higher upfront investment in education but tend to land in lower-level and lower-paid positions, employed below their skill level,” wrote Dawn Holland and Katrina Ell, directors at Moody’s and authors of the report.
In countries like the U.K. and France, the number of women in high-level management roles has fallen from 2010 to 2019. The percentage of women in leadership varies widely based on the type of business. In industries like mining and construction, which have traditionally had a higher number of men, less than 20% of leaders are female. But in the health and education sectors, that proportion is over 60%. The gap between men and women in management is especially concerning in fast-growing sectors like information and technology, where only about 33% of the leaders are female.
“Females have the necessary education and broader skillset to be successful in these important sectors, but are not yet well-represented in management,” Ell told Fortune. “This is problematic for future growth and productivity gains because these sectors are critical to drive future productivity gains.”
It’s not just women who are hurt by the corporate gender gap. Closing the labor force participation gap and correcting the underutilization of women in management in 38 OECD-member countries, would add $7 trillion to the global economy, the report found.
“This boost to economic activity stems from a rise in the number of people in work, with more women joining the labour force and an increase in productivity, as a greater share of women become employed in more productive managerial and professional roles,” Holland and Ell wrote.
There are several different reasons for the lack of women in management positions, the report found. In some cases, women struggle to identify as leaders because they lack role models in their industry. Other barriers include the burden of family responsibilities, unequal access to relevant professional networks, and women being held to higher standards than men in the workplace. The labor force participation and skills gap also contribute to the underskilling of women in some economies.
Learn how to navigate and strengthen trust in your business with The Trust Factor, a weekly newsletter examining what leaders need to succeed. Sign up here.
