Indonesia could add $135 billion to the gross domestic product (GDP) annually in 2025 by advancing women’s equality. In the report "The Power of Parity: Advancing women's equality in Asia Pacific" published in April 2018 by McKinsey Global Institute showed this number is nine percent above business as usual.
Currently, Indonesia performs slightly better than the Asia Pacific average on progress towards women’s equality. On gender equality at work, its progress has been above average. It has also reduced maternity mortality and gender gaps in education. But pockets of extreme inequality remain. Closing the gap to the best performers in the region on gender equality offers a significant economic reward.
“Indonesia has already proved that it can make rapid progress on tackling sources of gender inequality—just three examples are its success are doubling girls’ enrolment in secondary schools in less than a decade, its rapid progress in reducing maternal mortality, and its 30 percent quota for female candidates at each government level,” said McKinsey partner and president director of PT McKinsey Indonesia, Phillia Wibowo.
Indonesia performs well on girls’ and women’s education but has high or extremely high gender inequality on seven indicators. It has a GPS of 0.52 in gender equality in work, ahead of the regional average (0.44), but behind the regional best (0.73). On essential services and enablers of economic opportunity, Indonesia’s GPS is 0.88, compared with the Asia Pacific average of 0.85 and the best in the region at 0.96.
On legal protection, Indonesia’s GPS is 0.37, a little ahead of the regional average (0.32), but far behind the best in region (0.66). On physical security and autonomy, Indonesia scores 0.82, the same as the regional average, but is behind the best in region at 0.96.
Indonesia has a large opportunity to raise women’s labour-force participation, which has barely budged for 20 years from around 51 percent while rising in other Asia Pacific countries. Despite making up 38 percent of the labour force, Indonesia’s women contribute only 29 percent to GDP—the fourth-lowest share in Asia Pacific.
For companies, there is a compelling case for gender diversity within their ranks. A January 2018 McKinsey report Delivering through diversity found that companies in the top-quartile for gender diversity on executive teams were 21 percent more likely to outperform on profitability and 27 percent more likely to have superior value creation. The highest-performing companies on both profitability and diversity had more women in line (typically revenue-generating) roles than in staff roles on their executive teams.
On the other hand, digital technologies can offer a fast track to female entrepreneurs. Women-owned SMEs contribute 9.1 percent to GDP, one of the highest contributions in the world, and women-owned businesses generate 35 percent of online commerce revenue on Indonesia’s largest online marketplace. However, much more can be done to boost women’s access to the internet and to finance, and to raise women’s digital literacy.