92281 Women in the private sector in Latin America and the Caribbean1 9/2014 Creating the conditions to unlock women’s skills and expand Basic Definitions their opportunities in the labor market is essential to boosting shared prosperity and to promoting women’s economic Countries surveyed in 2010 and how they are grouped empowerment. Yet women’s productive potential is largely for analysis: underutilized; women’s participation in the labor market, In 2010, Enterprise Surveys (ES) interviewed 12,855 earnings, and quality of employment all lag behind those enterprises in 30 Latin American and Caribbean Caribbean Series Note No. 4 of men. The private sector plays a critical role in fostering countries. In addition in 2009, 1,802 firms were economic opportunities for women, accounting for about 66 interviewed in Brazil also following the standard percent of formal employment in emerging and developing ES global methodology. countries (IFC, 2013). Thus, knowing the extent to which For analytical purposes, the 31 countries are categorized women in Latin America and the Caribbean (LAC) are into 3 groups: participating in private sector economic activity, both as Small Caribbean countries: Antigua and Barbuda, employers and employees, and how firms run or owned by The Bahamas, Barbados, Belize, Dominica, Grenada, women perform, provides valuable insight for policies aimed Guyana, Suriname, St. Kitts and Nevis, St. Lucia, and St. at strengthening development and expanding women’s Vincent and the Grenadines economic opportunity. Medium-size countries: Bolivia, Costa Rica, Dominican Republic, Ecuador, El Salvador, Guatemala, Honduras, Several studies suggest important gender gaps in the private Jamaica, Nicaragua, Panama, Paraguay, Uruguay, and sector. Firms owned by women tend to be concentrated Trinidad and Tobago in labor-intensive sectors such as retail and other type of and the Large countries: Argentina, Brazil, Chile, Colombia, services rather than in capital-intensive manufacturing Mexico, Peru, and República Bolivariana de Venezuela. (Klapper and Parker 2010; Amin and Islam 2014). Evidence also suggests that women-run and women-owned firms Two waves of Enterprise Surveys, 2006 and 2010: are smaller, have lower employment growth, and face a World Bank Group Latin America Fifteen countries were surveyed in 2006 using the more burdensome business climate (Amin 2014; Aterido, ES global methodology: Argentina, Bolivia, Chile, Beck, and Iacovone 2011; Bruhn 2009; Sabarwal and Terrell Colombia, Ecuador, El Salvador, Guatemala, Honduras, 2008). The Enterprise Surveys (ES) provide information on Mexico, Nicaragua, Panama, Paraguay, Peru, Uruguay, the characteristics of private-sector firms that are women- and República Bolivariana de Venezuela. In total, 10,930 firms were interviewed in 2006, of which 3,535 owned, women-run, or in which women are employees, on were re-interviewed in 2010. how such firms perform compared to their men-owned or men-run counterparts, and on how such firms experience the Reference periods of the survey data: business environment. The information collected in the surveys refers to characteristics of the firm at the moment of the The Enterprise Surveys (ES) define women-owned firms as survey (2006, 2010 and 2009 for Brazil) or to the sole proprietorships owned by women2; women-run firms last completed fiscal year (2005, 2009, and 2007, are defined as firms in which the top manager is a female; and respectively). In addition, sales, employment, and women workers are defined as female permanent full-time labor productivity annual growth rates are calculated employees. The Enterprise Surveys also provide information comparing data from the last complete fiscal year of on whether a firm has one or more female owners, but they each survey and recall data. Consequently, growth do not specify the percentage of female ownership. Since this rates refer to the period 2002-05 for the 2006 surveys, measure does not indicate the extent of female ownership— 2004-07 for the 2009 Brazil survey, and 2007-09 for the 2010 surveys. firms in which women are the main shareholders are classified 1 in the same group as firms in which women are minority Despite an overall increase in female labor force shareholders—this alternative metric is not considered here. participation rates in the Latin American and Caribbean region in recent years, the share of women-owned firms in the private sector did not rise between 2006 and LAC countries compare well on female 2010. On average, for the 13 countries for which data are participation in the private sector as available in 2006 and 2010, the share of women-owned employers and as employees firms decreased slightly from 32 percent in 2006 to 30 Female participation in the private sector, in particular percent in 2010. On the contrary, and in line with the the percentage of firms run by a female manager, is low general positive trend, the percentage of female workers around the world. The Latin America and the Caribbean increased from 31 percent to 34 percent. region is no exception. Only one in five firms in LAC is run by a female manager. LAC fares well, however, when Women-run firms and women-owned firms compared to other regions. The percentage of women- are more common in the small Caribbean run firms in LAC, at 21 percent, is higher than in Eastern economies and more concentrated in the Europe and Central Asia, Sub-Saharan Africa, and South retail sector Asia, and lower only than in East Asia and the Pacific (Figure 1). Overall, the percentage of women-run firms and, to a lesser extent, women-owned firms, is significantly higher The Latin America and the Caribbean region also in smaller countries, whether measured by total GDP or compares well in the percentage of female-owned firms total population. These gender-based differences remain and female participation in the workforce. In LAC 34 after taking into account the possibility that small and percent of firms are women-owned and 38 percent of the large countries may have different types of firms in terms workforce is composed of female permanent full-time of sector of activity, firm size, and trade intensity. The share workers. These figures are surpassed only in the East of women-run firms ranges from an average of 15 percent Asia and Pacific region. in large economies to 24 percent in the small Caribbean economies (Figure 2). The same pattern is seen among women-owned firms, which account for 30 percent of all firms in the large economies and 38 percent in the small Caribbean countries. FEMALE PARTICIPATION IN THE PRIVATE SECTOR IS LOW IN DEVELOPING REGIONS, FIGURE 1 BUT FIRMS IN LAC COMPARE WELL TO OTHER EMERGING AND DEVELOPING REGIONS 60 50 Percentage of Firms (%) 40 30 20 10 0 South Asia Sub-Saharan Africa Eastern Eurpoe Latin America East Asia & Central Asia & Caribbean & Pacific Women-run firms Women-owned firms Women workers Source: Enterprise Surveys. 2 WOMEN IN THE PRIVATE SECTOR SMALL CARIBBEAN ECONOMIES HAVE Women-run firms are smaller than 4 Women in the private sector FIGURE 2 A HIGHER PERCENTAGE OF WOMEN-RUN AND WOMEN-OWNED FIRMS men-run firms, but women-owned firms are not 45 40 Women-run firms are smaller than men-run firms in 35 all sectors, where size is measured by the number of Percentage of firms (%) 30 permanent full-time employees working at the firm in 25 20103. Men-run firms are about three times as large 20 as women-run firms in retail and about twice as large in other services and manufacturing. The smaller 15 size of women-run firms is more evident in large LAC 10 economies, where men-run firms are more than three 5 times as large as women-run firms. This difference 0 Large economies Medium-size Small Caribbean decreases in medium-size economies and, even more in economies economies the small Caribbean countries. Women-run firms Women-owned firms Women-run firms are also smaller when total annual Source: Enterprise Surveys. sales are used to classify firm size. Overall, firms run by men have 1.3 times the annual sales of women-run firms. The greatest difference is in the manufacturing sector, where men-run firms have sales eleven times In terms of sector of activity, across the LAC region a higher than women-run firms. The difference is notably higher percentage of women-run firms is in retail than in smaller in other services, in which men-run firms have other services and manufacturing. In the small Caribbean 1.6 times the annual sales of women-run firms (Figure countries, however, women-run firms are as common in 4). In the retail sector, on the contrary, women-run the retail sector as they are in other services (Figure 3). firms have slightly higher total annual sales. The gender The prevalence of female-firms in retail is confirmed also gap in annual sales is consistent across all three groups when it comes to women-owned firms, with no difference of countries in LAC—large, medium-size, and small between small Caribbean countries and the rest of Caribbean economies. economies in the LAC region. FIGURE 3 MORE WOMEN-RUN FIRMS IN LAC ARE IN RETAIL THAN IN OTHER SERVICES AND MANUFACTURING 30 25 Percentage of firms (%) 20 15 10 5 0 Large economies Medium-size Small Caribbean economies economies Manufacturing Retail Other services Source: Enterprise Surveys. IN LATIN AMERICA AND THE CARIBBEAN 3 In contrast, women-owned firms are roughly the same Similarly, employment growth in women-run firms in size as firms owned by men, regardless of whether size LAC is lower than in firms run by men. This difference is is measured by the number of full-time permanent driven by the manufacturing and other services sectors: employees or total annual sales. The size homogeneity in manufacturing, women-run firms created jobs at may be driven by the fact that most sole proprietorships an annual rate of 3.8 percent per year vs. 5 percent by are small firms with 5 to 19 employees. men-run firms; in other services, at 2.7 percent per year vs. 5.2 percent. In the retail sector, however, women-run firms experience higher employment growth rates. The THE DIFFERENCE IN SIZE BETWEEN FIGURE 4 difference in employment growth rates between women- WOMEN-RUN AND MEN-RUN FIRMS IS LOWER IN RETAIL AND OTHER SERVICES and men-run firms is seen only in medium-size countries and large Latin American countries, however. In the small Caribbean countries, employment growth is slightly 25 higher among women-run firms (Figure 5). Measured by employment growth, women-owned firms in the LAC Total Annual Sales ($million) 20 region grew slightly faster than firms run by men. 15 Source: Enterprise Surveys. IN THE RETAIL SECTOR WOMEN-RUN FIGURE 5 10 FIRMS CREATE JOBS AT A SLIGHTLY HIGHER RATE THAN MEN-RUN FIRMS 5 7 0 Manufacturing Retail Other services 6 Employment Growth Rate (%) Women-run firms Men-run firms 5 4 Source: Enterprise Surveys. 3 2 1 Women-run firms in the retail sector 0 Manufacturing Retail Other services perform as well as—or better than— men-run firms Women-run firms Men-run firms On average, labor productivity, defined as annual sales per employee, is lower among women-run firms Source: Enterprise Surveys. than those run by men, with $28,689 and $33,206 median values respectively. However, this difference in labor productivity is significant only when it comes to manufacturing firms, with $20,370 for women-run firms The Enterprise Surveys also shed light on whether vs. $30,889 for men-run firms. There is no significant aspects of the business environment affect firms difference when it comes to the retail sector and other differently depending on the gender of their manager or services. By country groupings, female-run firms show owner. Women-run firms in medium-size and large Latin lower labor productivity than male-run firms to a roughly American countries report the business environment similar magnitude among large Latin American countries, to be more burdensome on certain issues. This is less medium-size countries and the small Caribbean the case in small Caribbean countries, however. For countries. When it comes to ownership, on the contrary, example, the percentage of senior management time labor productivity is not significantly different between spent dealing with regulations is higher for women-run men-owned and women-owned firms. firms in medium-size and large Latin American countries, 4 WOMEN IN THE PRIVATE SECTOR but not in small Caribbean countries. Similarly, while Identifying the extent of female participation in the 4 Women in the private sector there is no difference by gender for small and medium- private sector as owners, managers, and workers, size firms, the percentage of large firms inspected by tax and the types of firms most favorable to women’s officials in 2010 was much higher for women-run firms inclusion, is critical toward bridging the gender gap (75 percent compared with 65 percent), a result driven and promoting shared prosperity. Understanding the by the small Caribbean countries and the medium-size problems facing women working as employers or Latin American countries. employees in the private sector is also important for policy purposes. The results of the Enterprise Surveys Women-run and women-owned firms have more show that while LAC compares well with the rest of informal links, particularly in medium-size and large the world, gender parity is still far from a reality. The Latin American countries. In medium-size and large Latin retail sector appears to be more favorable to women, American countries, the percentage of sales paid in cash so policies aimed at developing this sector will also vs. sales on credit is much higher for women-run firms contribute to greater gender parity. Similarly, if female than for firms run by men. managers hire more female workers, as the results seem to suggest, policies aimed at increasing female Women employees are more common in participation in management are likely to increase the women-run and women-owned firms and in share of female workers in the labor force. However, the small Caribbean countries female workers are concentrated in firms with low labor productivity, which suggests the need for skills Female workers account for an average of 38 percent development for women. of the labor force in LAC. However, the share of female full-time permanent employees in the total workforce varies significantly with the gender of the owner or manager. The share is higher in women-run firms than in men-run firms (50 percent and 35 percent), and in women-owned firms than in men-owned firms (46 percent and 33 percent). This difference holds for manufacturing, retail, and other services and for small, medium and large firms. By country grouping, women employees are also more common in the small Caribbean countries, where the share of female full- time workers is 43 percent of the labor force compared with 36 percent in medium-size Latin American countries and 33 percent in the large countries. Female participation in the labor force is also higher among retail and other service firms than in manufacturing, with no systematic differences by firm size. In manufacturing firms, women are more likely to work as non-production workers than as production workers. The percentage of production and non-production workers by gender is about the same in large countries and medium-size countries4. Across the region, labor productivity is lower for firms with higher female participation in the workforce, but this effect is driven by large firms. IN LATIN AMERICA AND THE CARIBBEAN 5 Endnotes References Amin, Mohammad. (2014). “Female vs. male top manager of private 1. Lead authors Silvia Muzi and Mohammad Amin with the firms in developing countries: Implications for country and firm collaboration of the LAC report team. characteristics,” Mimeograph. Available at: http://works.bepress. 2. Sole proprietorships account for 31 percent of firms in LAC. com/mohammad_amin/53/. Accordingly, some caution is needed in interpreting the results Amin, Mohammad and Islam, Asif. (2014). “Are there more female on ownership because the sample of sole proprietorships is managers in the retail sector? Evidence from survey data in not representative of a country’s private sector. In particular, developing countries.” Policy Research Working Paper Series compared with other firms, sole proprietorships are smaller 6843, The World Bank. in terms of employment and annual sales. Still, looking at this Aterido, Reyes, Thorsten Beck, and Leonardo Iacovone. (2011). dimension of ownership makes clearer comparisons based on “Gender and Finance in Sub-Saharan Africa. Are Women gender. Disadvantaged?” Policy Research Working Paper Series 5571, 3 These results hold under the more comprehensive indicator of size The World Bank. that includes permanent and temporary workers. Bruhn, Miriam. (2009). “Female-owned firms in Latin America: characteristics, performance, and obstacles to growth,” Policy 4 Data on the percentage of female production and nonproduction Research Working Paper Series 5122, The World Bank. workers is not available for the small Caribbean countries. IFC. (2013). Assessing private sector contributions to job creation and poverty reduction. IFC Jobs study. Klapper, Leora F. and Simon C. Parker. (2011). “Gender and the Business Environment for New Firm Creation,” World Bank Research Observer, World Bank Group, vol. 26(2), pages 237-257, August. Sabarwal, Shwetlena and Terrell, Katherine. (2008). “Does Gender Matter for Firm Performance? Evidence from Eastern Europe and Central Asia,” IZA Discussion Papers 3758, Institute for the Study of Labor (IZA). Enterprise Surveys provide the world’s most comprehensive firm-level business environment data in developing economies. An Enterprise Survey is a firm-level survey of a representative sample of an economy’s private sector. The surveys cover a broad range of business environment topics including access to finance, competition, corruption, crime, gender, infrastructure, innovation, labor, performance measures, and trade. The World Bank has collected this data from face-to- face interviews with top managers and business owners in over 130,000 companies in more than 135 economies. Firm-level data and summary indicators are available on the website. www.enterprisesurveys.org 6 WOMEN IN THE PRIVATE SECTOR